Value Engineering Energy Efficiency--The Kerry Lieberman Bill

Last week, Senators John Kerry and Joseph Lieberman debuted the American Power Act, their Senate compromise energy bill which was supposed to be nominally bipartisan, until Lindsey Graham decided to back out at the last minute. Among the compromises that Kerry, Lieberman and Graham appear to have made is to gut energy efficiency provisions from the Act.

Technically, provision for energy efficiency, and the building code, it is still nominally there, in Section 1603 of the draft bill, on page 199 for those of you following along at home. However, it looks nothing like the versions in Waxman-Markey and prior senate versions. In the Kerry-Lieberman version, states are allocated between 2.5% and 1% of all green house gas emission allowances. Of that allocation, .5% must go to Indian Tribes. With the remainder, the states may use for a variety of programs, including energy efficiency, renewable energy and transportation. Specifically:

1) Energy efficiency purposes, including implementation of programs related to—
(A) building codes that improve energy efficiency;
(B) energy-efficient manufactured homes;
(C) building energy performance labeling;
(D) low-income community energy efficiency improvements; and
(E) energy efficiency retrofits of existing buildings.

(2) Renewable energy purposes, including—
(A) deployment of technologies to generate electricity from renewable energy sources; and
(B) deployment of facilities or equipment, such as solar panels, to generate electricity or thermal energy from renewable energy resources in and on buildings in an urban environment.

(3) Cost-effective energy efficiency programs for end-use consumers of electricity, natural gas, home heating oil, or propane, including, if appropriate, programs or mechanisms administered by local governments and entities other than the State.

(4) Enabling the development of a Smart Grid (as described in section 1301 of the Energy Independence and Security Act of 2007 (42 U.S.C.14 17381)) for State, local government, and other public buildings and facilities, including integration of renewable energy resources and distributed generation, demand response, demand-side management,and systems analysis.

(5) Providing the non-Federal share of support for surface transportation capital projects under—
(A) sections 5307, 5308, 5309, 5310, 5311 and 5319 of title 49, United States Code; and
(B) sections 142, 146, and 149 of title 23, United States Code; except that not more than percent of allowances distributed to each State pursuant to this section shall be used for the purposes described in this paragraph.

The distribution among the states will be based on a complex formula:

(A) 1⁄3 of the allowances shall be divided equally among the States.
(B) 1⁄3 of the allowances shall be distributed ratably among the States based on the
population of each State, as contained in the most recent reliable census data available from the Bureau of the Census of the Department of Commerce, for all States at the time the Administrator calculates the formula for distribution.
(C) 1⁄3 of the allowances shall be distributed ratably among the States on the basis of
the energy consumption of each State, as contained in the most recent State Energy Data
Report available from the Energy Information Administration (or such alternative reliable
source as the Administrator may designate).

Essentially, Kerry Lieberman took the best, easiest and cheapest means of reducing greenhouse gas emissions—through energy efficiency—and gave them the very short end of the stick, meanwhile allocating the vast majority of federal resources to cap and trade. Is this a good compromise?