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Thoughts on the New Energy Bill

Written by Nickel - 27 Comments

In case you haven’t heard, Congress recently approved an 822 page energy bill (known as the Energy Independence and Security Act) that President Bush is expected to sign into law. This bill is expected to reduce energy usage by 7% and carbon dioxide emissions by 9% in 2030. Excuse me? It’s going to take 23 years to achieve a less than 10% improvement in energy use and carbon emissions? I haven’t read the bill, but I’m assuming that this is on a per capita basis, so with continued population growth, there will likely be a net increase in energy usage over that timeframe (feel free to correct me if I’m wrong).

With that said, let’s take a look at some of the changes that are in store. Again, I haven’t read the bill myself, so these bits are captured from various media reports that I’ve run across.

More efficient light bulbs. Under the terms of this bill, all light bulbs have to use 25-30% less energy by 2012 to 2014. This measure is being phased in, starting with 100W incandescent bulbs in 2012, ending with 40W bulbs in 2014. And by 2020, all bulbs have to be 70% more efficient. The funny thing is, compact fluorescent bulbs that use 25% as much energy (i.e., that use 75% less energy) as compared to their incandescent brethren are already available. If you’re looking for a soundbite in support of this move, consider the following comment from Lynn Clement of Focus on Energy:

“If every American household replaces light bulbs in their five most frequently used fixtures with Energy Star compact fluorescent bulbs, we could save more than $8 billion in annual energy costs and prevent greenhouse gasses equal to the emissions of more than 10 million cars.”

Obviously, there are improvement that can be made in this area and, in the long run, it would be great if affordable, high-quality LED lighting eventually replaced CF bulbs. But in the mean time, there’s no reason for consumers to wait 13 years to make this one a reality. And it’s become increasingly cheap to do so. The claims that CF bulbs cost $8-$10 apiece are utter B.S.

More fuel-efficient cars. The bill requires a 40% increase in fuel efficiency by 2020 for a fleet-wide average of 35 MPG. I’m not a carmaker, but it doesn’t seem like this should be too hard to achieve, especially given the available timeline. In terms of real impact, this change is predicted to save the nation 1.1 million barrels of oil per day, which is about half of what we currently import from the Persian Gulf. On the downside (for the government) will be reduced federal excise taxes on gasoline.

Ethanol as a motor fuel. The bill calls for a 5-6 fold increase in the use of ethanol as a motor fuel by 2022. This one worries me — if it’s going to become reality, I certainly hope we can move beyond turning food into fuel, and switch over to cellulosic biomass in a hurry. The other side of the issue is that many drivers are reporting mileage decreases commensurate with the amount of ethanol blended into their fuel (e.g., a 15% decrease in mileage when driving with gas containing 15% ethanol). This seems odd to me, as there’s a good bit of energy packed into ethanol. While I’d expect some drop off with ethanol, I wouldn’t expect it to effectively behave as an inert ingredient.

More efficient water use. The bill also requires new dishwashers to use 28% less water, and for clothes washers to use 40% less water (note that many front loading washing machines already do this). This will not only help with energy usage (less hot water = less water to heat) but will also help to conserve water, which is becoming an increasingly scarce resource in many parts of the country).

Labelling. There are also a number of labeling requirements designed to make consumers more aware of how much energy various items use. This sounds good in principle, and it certainly can’t hurt, but I’m skeptical as to how much it will help in the long run.

Closing thoughts… While I’m not crazy about the idea of government intervention into free market processes, I also don’t really trust the markets (or individuals in general) to come up with a solution for our current energy problems that truly serves the common good. As Garrett Hardin pointed out, the tragedy of the commons (i.e., the exploitation of finite natural resources for personal gain) is a social problem that cannot be solved by technical means alone. In that light, perhaps the proper question here is not whether this legislation goes too far, but rather if it goes far (and fast) enough.

As always, please feel free to share your thoughts in the comments section, below.

Published on December 19th, 2007 - 27 Comments
Filed under: Energy

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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27 Responses to “Thoughts on the New Energy Bill”

  1. 1
    rocketc Says:

    I actually believe that the free market does a better job of finding ways to solve energy problems. The government keeps getting in the way. See oil refinerys, nuclear fuel, oil exploration, etc. Technology is getting cleaner every day. Private business would have probably exceeded these requirements if left alone, but now they won’t because they will be satisfied with the governement benchmarks.

