Energy Efficiency Bill Is a Big Step in the Wrong Direction

Senator Byron Dorgan (D–ND) told Greenwire (subscription required) that an energy efficiency bill that passed through the Senate Energy and Natural Resources Committee would be a necessary “first step” to more federal efforts to overhaul energy policy.

The legislation, introduced by Senators Jeanne Shaheen (D–NH) and Rob Portman (R–OH), contains a number of subsidies for commercial and residential building upgrades, manufacturing and industrial processes, and worker training programs and would be a giant step in the wrong direction for U.S. energy policy.

The Energy Savings and Industrial Competitiveness Act, more commonly known as Shaheen–Portman, uses taxpayer dollars to skew decisions that families and businesses should make on their own. For instance, the legislation creates:

• A “voluntary” building code standard for commercial and residential buildings in which the Secretary of Energy would be able to dangle carrots by providing federal funding to state governments and tribal communities to meet the building codes.
• More of the government playing the role as investor by allowing the Secretary of Energy to provide grants to the states for retrofit projects for commercial and private buildings. The states would have the discretion to use that grant money to establish a loan guarantee program, a revolving loan fund, and other financing mechanisms and encourages states to “consider establishing such other appropriate policies, incentives, or actions” to further promote efficiency upgrades.
• Subsidized worker training programs to establish building training and assessment centers, to train architects and engineers in energy efficiency, to promote research for alternative energy uses, and other activities.
• Handouts for public-private partnerships that would research and commercialize energy efficient manufacturing technologies and processes. The bill would also offer rebate programs for manufacturers that use more efficient electric motors and transformers.

These programs are a wasteful and inefficient use of taxpayer dollars and ignore the efficacy of how markets promote efficiency gains. Businesses make investments in technological innovations because it saves them money in the long run. Families will install more insulation in their home without a taxpayer incentive to do so.

When the government substantially alters those decisions with other peoples’ money or with mandates, there are opportunity costs for businesses and families, which can take away other energy efficiency investments consumers would make in a world without efficiency mandates and subsidies.

Further, families and businesses already place a high value on saving money. And even when a family isn’t capturing the energy savings it should, that doesn’t mean they’re making an inefficient decision or that government mandates and subsidies will make it better. By taking decisions away from the homeowner or business owner, these programs are making Americans worse off, not better.

Whether or not the subsidized investments that would come from the Shaheen–Portman legislation save money or improve efficiency is irrelevant. The question is whether taxpayer money should be used to support them and the answer is simple: they should not. Companies will make these investments if they believe the technology is promising, worth the risk, and the best use of their investment dollars.

If politicians believe Shaheen–Portman should be a springboard for broader energy policy reform, we’re jumping into a pool of more subsidies and unnecessary government intervention into the energy economy. That’s a pool American taxpayers and consumers don’t want to be swimming in.