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Melanie KenderdineDIRECTOR, FOR ENERGY POLICY AND SYSTEMS ANALYSISENERGY POLICY AND SYSTEMS ANALYSIS
David FriedmanASSISTANT SECRETARY (ACTING), ENERGY EFFICIENCY & RENEWABLE ENERGYOffice of Energy Efficiency & Renewable Energy
Mark MccallEXECUTIVE DIRECTOR, LOAN PROGRAM OFFICELoan Programs Office
Dr. Franklin (Lynn) M. OrrUnder Secretary for Science and EnergySC
FY 16-17: Agency Priority Goal
Energy Policy
Priority Goal
Goal Overview
Overview of the Efficiency Standards part of the goal:
Residential and commercial buildings consume approximately 40 percent of the primary energy consumed in the United States. This amounts to over 39 Quads of primary energy used by the buildings sector per year, an amount that is greater than the yearly energy consumption of either the industrial or the transportation sector. By developing minimum energy efficiency standards, as mandated by legislation, the Energy Department’s Equipment Standards and Analysis program helps reduce energy costs for consumers and businesses by billions of dollars, as well as associated energy use and emissions. Savings from these standards free up money to be spent elsewhere, spurring economic growth.
By covering a broad range of equipment—appliances, refrigeration, space heating and cooling, water heating and other electrical equipment—the DOE's work with standards development and implementation increases energy efficiency in the residential, commercial, and industrial sectors. National standards that eliminate the least energy-efficient products from the market, ensure that energy saving technologies are accessible to all consumers, provide manufacturers with a single set of requirements rather than an array of potentially conflicting state and local regulations, and drive technology and cost improvements.
The Department of Energy uses three strategies to drive building energy efficiency, focused first on research and development of the most promising emerging technologies, followed by industry support activities such as Better Buildings and ENERGY STAR, and then implementation of equipment energy efficiency standards.
As mandated by the Energy Policy and Conservation Act of 1978 (as amended), the Department’s Equipment Standards and Analysis program is developing and enforcing efficiency standards and test procedures to cover at least 75 percent of the energy used in the building sector. Under current law, covered products are responsible for 82 percent of residential building energy consumption, 67 percent of commercial, and approximately half of industrial. DOE promulgates energy conservation standards that are technically feasible and economically justified, subject to the Energy Policy and Conservation Act’s (EPCA) seven factors. In determining whether a standard is economically justified, DOE determines whether the benefits of the standard exceed its burdens by, to the greatest extent practicable, considering these seven factors:
(1) the economic impact of the standard on the manufacturers and on the consumers of the products subject to such standard;
(2) the savings in operating costs throughout the estimated average life of the covered product in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered products which are likely to result from the imposition of the standard;
(3) the total projected amount of energy, or as applicable, water, savings likely to result directly from the imposition of the standard;
(4) any lessening of the utility or the performance of the covered products likely to result from the imposition of the standard;
(5) the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard;
(6) the need for national energy and water conservation; and
(7) other factors the Secretary considers relevant.
To maximize energy savings subject to EPCA, the Standards subprogram first meets all statutory and other legal deadlines for completing standards and test procedures. The Department is also committed to streamlining the process for developing and issuing rulemakings in partnership with industry and other stakeholders. In order to expand coverage to new products, EPCA requires that these products consume at least 100 kilowatt-hours of electricity per household per year. To determine which products should be added through coverage determinations, DOE conducts analyses that examine the energy savings potential of various unregulated residential appliances, electronics, and commercial equipment while considering the impact of non-regulatory energy-efficiency programs currently available in the market. In addition to these actions, DOE also develops test procedures for ENERGY STAR, which is an effective non-regulatory program that saves consumers energy. By taking these actions, the Department’s Equipment Standards subprogram will contribute to the Department’s broader efforts to help buildings and industrial facilities reduce energy use and save costs.
The Department is working to address a variety of different challenges associated with this work, including:
Standards require a robust test procedure to be effective.
Changes to the statute or its legal interpretation and the need for additional information uncovered during the review process are factors that can affect the schedule for final issuance of the standards.