    I really hate the artificial propping up of ethanol. That is going to hurt us in the future. There is a better solution out there, but no one is trying to find it because the government has instituted incentives to keep people in ethanol. The gov’t is catering to lobby groups – corn growers. Ethanol actually uses more energy to create and burn than gasoline.

  2. 2
    nickel Says:

    rocketc: I agree with you on the ethanol issue in particular. I think this is a big gamble that has a low probability of success. The “energy in vs. energy out” issue is a hotly contested one, and it depends in part on the means of production. Clearly, corn isn’t a good choice for many reasons. In fact, I’ve read that a more efficient way of turning plants into power is to simply grow them and then burn them as fuel for electric plants.

    I do, however, question the notion that private businesses would necessarily be getting cleaner on their own, though. Rather, I suspect they’d be getting more efficient at getting their product (whatever it might be) to market for a lower overall cost. Likewise, the average person is going to rank cleanliness behind cost (as well as a number of other factors).

    If all of this involves the production a cleaner product, so much the better. But corporations and consumers won’t, on average, make decisions that make good environmental sense but poor financial sense. And unfortunately, those two things are often diametrically opposed.

  3. 3
    Compounding Says:

    Well, I am by default against government mandates… something about freedom. However, this is just bad policy. If incandescent bulbs are just outlawed, it will be ridiculous. There are applications where fluorescent bulbs don’t make sense, and where the bulbs are so seldom used that an incandescent doesn’t even consume much energy… like in certain appliances, namely refrigerators and ovens.

    If the government wants to cut energy consumption, why not mandate its own use of energy be cut? I know in my state that Wal-mart is the largest employer, immediately followed by the federal government, the state government, two state universities, a state run hospital system, the largest public school district, and the largest two cities’ governments. Government uses too much energy. If they want to mandate energy consumption… they can mandate it upon themselves.

    On a personal note, I like the idea of energy efficiency; I am just opposed to government intervention. I have replaced every lightbulb in my home (with the exception of the lights in the refrigerator and oven), installed an energy-star rated programmable thermostat, setup a power strip to completely kill electrical current to the TV when it is off, and more. I am hoping to get an on-demand water heater, and then get a new front-load washer and dryer with a moisture sensor.

    There are enough economical things that can be done to curb energy use… we don’t need crap like carbon credits and mandates. As energy costs increase, people will want to change their habits.

  4. 4
    The Saving Freak Says:

    Why don’t we ever talk about Compressed Natural Gas. The technology is out there and we produce over 95% of our natural gas domestically. In fact we waste tons of it when drilling for oil. The cost per gallon equivalent of gasoline for natural gas in a vehicle is somewhere around $1.50. This would be a great savings for everyone and would deplete our dependence on foreign oil. Natural gas also burns very clean so you don’t have to change your oil as often and the engines last much longer (somwhere between 400 and 500 thousand miles). Plus you can fill up at home with the right equipment. Next vehicle I buy will be a CNG vehicle.

  5. 5
    geo Says:

    Ethanol gives less bang-per-unit, if you will. To quote from wikipedia: “However, since the energy content (by volume) of ethanol fuel is less than gasoline, a larger volume of ethanol fuel (34%) would still be required to produce the same amount of energy.” Hence the loss in mpg reported by users of blended fuels.

  6. 6
    Jeremy Says:

    Wow, another person who knows Garrett Hardin. Have you ever read his Lifeboat Ethics essay? It was written a few years after Tragedy, but it incorporates a lot of similar concepts.

  7. 7
    nickel Says:

    Jeremy: No, I haven’t. But I will now that you’ve pointed it out. :)

  8. 8
    Adam Says:

    Capitalism works, and the auto companies have already responded with more fuel efficient vehicles that have lower emissions than ever before. and thats what the consumers mostly want.

    i don’t think that ethanol is a good idea. it doesn’t burn any cleaner then gasoline, it has less energy per unit, and it takes a lot of fuel to produce ethanol (you have to ship the seeds to the farm, use tractors to plow the field, fly a plane to spray insecticides, collect the corn with combines, ship it to the ehtanol plant, process it, ship it to the consumer, etc. i think its a net energy loss creating it when its all said and done. and its raising the price of corn, milk, and beef. you already read stories in the paper about how the poor can’t afford food, tortillas in mexico have gone way up in price, etc.

    i think the fuel standards are unrealistic. i mean to get a full size pickup to get 35mph it’ll weigh so little that it will fold like paper on an impact, and have poor towing capabilities.

    i think a better bill would have been to open up ANWR and areas in the gulf coast to more oil drilling.

    honestly, i don’t like all the emissions equipment on modern cars? ever try to work on them? its rediculous with all the emissions equipment and sensors on them. working on them is a PITA.

