Just over a week after President Obama called for an aggressive clean-energy standard of 80 percent by 2035, he hit the road to tout the lower-hanging fruit of energy efficiency.
“Now, that may not sound too sexy—energy-efficient buildings. But listen, our homes and buildings consume 40 percent of the energy use,” Obama told a crowd of Penn State University students in State College, Pa., today.
He laid out in broad terms his administration’s Better Building Initiative, a package of tax incentives and competitive grants that will go to states and cities to help make commercial buildings more energy-efficient. While not mentioning a price tag, Obama did say that the program's costs would be covered by ending tax breaks for the oil-and-gas sector.
“To pay for it, I’ve asked Congress to eliminate the billions of taxpayers’ dollars that we currently give to oil companies,” Obama said, repeating a call from his State of the Union address last week. “It’s time to stop subsidizing yesterday’s energy and time to invest in tomorrow’s.”
But on Wednesday evening, Congress gave him an answer—and not the one he wanted. In a 44-54 vote, the Senate defeated an amendment to repeal one of the biggest tax breaks for major oil companies. Nonetheless, Obama’s upcoming budget proposal almost certainly will eliminate the subsidies for the oil-and-gas industry that amount to about $4 billion annually.
In a conference call on Wednesday announcing the efficiency program, senior administration officials declined to cite the initiative's cost, saying only that it would be included in Obama’s budget proposal, slated for a February 14 rollout. The president today said the plan would be modeled after the administration’s Home Star initiative, which would have given rebates to homeowners who make their homes more energy-efficient. That bill passed the House last year but didn’t make it through the Senate, largely because of its hefty $6 billion price tag.
It’s likely that any program for commercial buildings modeled after Home Star, which was for residential buildings only, would carry with it an even bigger price tag. To executives leading the way in energy efficiency, that would be worth it.
“There’s a bigger return on investment in the commercial sector than the residential, said Daryl Dulaney, CEO of Siemens Industry, a company that manufactures technologies for the transportation, lighting, and building sectors, among others. “That’s not something that’s largely understood. Seventy percent of electricity is consumed in commercial and industrial buildings. It’s not [just] a residential challenge.”
But to Congress and the powerful oil-and-gas lobby, it’s not worth it. Despite Obama’s repeated attempts to try to repeal the subsidies, it has not happened. And given the GOP-controlled House, the more conservative Senate, and the overall deficit-cutting mood on Capitol Hill, his chances are even slimmer this time around.
Obama, seeking to rouse a crowd of young voters in the battleground state of Pennsylvania, was mindful not to wade into the likely legislative challenges to the initiative.
He said that the program, by providing upfront money to businesses, will help them innovate and create jobs. “The problems for both homeowners and business owners—they’ll recover the money by lowering their utility bills, but they may not have the cash upfront,” Obama told the college crowd. “Steps like these can also boost manufacturing and private-sector jobs.”
Obama's idea won't find common ground with the U.S. Chamber of Commerce because of his suggested pay/fors.
“The Energy Institute has always been a strong advocate for increased energy efficiency, which is a key component in our new five-point energy plan for a more secure energy future," said Karen Harbert, president and CEO of the U.S. Chamber’s Energy Institute. "While we’re pleased that President Obama is also focusing on this topic, we do not believe that these initiatives should be funded by imposing higher taxes on the energy industry."
Yet Obama was confident he would succeed in his call for business innovation in his speech. “We will show you the money,” he declared. “We will show you the money, states and local governments.”
Unless Congress won’t let him.
This article appears in the February 3, 2011 edition of National Journal Daily PM Update.