Following is a summary from a recent Congressional Research Service report on the energy-saving provisions in the recently enacted economic stimulus law.Energy Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5)

The American Recovery and Reinvestment Act of 2009 (ARRA,

  • 1. To preserve and create jobs and promote economic recovery.
  • 2. To assist those most impacted by the recession.
  • 3. To provide investments needed to increase economic efficiency by spurring technological advances in science and health.
  • 4. To invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits.
  • 5. To stabilize state and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases.

Several energy provisions in the law are designed to help address these purposes, including a number of appropriations provisions in Division A and several tax incentive provisions in Division B.

For appropriation provisions with a specific energy funding figure, House and Senate action on

 

P.L. 111-5) was signed into law by President Obama on February 17, 2009. The stated purposes of the law include the following:H.R. 1 is included in addition to the final ARRA appropriation. For appropriation provisions that do not have a specific energy funding figure, only the final ARRA appropriation is reported.Table 1 below.

P.L. 111-5, H.Rept. 111-16.Table 2 and the description under Title IV, below. Table 1, more details about program authorizations and ARRA funding is provided under the section below entitled "Division A- Appropriations Provisions."Table 2 below.H.R. 1, The ‘American Recovery and Reinvestment Tax Act OF 2009,’ Fiscal Years 2009 – 2019," http://www.house.gov/jct/x-19-09.pdf.Table 2, more details about the background and significance of the provision are provided under the section below entitled "Division B—Tax Provisions." The department’s activities occupy more than 316,000 buildings and an additional 182,000 structures on 536 military installations worldwide. DOD’s annual spending on facility energy use stood at more than $3.4 billion in 2007. This makes DOD the single largest energy consumer in the nation, even though the agency consumption comprises only 1% of the national total for site-delivered energy. The FSRM account covers expenses associated with maintaining the physical plant at DOD posts, camps and stations. The conference report directs that FSRM funding is available only for facilities in the United States and its territories.H.R. 1 recommended $350 million for "Energy Research and Development," including $87.5 million for each of the above-noted accounts. The Senate-passed version of H.R. 1 recommended $200 million for "Research, Development, Test, and Evaluation Defense-Wide, but made no specific mention of energy.4

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The ARRA conference report specifies that "funds are for improvements in energy generation and efficiency, transmission, regulation, storage, and for use on military installations and within operational forces, to include research and development of energy from fuel cells, wind, solar, and other renewable energy sources to include biofuels and bioenergy."

Table 3 below.P.L. 111-5 and H.Rept. 111-16.Table 3, more details about program authorizations and ARRA funding follows.H.Rept. 111-16) further directs that DOE use $50 million for R&D to increase the efficiency of information and communications technology and to improve standards.H.R. 1 recommended an appropriation of $2.5 billion for these programs, while the Senate-passed version recommended $2.6 billion. P.L. 110-329) provided for continued funding (through March 6, 2009) at the same level as FY2008.7 Of that total, $400 million is to be awarded on a competitive basis to grant applicants.H.R. 1 recommended $4.2 billion for the program, while the Senate-passed version recommended $3.5 billion.P.L. 110-140) established the program structure for the EECBG program. The goals of the program are to help reduce energy use and carbon emissions at the local and regional level. EISA set allocation percentages and listed the allowed purposes for the use of funds, which includes strategic planning, consultant services, and energy audits. Eligibility requirements include payment of prevailing wage rates, submission of a strategic plan, and sharing of information. The House-passed version of H.R. 1 recommended $3.5 billion for the program, while the Senate-passed version recommended $4.2 billion. H.R. 1 recommended $6.2 billion for the program, while the Senate-passed version recommended $2.9 billion.P.L. 110-329) provides for continued funding (through March 6, 2009) at the same level as FY2008, plus a special one-time additional appropriation of $250.0 million. 12 However, as discussed below, allocation of nearly all of this funding appears to depend on whether or not states will implement new building codes and at least pursue adopting utility rate "decoupling."H.R. 1 recommended $3.4 billion for SEP, while the Senate-passed version recommended $0.5 billion.13 14

 

 

b. The majority of funding for the Office of Science supports physics and science programs that are not directly related to energy use.