Energy price, product cost and consumer use projections vary and must be factored into the rulemaking process.
Stakeholder Engagement: Energy conservation standards are established by a four-phase rulemaking process: a framework phase, preliminary analysis phase, notice of proposed rulemaking (NOPR), and final rule. The Department actively encourages stakeholder participation and interaction at all stages of the process. Early and frequent interactions among stakeholders have been useful for providing a balanced discussion of critical information required to conduct the analysis to support any standards. Stakeholders include equipment manufacturers, building owners, State energy agencies, Utilities, Trade Associations and other interested parties.
The Department also coordinates with the Federal Trade Commission (FTC) and the Environmental Protection Agency (EPA) on key certification and compliance issues with the Energy Guide Label and ENERGY STAR, respectively. The Department of Energy has also engaged with non-governmental organizations, such as the Collaborative Labeling and Appliance Standards Program, on international harmonization with respect to certification and compliance requirements.
Overview of the Loans Guarantees part of the goal:
As part of the President’s Climate Action Plan, the Loan Programs Office (LPO) issued the Advanced Fossil Energy Projects Solicitation, which makes up to $8.5 billion in loan guarantees available to support innovative, advanced fossil energy projects in the U.S. that reduce, avoid, or sequester greenhouse gases.
Fossil fuels currently account for more than 80 percent of U.S. energy production and are projected to remain a significant energy source in the future. As a result, President Obama’s Climate Action Plan announced that LPO would issue this solicitation to accelerate the deployment of cleaner fossil energy technology. This is an important part of the Administration’s long-term plan to achieve a cleaner and more secure energy future as part of its “all-of-the-above” energy strategy
Overview of the Quadrennial Energy Review (QER) part of the goal:
In January 2014, President Obama issued a Presidential Memorandum that initiated a review process to provide a multi-year roadmap for U.S. energy policy known as the Quadrennial Energy Review (QER).
The QER is envisioned as a focused, actionable document designed to provide policymakers, industry, investors, and other stakeholders with unbiased data and analysis on energy challenges, needs, requirements, and barriers that will inform a range of policy options, including legislation. Each installment of the QER will analyze and make recommendations for a key component of the energy value chain.
As directed by the President, the Department of Energy (DOE) provides analytical support for the QER and helps manage the interagency process through a Secretariat. These activities are consistent with DOE’s statutory responsibilities and reinforce the objectives of DOE’s Strategic Plan by supporting the first two components of Goal 1:
- Advance the goals and objectives in the President’s Climate Action Plan by supporting prudent development, deployment, and efficient use of “all of the above” energy resources that also create new jobs and industries; and
- Support a more economically competitive, environmentally responsible, secure, and resilient U.S. energy infrastructure.
Overview of the Quadrennial Technology Review (QTR) part of the goal:
The 2015 Quadrennial Technology Review (QTR) describes the Nation's energy technology landscape and the changes that have taken place since the first report in 2011. The 2015 QTR approaches the analysis from a systems perspective to explore the integration of science and technology.
Strategies
Strategies for the Efficiency Standards part of the goal:
The Energy Department has an established process for developing standards and test procedures that gives stakeholders several opportunities to review and comment on DOE’s approach. For a standard, DOE traditionally begins the process by publishing a framework document and hosting a public meeting to discuss issues such as scope and methodology. This is followed by a preliminary analysis, notice of proposed rulemaking (NOPR), and final rule. At each stage, public comments are incorporated into the downstream analysis.
The current 3-year energy conservation standard timeline was introduced in 2006 as a way to formalize and improve the rulemaking process. In 2010, the Department announced that it was implementing changes to accelerate the process, where possible. The details of the process change are posted online here: http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/changes_standards_process.pdf
The process change incorporates three key changes. First, in appropriate cases, such as faster updates to existing standards where much about the product is known, DOE will begin rulemakings in the NOPR phase, instead of during the Framework Document phase. This could save significant amounts of time off the baseline 3-year rulemaking timetable where significant stakeholder input has already been received prior to initiation of the formal rulemaking process. Second, DOE is attempting to make Federal Register notices simpler by posting technical details in the Technical Support Document (TSD), which is posted online. Third, DOE is encouraging negotiated rulemakings as a means to engage the public, gather data and information, and reach consensus among interested parties.
