As the Infrastructure Framework Becomes Law, What’s Next for Efficiency?
By Paula Glover, President, Alliance to Save Energy
All year, there’s been a sense that we’re reaching a turning point — that this is the year for action on making our energy system more efficient, clean, and equitable. With President Biden signing the bipartisan infrastructure framework into law on Monday and a vote on the Build Back Better Act approaching, that moment is now arriving.
The $1.2 trillion bipartisan infrastructure package marks the largest public works investment in the U.S. in more than a generation. Importantly, the legislation recognizes that energy efficiency is an integral part of infrastructure: when we invest in making our homes, buildings, industries, and transportation systems more energy-efficient, we are not only building them “the right way” by making this infrastructure more resilient and environmentally-friendly, but we are saving billions of dollars in the long run by permanently lowering energy costs. As the nation’s leading energy efficiency advocacy organization, the Alliance to Save Energy worked around the clock during the months of infrastructure negotiations to ensure that lawmakers valued efficiency as an investment that more than pays off. The result is a package that contains billions of dollars in funding for weatherizing low-income homes, implementing modern building codes, developing the next generation of the energy workforce, and deploying advanced energy technologies. Alone, the Infrastructure Investment and Jobs Act is one of the largest single investments in energy efficiency in decades and marks a rare bipartisan policy achievement.
But frankly, it’s also not enough for the challenges we face. The International Energy Agency has found that improvements in global energy efficiency can account for 40% of the emission cuts needed to meet Paris Agreement goals — an enormous piece of the climate puzzle. But that potential will only be realized if we have all the right incentives in place to make energy efficiency measures accessible to — and adopted by — every household, every business, every industry. At the same time, as consumer energy prices increase, we face a new urgency to help families struggling to meet their energy needs by permanently lowering their cost burdens.
That’s why ambitious efficiency measures must also pass in the Build Back Better Act this year. Anticipated to pass in the House as soon as this week, the bill offers billions of dollars in rebates to consumers for the purchase of energy-efficient and electric household upgrades, funding for retrofitting mission critical public buildings, and the establishment of a green bank that could finance large-scale efficiency projects.
The legislation also includes reforms to energy efficiency tax incentives. This is a top priority for the Alliance as tax incentives like the Sec. 25C credit for homeowner energy efficiency are years out of date — currently offering just $500 (over your entire lifetime!) for energy efficiency upgrades like installing insulation or purchasing an ENERGY STAR dishwasher — and research shows that reforming the tax code to incentivize efficiency is one of the highest impact ways to reduce carbon emissions while benefiting the economy. In fact, one study found that reforming efficiency tax incentives could create nearly 600,000 American jobs, reduce carbon emissions by 340 million metric tons, and save more than $53 billion in energy costs. Unfortunately, as pressure has increased for lawmakers to reduce the price tag of the bill, proposed tax reforms in the Build Back Better Act have seen cuts. Our team is working hard to restore initially proposed values, which would more than double the Sec. 25C credit, and to ensure lawmakers recognize that using 25C to incentivize homeowner energy efficiency investments is a powerful tool for driving emission reductions and cost savings.
This is where energy efficiency policy stands as we close in on the end of 2021: a big win in the form of the infrastructure bill President Biden just signed into law, the potential for another round of critical investments in the Build Back Better Act, and several important fights remaining to make sure that the legislation is as transformational as the moment demands.
As you can tell, and as is too typical in Washington, D.C., the beginning of the holiday season more closely resembles crunch time than a time of rest. Members of Congress have much more than turkey on their plate in the weeks ahead — and the Alliance team will be there every step of the way to ensure all opportunities for enhanced energy efficiency are explored.
Learn more about the Alliance to Save Energy’s work at ase.org.