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2008 Energy Bill - Much Ado About Efficiency

Published Jan 9th 2008, 9:00am by Patty Streeter in Featured Articles

Capitol The 2008 Energy Bill is currently being discussed could determine our country's energy and vehicle efficiency for years, if not decades to come. Comparing the list below to the 2005 bill shows how much the U.S. political world view has changed on the subject. Back in 2005, the Republican Senate sought to increase domestic oil production through subsidies and other incentives. This year, the Democratic Senate list reads like the world post-"Inconvenient Truth". Hooray to Al Gore for making the climate change debate, and hence energy efficiency necessary.

Here are the key items

1. Increase in fuel economy
For cars, SUVs, light trucks (up to 10,000 lbs) the CAFE mileage requirement will increase from 25 to 35mpg by 2020, the first overhaul in 30 years. To you and me, this means a 40% decrease in money spent for fuel. With skyrocketing gas prices, we could really use this. This portion has been agreed on by Congress on Dec 1st, after a 6 month fight between the industry and environmental groups.

2. Renewable portfolio standard
Federal agencies must get 15% of their electricity from renewable sources by 2015, and reduce oil consumption by 20%. Renewables include solar, geothermal, wind, waves, but not nuclear and clean coal. The energy bill will also include a massive biofuels mandate, requiring motor fuel refineries to use increasing amounts of corn-based ethanol and, starting in 2013, increasing amounts of advanced biofuels using other feedstocks.

3. Provisions against price gouging by energy supplier
Gives authorities more power to investigate possible oil market manipulations, and make price gouging a crime when temporary "national energy emergency".

Although it all sounds pretty good at first glance, some of these so-called efficiency measures are not necessarily eco-friendly. Take the mandate for corn ethanol biofuels, for example, which I explored in a previous article.

In addition, hybrids today can already reach 50+mpg, so why are automakers fighting the 35mpg standard that is required by 2020? The car industry suggests that the rules pose a significant technical and economic challenge to the industry. But there are quite a few models out there that already provide more than 35mpg. Electric-gasoline hybrids (e.g. Toyota Prius), flex-fuel vehicles, and hydrogen cars that are either available early 2008 (e.g. Honda FCX Clarity) or already in market test (e.g. GM Chevy Equinox)? History has shown that when an industry regulation is proposed to address societal issues, the industry always put up a fight against the legislation. However, once a new standard is passed, the industry tends to find a way to meet it at a much lower expected cost. Innovative out-of-the-box thinking generally
saves the day, thanks to humankind ingenuity and out-of-the-box thinking. Necessity is the mother of invention. Take sulfur dioxide legislations to combat acid rain and health impacts in the mid-90s. Despite dire predictions by industries on the cost of the complying with the Acid Rain legislation, the cap-and-trade program for SO2 reduced emissions ahead of time and at a significantly lower cost than expected without negative impact on the country's GDP. Here is a neat graph from the Environmental Defense Fund comparing the projected and actual cost, and the results in reducing pollution.

Graph_acidrain2

The IPCC has already warned us that today, we are already past the critical level of carbon in the atmosphere at which catastrophic climate change occurs. By 2020, I wonder how what kind of global climate my kids will live in. Automakers should be accountable for being one of the biggest contributors to greenhouse gas emission. If they truly want to be responsible corporate citizens, here is a challenge with immense opportunities for innovation.

Which part of this bill will pass in the next weeks is yet unclear, but the end result will sure determine our future for a long time to come. The last time the CAFE miles-per-gallon efficiency standards were successfully revised was
1975, during the last energy crisis.

Extrazoom Marn-Yee Lee
Contributing Editor
AskPatty.com

Marn-Yee Lee is pursuing an MBA in Sustainability at the Presidio School of Management in San Francisco. After spending a decade in I.T. and on Wall Street, she is now pursuing her passion for the environment. She sees business as a partner for creating innovative solutions to pressing environmental issues. In her spare time, she writes a blog to inspire others to consider the impact of their daily lives on the environment at busythinking.blogspot.com.

Flickr photo by ~dabbler~ (formerly jowo)

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