Well, thank you, Kateri. And, A, it’s true that I was here within a few hours of being sworn in last year, but perhaps you’ve forgotten the date. It was May 21st, 2013. So today is also the one-year anniversary and I’m back. And you, I guess you always have meetings on May 21st so it’s something to keep in mind.
It’s been quite a year across our entire mission space, sometimes called “weapons and windmills, quarks and quagmires.” But certainly on the energy front, the climate front, it’s been, of course, a major focus. I’ll come back to this, but obviously the President’s Climate Action Plan last June has given us a pretty clear agenda to move forward on. And recent reports, whether it’s our own climate assessment report or those of the IPCC a couple of months ago, have done nothing except reinforce the importance of that – of that agenda, and I’m not going to preach to the choir about the important role of the demand side of the equation for meeting those goals.
As you all know, Kateri already mentioned, the President, on the energy efficiency side, has set the doubling of energy productivity by 2030 as a goal. It just happens to be the same as the Alliance to Save Energy. What a coincidence that we both had that goal, but of course that means that we have a terrific opportunity for working together in – and going forward. And I think the commitment to work at the state and local level is one that we both share. We think that it’s certainly critical and, again, just reinforces again the opportunity to work together.
We’ll come back a little bit to this, but probably when we talk about that goal we can talk about how much is the numerator, how much is the denominator but, you know, in rough terms we’re probably talking about the challenge of, you know, the order of a 20 percent reduction in absolute energy use as the economy grows over that time period. So it’s a challenge.
On the other hand, that energy productivity pace of about 3.5 percent per year, compounded, is something that we came at least very close to in the decade from the late ‘70s to the late ‘80s. And we have not approached that since, so it’s time to get back to that pace over these next 15 years, with all that implies for our climate, our economic and our energy security goals.
I know that the meeting this year has a very, very strong international participation. I understand from perhaps the order of 50 countries – is that correct, Kateri? I don’t know.
Twenty-eight. Well, OK, a factor of two. But nevertheless, 28 clearly underscores obviously the importance of international collaboration. And I’ll just say that two of our very big challenges, climate and security, are both areas where we need collective response and not just response by individual countries.
The climate is obviously very clear but, maybe a bit of an aside here, but the current situation going on –the Ukraine and Russia, et cetera – just highlights the important role of, A, a collective response, and the role of efficiency in that response, since you don’t have to look too hard at the data from some of the countries in Eastern Europe who are the most at risk in terms of energy as a geopolitical tool to look at the fact that better energy intensity performance would eliminate, largely, the problem. So again, this is really at the core of really two of the very, very big international collective challenges that we have now.
Last week, actually on Saturday, I gave my first college commencement speech in Dartmouth, Massachusetts, at the University of Massachusetts in Dartmouth. It’s not a huge town, but it was very interesting to see what is happening in so many communities across the country. Here is this small town with the integrated efficiency and solar agenda. On the former, just completed, you know, converting all of their streetlights to LEDs – 1,600 street lights in a relatively small town, and a small town that is the leader in absolute terms in solar energy generation in the state. And I think, again, it kind of reminds us also of that important link as to how efficiency can enable more renewables, in my view, going forward, and perhaps vice-versa. And we’ll talk a little bit more about not-so-distant future travel, like tomorrow, to reinforce that same message.
Now, obviously we need to scale up that kind of performance nationwide. Actually I should say last week I was also in Vermont where, again, you’ve got plenty of examples of that integrated renewable and efficiency agenda. We know Vermont, for example, was really a pioneer in many ways, like Vermont Efficiency as an efficiency utility was set up. So really, really quite interesting.
Clearly we need to make this, as the president has said over and over again, a year of action to get that scale up. As you all know here, an efficiency bill, the Shaheen-Portman bill, appears to have very widespread bipartisan support but no pathway to implementation. And the House has kind of a companion bill, the McKinley-Welch bill – ultimately of course would need bicameral support.
And so I believe Senator Shaheen spoke here yesterday, and I presume with her characteristic eloquence, about the need to pursue energy efficiency. She’s clearly a very, very strong champion of the commonsense, low-cost tools being put forward. But obviously, let’s face it, we’ve seen a poor reflection on our current status of being able to move good governance forward. This reinforces the importance of the President’s We Can’t Wait agenda, that we’re going to just have to move with as many administrative tools as we can to keep momentum on both the demand and the supply side.
As I said, the president’s Climate Action Plan continues to motivate what we do, including pursuing the all-of-the-above approach to energy supply and continued carbon reduction, but again with very, very strong commitment on the demand side –on the energy efficiency side. So what I’ll do here – again, this is a very knowledgeable audience and I just want to hit a few of the issues particularly in the last year, since I only come here on May 21sts, to some of our focus areas and some of the things that we’ve done.