The particular rulemaking process for a given product rulemaking can include many steps including framework documents, preliminary analyses, and requests for information in order to gather additional data and feedback to better inform the rulemaking processes. By the time the Department reaches the final rule stage, the Department has usually spent years conducting analyses to ensure that the efficiency levels are technologically feasible and economically justified. Each product is unique in the requirements for some or all of these steps, but the Department has taken steps to streamline this process by making available electronically some or all of the data and/or eliminating these documents entirely in favor of electronic dissemination to all stakeholders.
Enforcement activities are also an important part of success. Issuance of an energy conservation standard final rule, by itself, does not comprise an effective standard. The Energy Department must also provide a reliable test procedure for manufacturers to measure the efficiency of their product against the standard. The Department is in the process of strengthening its standards by improving its certification and enforcement regulations. The emphasis on enforcement is important to ensure that the established standards are adhered to. As part of its enforcement activities, the Department reviews certification reports, conducts verification tests, and when necessary, coordinates enforcement tests that can lead to penalties for non-compliance.
Strategies for the Loans Guarantees part of the goal:
Applicants under the Advanced Fossil Energy Projects Solicitation must submit their application in two parts, “Part I” and “Part II”. To be considered for a particular Part I or Part II round of review, applicants must file their submission no later than 11:59 pm Eastern Time on the corresponding due date for that round. Part I of the application provides DOE with a description of the project. This information will be used as a basis for determining the initial eligibility of the project and the project’s readiness to proceed. The Part II submission may be filed at any time after DOE invites an applicant to submit its Part II submission. Mandatory criteria that DOE will use during each round of Part II reviews in determining which project sponsors/applicants will proceed to the next stage include: (1) whether the project provides a reasonable prospect of repayment of the principal and interest on the guaranteed obligation and other project debt; and (2) whether the guaranteed obligation and other project debt, when combined with amounts available from other sources, will be sufficient to carry out the Project. Other criteria that LPO will consider in evaluating applications include but are not limited to: (1) whether the Project could be fully financed on a long-term basis by commercial banks, institutional investors, or the capital markets without a federal loan guarantee; (2) whether the Project has identified a dedicated and appropriate Project site. Generally, a Project is restricted to one location within the United States. However, DOE may, in its discretion, consider an Application for a Project using a particular technology that is proposed to be situated in more than one location in the United States if multiple locations are integral components of a unitary plan, necessary to the viability of the Project, and at least one of the locations is identified in the Application; (3) the level of NEPA review required by DOE; (4) whether the Guaranteed Obligation is expected to be senior-secured debt; (5) the best use of the loan guarantee (i.e., Applications that demonstrate the most efficient and competitive uses of the loan guarantee); (6) the Project Sponsor’s experience in the development of Advanced Fossil Energy Projects including experience in securing project financing, project due diligence, developing, designing, equipping, building, interconnecting, contracting for the sale/purchase of energy, and commissioning of the assets; (7) and the extent the Project uses partial guarantees and/or co-lenders. The use of partial guarantees and/or co-lenders will be viewed favorably by DOE.
Information supplied in Part II will be used by DOE to make decisions as to whether to continue due diligence. Projects that successfully complete the due diligence, underwriting, and negotiations necessary to develop an acceptable term sheet may be offered a conditional commitment for a loan guarantee. Such projects will then undergo a complete underwriting process. If the underwriting (including due diligence) and negotiations of financing documents are successful, the projects may be awarded a loan guarantee. Additional detail on this process can be found in the solicitation:
Loan Program Office’s ability to achieve this goal is subject to the quality and number of applications submitted in response to the solicitation. If the applications submitted in the initial rounds of the solicitation are for projects that are not ready to proceed, do not have a reasonable prospect of repayment, or are not otherwise eligible, LPO may not be able to award, by the end of FY 2017, all of the $8.5 billion in loan guarantees for advanced fossil energy technologies that reduce greenhouse gas emissions.