  9. 9
    rocketc Says:

    Adam, you and I would get along well.

    The best way to help the environment is to educate the consumer with sound, scientific information and illustrate the cost savings.

    I buy the car with the lowest MPG posssible – without a government mandate and I am switching to CFL bulbs – not because of politics, but because I think it will help my bottom line.

    There are not too many people out there who purposefully look for the car that will cost the most amount of money to operate.

  10. 10
    rocketc Says:

    By the way, has anyone looked into the connection between the lobbyists employed by “green” companies in all of this rush to save the environment? The companies who sell carbon offsets or CFL bulbs or emissions equipment?

    Oil companies make money, but so to “green” companies. That is why government mandates can be dangerous here – how do we know that they mandates are backed by good science and economics? It is more likely that they are backed by good corporate lobbyists.

  11. 11
    RAY SHEAD Says:

    Why not make cars get 35 mpg in three years instead of thirteen. Oh, I forgot congress thinks we have only a twelve year olds mentality.

    My Christmas Wish is for term limits or vote out any politican that SERVED more than eight years.

  12. 12
    Boris Says:

    I really don’t like the light produced by the new CFLs. Try to convince me as you will, it is harsh and garish (though improved from earlier) compared with incandescents and halogens. Why would you restrict my freedom to choose what light I show in my home?

    The real differences in home energy usage is in their size, not the amount of CFLs they employ. Eg, the average mansion home of wealthy people pushing for CFLs to be used everywhere uses far more energy (from heating, air conditioning, etc.) even if it were equipped with CFLs.

  13. 13
    dan Says:

    I’m also against these regulations.

    1. CFLs – while the energy savings is a good thing and I use them myself they do adversely effect some people like my friend who gets a blinding headache if he’s in a room with a CFL on. Banning incandescents is like a sentence to permanent headaches if the LEDs don’t work out. And more energy efficient bulbs (CFLs and LEDs) would come into the marketplace anyway as they’re already in development or production so I really don’t see the point except to limit consumer choice which I’m against

    2. Fuel efficiency – As engines already burn 99% of the gas how much more efficient can they be. This seems like a thinly veiled attempt to kill SUVs and will probably take pickups out with it.

    3. Ethanol – Seems to have the same problem electric and hydrogen powering had. They don’t produce their own power which leaves us just as dependent. Solar panels and windmills anyone?

    4 Water use – Another example of something already being produced. Railroading anyone?

    5. Labelling – Somehow I don’t see it helping much, kinda like the warnings about prescriptions on TV and ads. Its there but its so prevalent that most people just tune it out.

    In short I’d say its just a way to try to look good. 3 of the 5 are already accomplished and one is done on its own when it can beat competition by a significant amount.

  14. 14
    rocketc Says:

    Some more laws that might help:

    Each person is only allowed one shower per week.

    Homeowners may only turn on lights between the hours of 6 pm and 8 pm.

    Cars must get 100 MPG.

    Why not just mandate that no one can ever use energy again – wouldn’t that solve the problem?

    Where is someone like Reagan when we need him?

    “government is the problem”

  15. 15
    Jeremy Says:

    I don’t think people fully understand how the gas mileage issue works. 35mpg is what an auto company must maintain as an average across all of their vehicles. This doesn’t mean that every vehicle must get 35mpg or that trucks need to.

    This just means that GM, Ford, Chrysler, Toyota’s entire fleet of new vehicles must come up to an overall average of 35mpg or better.

    And the reason that this has to be done across so many years is simple economics. Auto companies are bleeding money as it is, and if they were to try and meet this new goal in just a few years, they would have to immediately cut half the vehicles out of production or increase vehicle prices so much that people wouldn’t buy them.

    A lot goes into model changes, it isn’t as simple as slapping a battery in it and calling it a hybrid. You have hundreds of factories that rely on custom made tools, robots, etc that all make specialized parts. You can’t just flip a switch and they can magically make cars that get 10 more mpg.

    This doesn’t validate the fact that they waited 30 years to make another mpg mandate, since this could have been phased in starting years ago, but this is at least a step in the right direction.

