“NO” on the Shaheen-Portman Energy Efficiency Bill

This week, the Senate is likely to consider the Energy Savings and Industrial Competitiveness Act of 2013 (S. 761). Introduced by Sen. Jeanne Shaheen (D-NH) 2% and Sen. Rob Portman (R-OH) 28%, it claims to promote energy savings in industrial and commercial buildings. The bill provides federal incentives (i.e. taxpayer dollars) to make building and manufacturing processes more efficient, but these “incentives” would burden taxpayers and consumers alike while producing no tangible benefits.

Like most government-initiated efficiency programs, this one is fatally flawed because it is based on the idea that businesses and families will act irrationally unless the government intervenes.  This inappropriate intervention comes in the form of voluntary federal mandates and taxpayer funded subsidies.  As Heritage notes, only the free-market has been proven to decrease costs and increase efficiency in energy production.

This legislation creates a number of wasteful programs.  Heritage’s Nick Loris has outlined the more egregious ones:

  • 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.

This federal government intervention is unnecessary for a number of reasons.  Businesses already know how to save money, so they don’t need the government to force taxpayer funded voluntary mandates and regulations upon them.  Government attempts to drive energy efficiency take a paternalistic approach and ignore consumer preferences.  Families and businesses should be able to choose how  to spend their money as they see fit, not be prodded by the federal government with taxpayer-funded handouts.

Even the environmental “benefits” of the Shaheen-Portman bill are negligible.  Whatever one believes about protecting the environment by reducing greenhouse-gas emissions (GHGs), this legislation would fail to change the climate in any meaningful or substantial way.

Because the federal government is the single largest energy user in the country, the bill attempts to reduce costs to the taxpayer by making improvements in the technologies used by the federal government, such as computers and software.    However, Heritage explains:

Whereas the government has less incentive than businesses and homeowners to save money, energy-efficient investments can make economic sense for the taxpayer, but those investments should not be made to advance a renewable energy agenda—they should be done on the merits of reducing energy costs and on improving capabilities. 

The bill is also problematic because it “intends to improve transparency and direction for the Department of Energy’s Advanced Manufacturing Office (AMO), which provides grants to improve manufacturing efficiency.”  While improved transparency and direction for a program are laudable goals, Heritage contends this office should not even exist.  AMO duplicates many existing state programs and engages in “blatant corporate welfare for large companies, or research and development projects conducted in universities, which the private sector should collaborate with and fund.”  (emphasis added) For example, LyondellBasell  received a $4.5 million grant and  is one of the largest chemical companies in the world with annual revenues of $45 billion and a market capitalization of $35.7 billion.  Taxpayers should not be subsidizing a company like that.

Heritage Action opposes S. 761 and will include it as a vote on our legislative scorecard.

Related links:

Heritage Action Scorecard
Four Problems with Obama’s Push for Energy Efficiency
Energy Efficiency Bill Is a Big Step in the Wrong Direction
The Shaheen–Portman Energy Efficiency Bill: A Costly, Inefficient Use of Taxpayer Money
Energy Efficiency, Not Efficiency Mandates
Keystone Pipeline: Shaheen-Portman Wrong Place for a Keystone Amendment 
10 Questions Congress Should Ask About the Shaheen-Portman Energy Bill