Eliminate the Department of Energy's Grants to States for Energy Conservation and Weatherization

The Weatherization and Intergovernmental Program, which is administered by the Department of Energy (DOE), provides grants that help fund state and local government programs for energy conservation and the weatherization of buildings. Some grants provide low- income households with insulation, storm windows, and weather stripping. Institutional grants help reduce energy use at educational, municipal, and health care facilities and fund local efforts to encourage private investment in building improvements. Other grants support efforts by state and municipal governments to establish energy- efficiency standards for new and remodeled buildings and to promote energy-saving practices such as carpooling and the use of public transportation. In 2010, DOE received regular appropriations of about $230 million to provide grants to states and municipalities for energy conservation and building weatherization. The American Recovery and Reinvestment Act of 2009 (ARRA, Public Law 111-5) provided an additional $8.1 billion.

This option would eliminate new funding for the grants that DOE provides to state and local governments through its Weatherization and Intergovernmental Program. Ending that funding would save about $900 million over the next five years and more than $2 billion over the 2012-2021 period.

One rationale for eliminating new funding for the grants is that the funding provided in 2009 should be sufficient to cover several years' worth of weatherization activity; the appropriation provided by ARRA was roughly eight times the normal amount of funding provided in an average year for weatherization activities across all federal programs. Another rationale is that other federal programs--such as the Low Income Home Energy Assistance Program, which is administered by the Department of Health and Human Services, and DOE's own Building Energy Codes Program--are doing similar work. Moreover, direct federal funding may encourage state and local governments to reduce their own support for energy conservation and weatherization and to redirect that support to other uses. In the extreme, if federal funding simply substituted dollar-for-dollar for what a state or local government otherwise would have spent, then that federal spending would have no net effect on energy conservation.

One argument against such a policy change is that many states rely heavily on federal grants to improve the energy efficiency of low-income housing and public institutions. Eliminating DOE's energy conservation and weatherization grants could make it harder for states to continue to promote such efforts. A second argument is that the grants support policies the federal government should consider a priority--specifically, those designed to reduce emissions of greenhouse gases and other air pollutants from natural gas and electric power generation. Eliminating the DOE grant program could result in fewer resources being allocated for such purposes. Finally, weatherization and energy conservation limit the effects that higher energy prices have on public and household budgets. Ending DOE's grants would have a particularly adverse impact on the programs' beneficiaries--primarily low-income households (who devote a larger-thanaverage share of their income to energy bills) and public institutions--especially if energy prices were to rise over time.