  16. 16
    CK Says:

    Ever heard of the idea of pigovian taxes? Check it out.
    http://gregmankiw.blogspot.com.....festo.html

  17. 17
    nickel Says:

    geo: I understand that it less bang for your buck, but people are claiming a 15% mileage decrease with 15% ethanol. This implies that the ethanol is effectively behaving as an inert ingredient — that it provides no energy whatsoever. That makes no sense to me.

  18. 18
    Nils Anderson Says:

    There is no 2008 gas vehicle getting combined 35mpg! The Civic gets 30 (36hiway) and Yaris 32 (36hiway) The Pirus and Civic-Hybrid get 40. The EPA test is on a tread mill so vehicle aerodynamics is irrelevant. The only reason the Prius and Civic-Hybrid get good highway mileage is that their engines are 1.4 and 1.8 liters. The 1987 Chevy Sprint got 45mpg because it had a 1.0 liter engine. How will the 35mpg test be done, with what fuel, what speed (45mph)? The EPA sticker on the bi-fuel 2008 Chevy Impala is 16mpg on Ethanol and 21 on gas. We will have to drive two passenger, 2000 pound cars with 1.5 liter engines; top speed 55mph. That’s just the laws of Thermodynamics and Physics that Congress does not understand Americans will be happy with. Real solutions need to include Electric Vehicles, Nuclear Power and Population Control.

  19. 19
    Nick Says:

    I’m sorry to, but this is a very interesting topic I would gladly comment upon.

    First and foremost… Government is to govern, regulate, and set the rules. I am sorry gentlemen but our government is a joke. Stop blaming it. The free economy is much too free in US… for some, and the rest of us have to pay the bill.

    Now to the point…

    Gas, is actually pretty darn cheap in US. Check with your friend in Paris or Bonn, or Barcelona, we pay 1/3 of what the world is paying… with that said. Would some one explain me how come Diesel fuel is more expensive then gas??? Diesel is bi-product in the gasoline refining, and being more ought to be cheaper… it is in Bonn, Barcelona… and Paris!!!. Just for info… average car in Europe has a 1.8Liter engine and consumption is… 5.5-6 litters per 100 kilometers. 5.5-6l. would be around a gallon and a half per 60 miles. You make the math.

    Electricity… How many of you actually checked the back of your small and not so small home appliances for their hourly consumption rate… it is in Watts per Hour… I have a surprise for you… you probably would not find that information. And you definitely would not find it on bigger items, as the consumption is bigger as well. Light bulbs… won’t change much. Your microwave is 1000W/h minimum; do you know how much your fringe is, or just one of your stove’s burners? What about the air-conditioning? I was surprised that my local electrical company couldn’t give me price per kilowatt; they had “several different depending on… location, size, appraisal”

    Housing… I’m sorry, but if a German building law come to inspect average suburban house they will probably condemn it before it go on the market as a fire hazard…

    And back to the government. Government that supports its economy by subsidizing and regulating it in a healthy way is a must. Yet US government is not it. US government spoils corporations and allows them privileges instead to press and dement action. 2030… that is 22years from now. The polar ice will melt sooner then we make the change to preserve that same ice. Lately I think of Nixon’s words… “Don’t ask yourself what your country can do for you, but ask what you can do for yourself” and that reminds me the old saying “the fortune of the drowning is in his hands”

    Thanks for the site
    Nick

  20. 20
    rocketc Says:

    Quote is from Kennedy. There are more than a few Dems who just spit coffee on their monitors.

    If the polar ice melts, then we can grow corn at the south pole and use it for fuel! Sorry, it’s late. . .i’ve been on the internet for too long. . .

  21. 21
    Nick Says:

    Quote is Kennedy’s I agree, yet apparently you never listen to Nixon’s inauguration speeches… He used Kennedy’s speech “But ask your self what you can do for your country”, and change it to “but ask yourself what you can do for yourself”. Google it up…, my jaw dropped when I listen to it the first time… I couldn’t believe too.

  22. 22
    geo Says:

    Nick,

    I don’t see the European style of government economic management as obviously superior as you imply.

    For example, Germany’s jobless rate was 8.1 percent in December. The US was 5%. Granted, Germany’s is trending down whereas the US is inching up slightly. Three years ago, the opposite was true. But Germany’s peaked at 13% in 2005, whereas ours did not break 8% in the last downturn (circa 2002).

    Just saying.

