An energy bill that Congress can and should pass

In last week's State of the Union address, President Obama issued a call to action to Congress to bring him an energy efficiency bill that will help manufacturers eliminate energy waste and give businesses incentives to upgrade their buildings. He promised energy savings of $100 billion over the next decade, with less pollution, more manufacturing, and more jobs - if Congress can enact the right legislation.

What legislation could deliver these benefits?

Let me start by saying that the following ideas all embody what I believe to be the most effective role for government to play in bolstering this industry and creating jobs - creating an environment of enablement, as opposed to purely investment. Tax credits to encourage energy efficiency programs will absolutely spur action. But there are a set of more lasting initiatives the federal government can advance that will encourage businesses to drive and fund these energy efficiency programs without placing burden on taxpayers.

It's clear our country has an energy problem, and both business and government have a role in fixing it. It's time for business to stop being passive when it comes to managing energy, and government can help. Here are four steps that can be taken to deliver on the promises made in the State of the Union address.

First - The federal government is the largest energy consumer in the country. It has taken some important steps to reign this in, including the recently announced Better Buildings Challenge. But the biggest change government could bring would be to apply the same principles to energy efficiency that help to educate consumers on the food that we eat and the products we purchase. A Federal mandate that all commercial buildings in the U.S. should be 'labeled' to reveal their energy efficiency would dramatically shift the discussion.

In the same way that a consumer reads the nutrition information on a box of cereal, building energy labeling would give businesses clear information about the efficiencies of the buildings they occupy, the factories they manage and the stores they own. This information would spur tenants to make informed decisions about where to rent, create competition in the building management community to use energy efficiency as a selling point, and drive public pressure to bring low efficiency buildings up to standard. The private sector should develop the measurement and verification standards, but the federal government can push this forward with a building energy labeling mandate.

Second - As the president discussed in his State of the Union, there are trillions of dollars of profits earned by U.S. businesses locked up in foreign countries. Repatriating those dollars would have a major impact on our economy, but the debate over how to do that effectively has raged for years and led to inaction. Here's a simple idea: Allow businesses to repatriate dollars with zero tax impact, if those dollars are used for energy efficiency programs here in the U.S.

If energy efficiency is a national priority, as the president suggested, let's treat it that way. Let's use dollars which are not serving U.S. interests at all by being locked up overseas to drive this national priority here at home. This would bring billions of dollars back to the U.S. - and ensure that those dollars go immediately into programs that help businesses save energy, and create tens of thousands of green jobs. This initiative would likely only represent a fraction of the trillions of dollars currently locked up overseas, so the debate over how to tax the rest of those dollars back can continue. But this simple step would have an immediate impact on the U.S. economy, energy efficiency and our energy independence.

Third - The Senate needs to pick up and pass Shaheen-Portman, and the House of Representatives should pass the energy efficiency bill being
advanced by Rep. Charles Bass (R-N.H). The bodies should then reconcile those bills and put the resulting bill on the president's desk. These initiatives, which already have bi-partisan support, would strengthen building codes, providing financing options for manufacturers, and require the federal government to improve its own energy management.

Fourth - There are initiatives the administration can take that will have a major impact on green jobs and energy efficiency that don't require Congressional action. We call on the Department of Energy, led by Secretary Chu, to sponsor a new training and awareness program for states and cities on the topic of performance contracting. Performance contracting is the cornerstone of the federal government's Better Buildings Challenge, upgrading buildings and making them more energy efficient at no cost to taxpayers. Some states and cities have leveraged performance contracting as well, but education and adoption at the state and local level is low. We would volunteer to co-sponsor such a training and awareness program, and I'm sure other energy services companies would support this program as well.

These four steps - three that require congressional action and one that the administration can drive - would kick-start the U.S. economy with tens of thousands of new jobs, millions of dollars in energy savings that can be funneled to economic development, and dramatic improvements in our pollution control and energy independence.

There's a clear case to be made for energy management programs. I've seen first-hand leading companies such as Macy's saving 30 percent of their energy costs with a typical return on investment of 1 to 3 years. The rest of the business community needs to stand up and recognize the dollars being wasted by their current lack of focus on how they use energy.

The president asked for action - it's time for Congress, the administration and the private sector to work together to make it happen.

Chris Curtis is the CEO of Schneider Electric North America.

COMMENT:

Edwin Loftus

A - "Tax credits to encourage energy efficiency programs will absolutely spur action." I agree. But permanent tax reductions will be just as enabling but without the intimmidation factor - ("If you don't do what we say, your taxes will be higher.") If "tax credits" will spur activity, how about tax reduction across the board to spur activity in all sectors of the marketplace? The only advantage limiting this to selective "tax-credits" provides is it lets the government pick which "energy efficiencies" it likes. Those may or may not be in the best interest of the people. Many of these so-called "efficiencies" lead to less energy efficiency than if the government did not artificially skew the incentives.

B - The first point has some sort of merit, but it misses the point it unintentionally makes. The federal government is the biggesst corporation in America. Reduce its size and we'll reduce its energy drain on the economy, a drain that is paid for through a financial drain on the economy. Offering the same reductions of taxes that the building refurbishers are asking to other companies would stimulate those industries as well and eliminate much of the need for these refurbisments.

C - There really isn't any debate over what will get the overseas capital back to the United States. They are there because it costs less for them to be there than it would for them to be here. Change that equation in ways that make it cost less to run their businesses here than there and they will come back. the President's plan is to raise taxes on all wealthy people and the businesses that support their wealth. If anything, that will make more of them decide to go overseas. in the face of all of that incentive to leave, he offers "tax-credits" to those who will return and hire Americans. That will only work if he offers them "tax-credits" huge enough to overcome the increased costs of his increased taxes. there is also less certainty in "tax-credits" than in tax-reductions. "Tax-credits" can be subsequently represented as "subsidies" and withdrawn more easily than tax increases. This increases uncertainty, another reason businesses are moving away.

D - Such building code "strengthening" will make building more expensive and for what? To make them safer? No. To make them more energy efficient in a nation that does not have any shortage of energy resources. Support opening energy development and eliminating unnecessary regulations and these bills won't be needed. Smart business people will opt for real improvements that save them money. Worthwhile energy efficiencies will find a market without this imposition by the federal government. The only reason these codes are neeeded is to force developers to buy products that aren't worthwhile until someone redesigns the law to make them required. This kind of self-serving proposal is killing our economy.

E - Your fourth suggestion is a really good way to propel the elimination of the Department of Energy, so I applaud you on this one. But there is no need to disguise this with the virtual lie that this will happen at no cost to the people. taxes aren't the only way we pay for these efforts to "design-manipulate" progress. you can't add cost without adding the need to recover costs. Whether it comes in tax increases or higher costs for consumer goods and services, the American people will pay for these unecessary changes.

F - Your concluding remarks are non-sequitor. If Macy's 3 year payback on systems that will last considerably longer than 3 years (I assume) is typical, then there is no need what-so-ever to ask for the government to waste its time and our money trying to force what companies will be pushing each other out of the way to get to anyway. The only reason this might need extra incentives from the government would be if this was not an honest presentation of typical savings. You wouldn't do that, would you?