For each of the offices listed in

Office of Energy Efficiency and Renewable Energy (EERE)

DOE Energy Efficiency and Renewable Energy Research

ARRA provides $2.5 billion for applied research, development, demonstration and deployment activities at DOE’s Office of Energy Efficiency and Renewable Energy (EERE). Of this total, $800 million is slated for biomass energy projects and $400 million for geothermal projects. The conference report (

The House-passed version of

Annual funding for EERE programs stood at about $1.72 billion in FY2008. For FY2009, the continuing resolution (

DOE Energy Efficiency and Conservation Block Grants

ARRA provides $3.2 billion for an Energy Efficiency and Conservation Block Grants (EECBGs) program.

The House-passed version of

The Energy Independence and Security Act (EISA,

DOE Weatherization Program

ARRA provides $5.0 billion for the DOE Weatherization Program.

The House-passed version of

The Weatherization Assistance Program enables low-income families to permanently reduce their energy bills by making their homes more energy efficient. DOE program guidelines specify that a variety of energy efficiency measures are eligible for support under the program. Such measures include insulation, space-heating equipment, energy-efficient windows, water heaters, and efficient air conditioners. For household income eligibility, ARRA (§407a) revises the guidelines to increase the eligibility cap from 150% to 200% of the poverty level.

DOE employs a formula to allocate funding to each of the states and territories. Each state and territory, in turn, decides how to allocate its share of the funding to local governments and jurisdictions.

DOE Weatherization Program funding stood at $227.2 million in FY2008. For FY2009, the continuing resolution (

DOE State Energy Program and Decoupling Provision

ARRA provides $3.1 billion for DOE’s State Energy Program (SEP).

The House-passed version of

SEP provides grants to states and directs funding to state energy offices from technology programs in DOE’s Office of Energy Efficiency and Renewable Energy (EERE). The states design and carry out their own renewable energy and energy efficiency programs. SEP funding goes to state energy offices in all states and U.S. territories. SEP projects are managed by state energy offices, not by DOE.

The decoupling problem involves efforts to encourage utilities to promote customer use of energy efficiency measures. An issue in promoting efficient use of electricity is that the profitability of electric utilities depends in large part on how much power they sell. Utility profits also increase with greater capital investment, such as in power plants. These utilities therefore have limited motivation to implement conservation programs that would slow or even reverse the growth of electricity demand. A solution to this problem is a regulatory approach called decoupling, under which utilities that meet energy conservation targets receive payments (funded by ratepayers) that compensate the utility for lost sales. The approach therefore decouples growth in sales from profitability. Decoupling has been implemented in varying forms in some states, probably most notably in California.

Retail rate design, of which decoupling is a part, has historically been under exclusive state or local authority.

The funds available for allocation to the states that meet these criteria (decoupling and building codes) are about $3.05 billion of the total of $3.1 billion, compared to the allocation of $1 million per state which, as cited by §410 of ARRA, is specified in section 365(f) of the Energy Policy and Conservation Act (

Advanced Battery Manufacturing Grants

ARRA establishes a new program of $2.0 billion for facility funding grants to manufacturers of advanced battery and battery system components. Covered activities include the production of lithium ion batteries, hybrid electrical systems, system components, and software.

The House-passed version of

In a related action, the Continuing Resolution for FY2009 (

Alternative-Fueled Vehicles

ARRA appropriates $300 million to provide grants to states, localities, and metropolitan transit agencies for the purchase of alternative fuel and advanced technology vehicles.

The House-passed version of

The structure for this program was established by §721 of the Energy Policy Act of 2005 (EPAct2005,

Transportation Electrification

ARRA provides $400 million in transportation electrification grants.

The House-passed version of

EISA (§131) directed DOE to establish a program that provides electrification grants for a variety of transportation modes, including highway vehicles, airport ground support vehicles, and ships. EISA authorized $185 million annually for the grant program.

Energy Efficient Appliance Rebate

ARRA provides $300 million to provide consumers with rebates to buy energy-efficient Energy Star products to replace old appliances and help lower energy bills.

The House-passed version of

The program is authorized by EPAct2005 (§124), which directed DOE to fund rebate programs in eligible states to support residential end-user purchases of Energy Star products.

Office of Electricity Delivery and Energy Reliability (OE)

ARRA (Title IV) provides $4.5 billion to the Office of Electricity Delivery and Energy Reliability, for grid modernization and related technologies, such as electricity storage. It includes funds for the smart grid and grid modernization provisions in EISA (Title 13).