Strategies for the Quadrennial Energy Review (QER) part of the goal:
First Installment of the QER
In April 2015, the White House released the first installment of the QER (QER 1.1), which focused on energy transmission, storage, and distribution. QER 1.1 proposes 63 recommendations that encompass a wide variety of topics and require different methods of implementation (e.g., executive action, legislative authorization, etc.). In order to gauge the rate of implementation, Secretary Moniz directed the Office of Energy Policy and Systems Analysis (EPSA) to create a 6-month report card. This document provides detailed information about the status of each recommendation, barriers to implementation, and proposed timelines for implementation.
Work is currently underway to implement QER 1.1’s recommendations. Of the 63 proposals in the report, 37 are managed by DOE, 11 are managed by other Executive agencies, and 15 require authorization or appropriations from Congress. While DOE is actively implementing the 37 recommendations under its direct control, the Department is limited in how much it can influence the actions taken by other Executive agencies and Congress to execute the remaining 26 proposals. These initiatives are substantial in that they account for two-fifths of the QER’s total recommendations and approximately $8.3 billion–$11.3 billion in suggested funding. In addition, the level of effort required to implement the recommendations has been tremendous and more involved that EPSA originally anticipated.
Second Installment of the QER
To kick-start work for the second installment of the QER (QER 1.2), EPSA established a more robust QER Secretariat by incorporating many of the lessons learned from the QER 1.1 process. These include early and frequent interaction with internal DOE and external executive agencies, a more streamlined stakeholder engagement process, and recognizing value in publishing key reports along the way to incorporate feedback and solicit buy-in from stakeholders.
In the last quarter of FY15, DOE worked closely with the White House to determine the scope and timeline of QER 1.2. The report will be an integrated study of the electricity system and is expected to be published in late 2016.
Strategies for the Quadrennial Technology Review (QTR) part of the goal:
The 2015 QTR has already resulted in improved coordination and communication across the DOE science and energy programs. Further, it has served to describe the opportunity space for Federal investment. The outcomes of the QTR analytical effort will be fully incorporated into the Administration's FY 2017 budget.
Q4FY15 - Submission of DOE budget that aligns with technology and research areas identified through the Quadrennial Technology Review
Q2FY16 - Settlement with OMB and release of DOE budget that incorporates technology and research priorities identified through the QTR
Progress Update
Progress Update for the Efficiency Standards part of the goal:
DOE published one standard ahead of schedule in CY15, reducing the CY16 target from 14 standards to 13, which DOE expects to meet by the end of the calendar year. The agency estimates that all of the appliance standards and federal building energy efficiency rules issued since the beginning of this Administration will achieve 2.2 billion metric tons of CO2 reductions by 2030. The remaining rules to be issued in CY 16 are expected to meet the Climate Action Plan target of 3 billion metric tons.
Progress Update for the Loans Guarantees part of the goal:
The Title XVII innovative clean energy projects (Title XVII) loan program provides loan guarantees to accelerate the deployment of innovative clean energy technology. The Title XVII loan program applies to a wide range of technologies, including advanced fossil energy, nuclear energy, renewable energy and energy efficiency. LPO is current accepting applications in response to open Title XVII solicitations. Potential applicants are encouraged to submit complete applications before any applicable deadline. The LPO team will begin reviewing application materials as soon as they are received.
The ATVM loan program has an open application process.
Applications have been received and substantially completed applications potentially can move on to the due diligence review process.
Alcoa was issued a conditional commitment in 2015 for a loan approximately totaling $259 million.
Progress Update for the Quadrennial Energy Review (QER) part of the goal:
First Installment:
EPSA collaborated with the White House to monitor the status of recommendations from the April 2015 QER. Fourth quarter accomplishments include:
Implementation of 17 additional recommendations for a total of 29 complete.
Second Installment:
EPSA continued working with the White House and interagency partners to implement the second installment of the QER. Fourth quarter accomplishments include:
Completing the analytical phase and conducting interagency coordination.
Progress Update for the Quadrennial Technology Review (QTR) part of the goal:
Completed synthesis and integration of QTR analytical input into FY 2017 Request and released the Budget to Congress on February 9, 2016. This is the final milestone for this goal.
