Publications

Overview

President Bush signed into law the Energy Independence and Security Act of 2007 (EISA) on December 19, 2007.^[i] The new energy legislation does not implement sweeping changes for renewable and fossil energy, but it does have far-reaching implications in other areas, including the automotive, fuels production, agribusiness, appliance manufacturing, and building design and construction sectors. Vehicle fuel economy must improve substantially by 2020 to meet prescribed standards. Biofuel production must increase ninefold by 2022 to meet the renewable fuel standard for gasoline. Numerous electric appliances and products are subject to new minimum efficiency standards. Federal agencies must reduce their energy consumption by 30 percent within eight years, and new commercial buildings are targeted to produce as much energy as they consume by 2030.

EISA comprises 16 titles, each covering a substantive area of energy policy. This bulletin provides an overview of the significant areas of the legislation. Detailed bulletins on key sections will be issued in the near future.

EISA represents a Senate compromise to overcome a filibuster and threatened presidential veto. The legislation as passed does not contain provisions from the House of Representatives' version of the bill that would have established a renewable portfolio standard and eliminated a number of tax breaks and depreciation allowances that were granted to the five largest oil and gas companies in 2004 and 2005. EISA does, however, contain new standards for vehicle fuel economy, as well as provisions that promote the use of renewable fuels, energy efficiency, and new energy technology research and development.

Vehicle Fuel Economy – CAFE

Prior to EISA, Congress had not raised the corporate average fuel economy (CAFE) standard for passenger cars since 1975. Under the EISA provisions, the combined fuel economy of passenger and non-passenger vehicles between model years 2011 and 2020 must average at least 35 miles per gallon (mpg). The minimum standard for passenger vehicle fuel economy is 27.5 mpg.

EISA also calls for the establishment of the first-ever efficiency standards for medium- and heavy-duty vehicles. The secretary of transportation is responsible for increasing the fuel economy standards for these vehicles at the maximum feasible rate. A separate fuel economy standard will be developed for work trucks.

The secretary is also authorized to create a CAFE credit trading program. This program will allow manufacturers whose vehicles exceed the prescribed fuel economy standards to earn credits that can be sold to manufacturers whose vehicles fail to achieve the standards. These credits can also be transferred within a manufacturer's own fleet to a vehicle category that fails to achieve the prescribed standards.

Renewable Fuel Standard – Biofuels

The new energy legislation was designed to reduce U.S. dependence on foreign oil by increasing the supply of alternative fuels sources. EISA seeks to increase the supply of biofuel by requiring fuel producers to use in the fuel mix a progressively increasing amount of biofuel, culminating in at least 36 billion gallons of biofuel by 2022. (See Table 1) The U.S. Environmental Protection Agency (EPA) is required to revise its regulations to ensure that transportation fuel sold in or imported into the United States contains at least the applicable quantity of renewable fuels. Although those revisions have not yet been developed, responsible parties under the current EPA regulations relating to biofuels include large refiners, blenders, and importers of gasoline, and exclude small refiners.EISA differentiates between "conventional biofuel" (corn-based ethanol) and "advanced biofuel." Advanced biofuel is renewable fuel, other than corn-based ethanol, with lifecycle greenhouse gas emissions that are at least 50 percent less than greenhouse gas emissions produced by gasoline or diesel. Beginning in 2016, a progressively increasing portion of renewable fuels must be advanced biofuels, such as cellulosic ethanol. (See Table 2) Environmental protections have also been included in EISA to prevent the increased use of biofuels from damaging air or water quality.

Energy Efficiency – Lighting and Appliance Standards

The new law contains many provisions setting new minimum efficiency standards for an array of products and appliances, including dishwashers, dehumidifiers, residential boilers, electric motors, incandescent lamps, external power supplies, and walk-in coolers and freezers. EISA also directs the Department of Energy (DOE) to conduct new rulemakings on residential refrigerators and clothes washers, and on the standby power use of currently regulated appliances, and to revise all standards and test procedures on a regular basis.

EISA includes a mandate that common light bulbs use 20 percent less energy than current incandescent bulbs by 2012, and 30 percent less energy by 2014. DOE is also required to conduct a rulemaking to set standards that will reduce light bulb energy use to no more than about 65 percent of current levels by 2020.

Building Efficiency – Government, Commercial and Industrial

EISA requires improved energy efficiency in federal and commercial buildings. Federal agencies are required to reduce their energy consumption by 30 percent by 2015, thereby saving natural resources and taxpayer dollars. The new law also permanently authorizes Energy Savings Performance Contracts (ESPCs), an innovative financing tool for upgrading the energy efficiency of federal buildings.

EISA authorizes DOE to implement a new program, the Commercial Buildings Initiative (CBI), to be designed with input from an industry consortium. This program will combine research, development, and deployment activities designed to achieve the goal of making all new commercial buildings "zero energy" by the year 2030. Zero energy means that, on a net basis, the facility produces as much energy as it uses.

Research and Development – Solar, Geothermal, Marine and Carbon Sequestration

EISA promotes accelerated research and development of alternative energy resources, primarily focusing on solar, geothermal, and marine energy technologies, along with carbon sequestration. However, extensions of the Production Tax Credit and a national renewable portfolio standard for electricity were not included in the final legislation.

The advancement of solar power includes training to develop a skilled workforce to install and maintain solar energy equipment, and research and development to improve technologies to store solar power. EISA authorizes research and development for technologies to locate and develop geothermal energy resources, and requires a nationwide assessment of geothermal resources.

EISA supports the use of carbon capture and sequestration as a cleaner way to use the nation's coal resources, and authorizes a nationwide assessment of geological formations capable of sequestering carbon dioxide underground. EISA also provides grants to develop technologies for large-scale carbon dioxide capture from industrial sources.

Endnotes

[i] Pub. Law No. 110-140

Table 1: Renewable Fuel Requirements

Table 2: Advanced Biofuel Requirements

For More Information

Please contact Peter C. Lesch or Michael J. Zimmer for more information.

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