The House-passed version of

Of the $4.5 billion appropriated, ARRA specifies that $100 million be available for worker training. Also, $80 million will be available for regional transmission planning, addressing a concern that multistate planning is needed to provide a framework for expanding the transmission system. Further, $10 million is provided for ongoing work by the National Institute of Standards and Technology to develop electronic system communication ("interoperability") standards needed for the wide scale use of the smart grid.

ARRA §405 modifies the smart grid demonstration program established by EISA to specifically direct funds to projects in rural, urban, suburban, and tribal areas; and it directs funds to both public power and privately owned transmission systems. Funding is also made available to nonutility project developers; and all participants are required to provide data to a new smart grid information clearinghouse open to the public. Also, the federal matching fund requirement for smart grid investments that was set at 20% in EISA is increased to 50%.

ARRA §409 directs DOE to analyze transmission needs and constraints related to renewable energy as part of its 2009 National Electric Transmission Congestion Study.

Loan Guarantee Program (Office of Chief Financial Officer)

Also, up to $500 million of that total may be appropriated for "leading edge biofuels projects." The appropriations for electric grid projects are expected to leverage more than $60 billion in loan guarantees for transmission grid construction that supports renewable energy projects.H.R. 1 (Title V and Sec. 7003) recommended $8.0 billion for the program, and the Senate-passed version (Title IV) recommended $8.5 billion. ARRA followed the language of the House-passed bill, but with a smaller total appropriation.H.R. 1 (Sec. 5001 and 5002), and the Senate-passed version (Sec. 401 and Sec. 402) were identical with each other and with the final law.

ARRA (§406) provides $6.0 billion for a "temporary program for rapid deployment of renewable energy and electric power transmission."

The House-passed version of

This provision complements the $4.5 billion provided to OE for smart grid research and planning, noted above. This new loan guarantee program expands the existing innovative technology loan guarantee program created by EPAct2005 (Title 17). While the program set up in EPAct2005 is limited to supporting "pre-commercial" innovative technology, the new program can also support commercial technology used for transmission and renewable electricity projects. Of the total appropriated, ARRA specifies that $10 million be used for administrative expenses that support the Advanced Technology Vehicles Manufacturing Loan program. Qualifying projects must be capable of starting construction no later than September 30, 2011.

Bonneville and Western Area Power Administrations

ARRA provides $3.25 billion in new borrowing authority for the Bonneville Power Administration (BPA, §401) and $3.25 billion for the Western Area Power Administration (WAPA, §402).

The House-passed version of

For both BPA and WAPA, the purpose of the new borrowing authority is to support transmission system planning, operations, and construction. In the case of WAPA, ARRA states that funds can be used for the specific purpose of delivering power from renewable power plants constructed after the date of enactment. Any lines constructed by WAPA must connect to the existing WAPA system and, from a practical standpoint, the same would presumably be true for BPA.

Office of Fossil Energy Research and Development

H.R. 1 (Title V) recommended $2.4 billion, and the Senate version (Title IV) recommended $4.6 billion. This provision likely refers to a program for large-scale demonstration projects that capture carbon dioxide (CO2) from a range of industrial sources. A small portion of the $1.52 billion would be allocated for developing innovative concepts for reusing CO2. Of the remaining $1.88 billion, $1.0 billion would be available for fossil energy R&D programs. However, the conference report does not say how the funding would be distributed across programs. Of the remaining $880 million, the report specifies that $800 million will be designated for DOE’s Clean Coal Power Initiative Round III solicitations. That program targets coal-based systems that capture and sequester, or reuse, CO2 emissions. Lastly, $50 million is allocated for site characterization activities for geologic formations (for the storage component of CCS activities), $20 million for geologic sequestration training and research, and $10 million for unspecified program activities.H.R. 1, instead of $330 million as proposed by the Senate. However, the conference agreement excludes $100 million for advanced scientific computing as proposed in the House bill. Most programs emphasize research in the physical sciences and the construction and operation of large scientific user facilities. The office also funds research on biological and environmental science and advanced scientific computing. Some of the programs address long-term basic research related to DOE energy technology programs. Under the Bush Administration’s American Competitiveness Initiative (ACI), funding for the Office of Science and two other agencies would double over the 10 years from FY2006. Congress set even faster growth targets in the America COMPETES Act (P.L. 110-69), which authorized doubling in just seven years. Actual appropriations, however, have not yet met these targets. H.R. 1 under ”Science.” The Senate-passed version of the bill carried no similar provision.P.L. 110-69).