I’m sure you all saw less than two weeks ago the President in California focusing on, again, energy efficiency and solar with new commitments in the context of the Better Building Challenge, adding, as Kateri already mentioned, kind of the total square feet, but with these new commitments that was adding over a billion square feet to those commitments, at the same time that the commitments we’re talking about – adding almost a gigawatt of solar, again at that same time, but improving the energy efficiency of municipal and commercial buildings, multifamily housing, industrial plants, all aiming at the order of a 20 percent reduction by 2020, which is a nice acceleration of what I said earlier would be roughly a 20 percent reduction in absolute energy use that we need by 2030, in that ballpark, to meet the energy productivity goal.
Part of the action plan, the President called also for the creation of Better Buildings Accelerators, really targeted efforts to address some of the persistent barriers in the way of greater efficiency. Again, he announced the fourth of those accelerators, the Better Buildings Neighborhood plan, also part of that initiative, and I’m pleased to say that we have achieved 100,000 residential energy efficiency building upgrades through that neighborhood program.
And these are, you know, typically not high-tech, pretty simple fixes but with tremendous, tremendous cumulative impact. And with our partners at HUD, in five years together having weatherized, you know, going on 2 million homes and having a big impact there. So that neighborhood program is part of a partnership with over 40 state and local governments, who have pitched in with community-based drives, producing, again, an estimated energy cost savings of about $730 million, and good local jobs as well.
So related to this is also our Better Plants Challenge, which has signed up hundreds of manufacturers committed to reducing energy intensity by 25 percent by 2020. The Volvo Group is one of them, for example, with integrated commitments to, again, efficiency, renewable fuels and technology development to more efficiently utilize resources. Another company like Cummins in the challenge context, having already met their goals and kind of doubling down going forward.
In fact, in the manufacturing space I would just note that another of our initiatives, which really has an underlying energy efficiency driver, is that of our advanced manufacturing activities, for example in establishing hubs. A first was – and the President has talked about a very ambitious program to have many, many of these. We have – we started with the Department of Defense in supporting a hub on 3-D printing. The Department of Energy followed up in January with a hub on wide band-gap semiconductors, power electronics applications and the like. We have a solicitation out now for another one on advanced composite materials. All of these will contribute to more efficient manufacturing and producing components of efficient technologies. So this is really is part of our agenda.
In fact, if you look at the whole energy efficiency agenda and look at our fiscal year 2016 budget submission, you all know this is a very constrained budget environment. The discretionary funds available in 2016 are flat –if you count 0.2 percent increase in the budget compared to fiscal year ’15 – and yet we have proposed an over 40 percent increase in our efficiency budget. It’s really the place where we are looking to move more resources in at a substantial level.
Another important part, as you know, of the president’s Climate Action Plan was the directive to EPA for new standards on coal plants – new and existing – and of course the proposed rule for existing plants due out in June. EPA has conducted really extensive outreach to gather input and advice that has fed into crafting their upcoming existing power plant proposal. And, you know, they’re hearing about what works and what doesn’t, and energy efficiency is obviously a viable strategy to achieve carbon pollution reductions. And states and energy sector players have expressed their desire to be credited for that ongoing work in looking at a flexible response to the state requirements that will be proposed.
Kateri mentioned we have tried to pick up the pace on efficiency standards at the Department – if you go back to the beginning of the Administration now more than 30 household and commercial appliances: dishwashers, refrigerators, less than two weeks ago electric motors in walk-in coolers and freezers, for example. And we want to keep building on this momentum, keep up the pace. And I think you all know that we are projecting that as we keep up this pace, the efficiency standards accumulating one after the other over the administration, will lead to nearly a half a trillion dollars of energy cost savings up to 2030, the date of our energy productivity goal, and yours too, and about three gigatons of avoided CO2 emissions.
So again, these really accumulate, but it can only accumulate if we just keep up the pressure and keep getting these standards cranked out. And I have to say that it’s been a terrific partnership that we established shortly after May 21st last year, with the OMB and OIRA to really keep up this pace. So that certainly is our intent.
Another program I want to bring to your attention, the Loan Program, again, to help deploy energy-efficient, clean energy technologies. The department just issued a loan guarantee solicitation. We anticipate the order of $4 billion going out to projects that cover, again, both renewable and energy efficiency technologies, and sometimes hybrids of those, obviously looking for technologies that are replicable and kind of push the edge of commercial-scale development.
This is on top of our portfolio of over $30 billion of existing projects that are out there, and some of them, for example, one to Ford Motor Company in terms of retooling plants, especially in the context of meeting the higher efficiency standards coming down the road. One was helping the development of the EcoBoost engine to particularly improve pickup truck gas mileage by about 20 percent. And that was part of our advanced vehicles manufacturing program.
Then maybe six weeks or so ago, we spoke with the auto suppliers. They noted that a Secretary of Energy had never talked to the auto suppliers CEOs. But the message was about (how) we are open for business with this program and that the auto suppliers are quite eligible. And the point is we anticipate that there are going to be capital requirements, again, for retooling for the kinds of components needed to meet the CAFE standards for 2025, whether it’s, again, lightweight components, vehicles, low-resistance tires, advanced engines, you name it. And so again, we are out actively talking about how we can do this, and really, the context, again, is the efficiency, in this case in terms of the CAFE standards.