  23. 23
    geo Says:

    Nick,

    The full text of Nixon’s 1972 Inauguration speech is available online at http://www.bartleby.com/124/pres59.html

    Here is the quote I believe you are referring to, this time with its context:

    “Government must learn to take less from people so that people can do more for themselves. Let us remember that America was built not by government, but by people—not by welfare, but by work—not by shirking responsibility, but by seeking responsibility. In our own lives, let each of us ask—not just what will government do for me, but what can I do for myself? In the challenges we face together, let each of us ask—not just how can government help, but how can I help?”

  24. 24
    Nick Says:

    Geo,

    I may be wrong it has been years “let each of us ask—not just what will government do for me, but what can I do for myself?” could be the exact phrase wording. Yet it resembles JFK speech, and it does remind about the drowning man… doesn’t it?

    Europe… just comparing,

    What would happen if gas prices in US jump to 7-8 dollars a gallon, Every US citizen and legal alien gets a universal healthcare, meaning no medical insurance = free healthcare? 1month paid vacation. And… Mexico joins US as East Germany joined “Die Bundesrepublik”… 82 mil. them, close to 300mil. us. Not counting Mexicans…

    What would happen with our job rate, or the economy? By the way Germany introduces “green card” for experienced and skilled employees, as we have in US. Plus being unemployed in Germany isn’t that bad in compare to US. Recently Deutsche Welle news mentioned that Germany has problems employing skilled workers… and many open jobs are unoccupied.

    Just out curiosity, do you know how many brands Daimler holds in US? And how many does GM in Germany?

  25. 25
    rocketc Says:

    I am with Nixon on this one.

    The problem with the European economy – and this is especially true of healthcare – is that it does not reward innovation. The socialist-style health care in the UK and other places depends on research and development that is happening in free markets like Japan and the US.

    A cleaner environment will happen as technology advances, gets better, cheaper and more efficient. The free market is better able to support those advancements.

    Nick, Maybe you should be pressuring the German marketplace to find ways to reduce the cost of gas instead of trying to raise the price of gas in the US. Do you work for the oil companies?

  26. 26
    Nick Says:

    Rockets…
    Nixon was an idiot, and criminal, that is personal statement. If I would to care of myself, then what is the need of the government? Why pay taxes?

    Do you suggest that UK, Germany, Canada are not free market economies? And researches are done by only us and Japan? No innovations would come from Europe? You have to be joking, right?

    The fastest train is in France in production… 4-500 km/h. Project started by the France government back then. And it works. Clear environment hug… that same train is electrical, as are most in Europe. Do you know how much of US railways are electrified? Less then 2 %, that is why Diesel in US is expensive (the answer on my previous post). Demand is high in the business sector, and that is why GM would never introduce small 1.0 TDI engines that can do 35-45 miles per gallon in US. I hoped you would be interested and research it for yourself; apparently I’m wrong on that one. And I expected you would compare the infrastructure, consumption of natural resources… and so on and on…. Or think as American. Sitting in train from Kansas to Chicago and travel as fast as an airplane, paying considerably less, and being guarantied you will not end up in a sky scraper? And yes, no gas is involved, ecologically clean electricity. France has it now, not in some inevitable future. What do you say? Innovations? R&D? Where do we stand?

    I wish I worked for the oil industry, they do pay much better, I’m in the paper converting business. It is overwhelmingly flooded by German and Japanese hardware, considered best. I don’t try to raise the prices, just hypostatizing of a possible future event that may occur and drawing my conclusions now. Getting prepared, good old boy scouts way of thinking.

    And healthcare… again. Human lives are not a bargain. No country benefits of having sick and obese people as citizens, and profit out of it. To me that borders insanity. Sorry I forgot that humane society is for homeless cats and dogs, not humans. Humans… they will take care of themselves, “let each of us ask—not just what will government do for me, but what can I do for myself?”. Nixon… right? Meanwhile my medical insurance alone is almost as much as a new car payment, and then there are deductibles… and so on and on… “The fortune of the drowning is in his hands” right?

  27. 27
    richard macdonald Says:

    Banning anything is foolish. No one in a dark climate will want to spend a winter under those depressing cf light waves. They are totally devoid of warmth. A mix of cf and incandescent is good. how about discouraging all those all night outdoor mercury vapor lights everyone had to buy a decade or so ago, or mega mall parking lots lit all night, or store lights burning all night , or roads lit like daylight. Turn off one out of three street lamps. Invent motion detector switches that turn off lights in unpopulated rooms. There is so much waste that it’s criminal and it would affect no one’s lifestyle to eliminate half of it NOW. How about the vast mercury pollution from billions of cf bulbs carelessly discarded.

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