Next Steps
Next Steps for the Efficiency Standards part of the goal:
DOE works simultaneously on standards development for multiple product classes, prioritizing its activities based on which energy conservation standards are technically feasible and economically justified, as determined by the Energy Policy and Conservation Act’s (EPCA) seven factors. Each of these product classes goes through multiple development stages for both test procedures and standards, typically including a framework document and public meeting to discuss issues such as scope and methodology, followed by a preliminary analysis, a notice of proposed rulemaking (NOPR), and a final rule. This established process gives stakeholders several opportunities to review and comment on DOE’s approach. At each stage, public comments are incorporated into the downstream analysis, with progress dependent upon DOE’s continued determination of cost-effectiveness and technological feasibility. Because each stage of rule-making is a deliberative process involving stakeholder input and ongoing analysis, this Priority Goal has internal milestones in addition to indicators for assessing progress. The rule-making process itself will be conducted in a rigorous, publically vetted manner. For any given product, active work on these proposals and final standards can take multiple quarters.
Next Steps for the Loans Guarantees part of the goal:
- LPO will continue outreach efforts with interested parties to receive more loan applications
- LPO will continue timely and responsive review of applications to determine if applicants can proceed to consideration for conditional commitments
- LPO will continue conducting thorough financial, programmatic, and technical assessments of projects to appropriately issue conditional commitments
Part I: open through Nov 30, 2016
Part II: open through Nov 30, 2016
Next Steps for the ATVM loan part of the goal:
The one applicant with a conditional commitment is awaiting the outcome of its corporate restructuring before LPO can issue a closing agreement.
LPO will continue outreach efforts with interested parties to receive more loan applications.
LPO will continue timely and responsive review of applications to determine if applicants can proceed to consideration for conditional commitments.
LPO will continue conducting thorough financial, programmatic, and technical assessments of projects to appropriately issue conditional commitments.
Next Steps for the Quadrennial Energy Review (QER) part of the goal:
- Continue implementing recommendations from the first installment of the QER.
- Publish the second installment of the QER.
- Inform the QER’s analytical content by hosting four additional technical workshops: 1) Best Practices for State Policies to Enable Carbon Capture and Sequestration; 2) Current State of Electricity Valuation Issues and Practices; 3) Financing Clean, Resilient, and Affordable Energy; and 4) Energy Productivity.
Next Steps for the Quadrennial Technology Review (QTR) part of the goal:
Goal Complete. Finalized the budget request and supporting materials
Contributing Programs & Other Factors
Building Technologies Office (BTO)
As envisioned by Congress, national standards that eliminate the least energy-efficient products from the market ensure that energy saving technologies are accessible to all consumers, provide manufacturers with a single set of requirements rather than an array of potentially conflicting state and local regulations, and drive technology and cost improvements. Since the beginning of the Obama Administration, the Department has issued or codified new efficiency standards for more than 35 products.
Office of Information and Regulatory Affairs
The Department of Energy works closely with the Office of Management and Budget (OMB) Office of Information and Regulatory Affairs (OIRA) during the NOPR and final rule phases of the rulemaking process.
As part of the President’s Climate Action Plan, the Loan Programs Office (LPO) issued the Advanced Fossil Energy Projects Solicitation, which makes up to $8.5 billion in loan guarantees available to support innovative, advanced fossil energy projects in the U.S. that reduce, avoid, or sequester greenhouse gases. Projects that LPO determines meet the eligibility criteria set forth in the solicitation may be selected for continuing due diligence, underwriting, and negotiations. Such projects must then obtain intra-agency and interagency approval before a conditional commitment and/or a loan guarantee may be awarded. External partners include the U.S. Treasury Department and the Office of Management and Budget.
Office of Energy Policy and Systems Analysis and other DOE Program Offices.
White House Task Force—co-chaired by the Office of Science and Technology Policy and the Domestic Policy Council—comprised of 22 Federal agencies with equities in energy.
Recommendation by the President’s Council of Advisors on Science and Technology (2011) and President Obama’s Climate Action Plan (2013).
No Data Available