Maybe a little more surprising, again, one of the fun events, I have to say, that was eye-opening for me was visiting NASCAR, maybe three weeks ago. It’s been a lot of activity in these last weeks. And we don’t usually think about NASCAR in terms of, you know, energy efficiency or renewables. I don’t know why an 850-horsepower engine wouldn’t be viewed as highly efficient. But it was eye-opening in terms of the engineering and technical aspects of those. But what was very eye-opening was, first of all, I at least had not known that the NASCAR races are all run on E-15, and the green flag I waved has “ethanol” written on it, but also, they are doing a substantial effort in reaching out to their very, very large base of fans in terms of efficiency, clean energy, recycling, et cetera, and I think this is an example – we have an MOU with NASCAR, which is why I was there. I think we need to take advantage of every opportunity to reach out to groups and organizations that have a tremendous access to the base.
In fact, polls have shown that the NASCAR fan households are now ahead of the average American household in terms of things like efficiency and recycling. So, you know, a little lesson to reach out to NASCAR and other organizations of this type.
So those were a set of issues kind of in the automotive arena. Obviously, going to lighting, again, this audience is very well-aware of 70 percent of electricity in residential and commercial buildings. Lighting is a major issue, both indoor and outdoor lighting. And in fact, I’d just say that you may guess who we’re talking about, since I also had the opportunity to throw out a first pitch at Fenway on Earth Day, that we are in the early stages of talking with, let’s just say, some major sporting organizations about opportunities for efficient lighting. And this is, again, kind of interesting, and again, an opportunity, I think, to reach major parts of our population with these messages.
With lighting, I mentioned last week having been in Vermont. And another little surprise I got – I hadn’t checked in a few months on retail price of, you know, LEDs. Five years ago, you’re talking $20, $30. Last September we put out a report – we said $15. Then we checked a couple of months later, and it was $10. And now $4.97. It’s really incredible how this is dropping. The deployment is showing it, up, you know, getting close to 40 million. And we’re now below a year payback period at those prices. So this is really, I mean, I think, a tremendous development.
I mentioned this little town of Dartmouth, Massachusetts, but tomorrow I’ll be in Detroit, a somewhat larger city, to help inaugurate that city’s push to replace broken and obsolete street and park lights, a challenge for lots of cities. And you know, we heard that Detroit was preparing to replace those lights with conventional, inefficient equipment, trying to save money in the short term. So we provided technical assistance, and city officials arranged financing to install all LED lighting to reduce future costs, reduce carbon emissions, and, by the way, a move that is strongly endorsed by the law enforcement community.
So again, I think we’re seeing this really happening, and we just have to keep the pedal to the metal and keep pushing for this transformation.
Federal buildings – again, we keep pushing on that. We’ve been having about a 2 percent per year reduction in Federal building energy use, keep pushing on that. Terry already mentioned that the president, again, less than two weeks ago announced, on the ESPC front, a doubling to a $4 billion goal over the administration. We still haven’t hit quite the $2 billion goal in terms of signed ESPCs, although the pipeline is now considerably over 2 (billion dollars), but we’ve got to close it, and we’ve got to get $4 billion in the next few years.
So again, turning back to climate, in wrapping up, I’d just say that, again, we all know the risks. The recent Climate Assessment Report, I think, particularly has gotten attention by its focus on the regional impacts, and regional impacts that are already being experienced and will only get more severe. Indeed, of course, one of the drivers of the impacts comes around water, extreme downpours being more prevalent, certainly in my part of the country, New England, sea level rise in the Northeast, a foot, warmer waters leading to more intense storm surges and the like. We’ve seen that film run.
But I remind you, in terms of, again, the pace of change, I mentioned that in the LED retail price context, but the assessment report was done now even before last week’s news with regard to the Antarctic ice sheet. And we’re talking about potentially another 10 feet of sea level rise, and the implications of that would be not very pleasant, to put it mildly.
So that just takes us back to demand side as a critical equation. I said this last year, and I’ll say it again because it’s still true. I cannot see a credible resolution of our climate change challenges without an enormous contribution from the demand side of the equation. I just don’t think we can get there on the supply side of the equation alone. That’ll be important, but I think the efficiency side is what’s really going to have to drive a strong response.
So I’ll end by saying that, again, sharing our energy productivity goal is very important. In fact, yesterday the alliance really in many ways stimulated, for our scale, like two hours – a marathon meeting on energy productivity with all of our senior energy leadership across the Department. We will be – we are actively framing and will soon be able to talk about what we will be doing in sort of an institutional structure to try to – to try to help make sure we are staying together in reaching that goal within the department, within the Administration, but also with our key partners like here in the Alliance.
And so we’re looking forward to working with you over the next year, two years, 2 ½ years, at least a couple more May 21sts. Thank you.