Will Bush's Energy Plan Help Consumers?

While much of President Bush's energy plan aims to increase the country's long-term power supply, the proposal also contains some tax credits intended to help consumers in the here and now.

Among the possible incentives for individual consumers: $4 billion in proposed tax credits for the purchase of hybrid gas-and-electric cars, and a tax credit of up to $2,000 for installing solar panels in homes.

The plan also proposes a $300 million increase, to $1.7 billion, for a federal program that helps poor families pay their household energy bills, and recommends $1.2 billion over 10 years for the Weatherization Assistance Program, which helps insulate homes of low-income families.

And the Bush plan also recommends continuing the Environmental Protection Agency's "Energy Star" program, instituted by President Clinton in 1992, which alerts consumers to fuel-efficient products.

Instant Impact?

Through these measures, Bush said while introducing the plan in Minnesota on Thursday, he intends to give Americans the financial means to "expand the diversity of our energy supply."

But environmentalists and energy experts are not necessarily persuaded that the measures they see in the administration's report are the best way to help consumers.

"There are some good elements," says David Hawkins, a program director at the Natural Resources Defense Council in Washington, "but they're consigned such a small role, they don't really leave the consumer better off … in the big picture, the plan does not do enough to lower energy costs, by getting manufacturers to make more energy-efficient automobiles and appliances."

Like all tax measures, these credits and spending measures would have to gain congressional approval — at a time when Congress already has been battling Bush's proposed tax cut. Only then would consumers reap the benefits.

There are limitations imposed by the marketplace, as well. For instance, there are currently only two models of hybrid car available in the United States: the Toyota Prius, a four-door sedan, and the compact Honda Insight.

Detroit's big three automakers — General Motors, Ford and DaimlerChrysler — all have long-range plans to roll out hybrid versions of their most popular models, which would use engines that use a combination of gas and electric power, switching from one to the other while the car is running.

But the automakers say a five-year production cycle means they will not start producing hybrids right away. Ford and DaimlerChrysler are planning hybrid versions of some of their SUVs, to be rolled out from 2003 through 2005, while Chevrolet is planning to produce hybrid versions of two full-size pickups, the Silverado and Sierra, in 2004. Honda has a hybrid version of its popular Civic in the works.

Fun With the Sun

Then there are the solar panel tax credits. The Bush administration's plan recommends that Congress pass a tax credit covering 15 percent of the costs of installing solar panels, up to a maximum of $2,000.

Residential solar heating systems can cost from $5,000 to $25,000 to install, depending on the amount of power required. But that's not the only problem consumers face when trying to go solar.

"There are a number of barriers to installing solar panels," says Virinder Singh, research director for the Center for Renewable Energy and Sustainable Technology in Washington. "Offering money to consumers is nice, but without dealing with onerous barriers, a tax credit will do consumers little good."

Among the problems Singh points to: heavy insurance fees for solar panels, complicated utility contracts that discourage consumers and the reluctance of installers to deal with unfamiliar equipment. He thinks a more effective policy would address these issues, as some states, including California and Rhode Island, have done.

Star Treatment

The report also calls for EPA head Christie Todd Whitman to "develop and implement a strategy to increase public awareness of the sizeable savings that energy efficiency offers to homeowners across the country."

That means publicizing the Energy Star program, which labels products — appliances, office equipment, and even home-construction parts — that are highly energy efficient, and is looked upon as a success by former administration officials.

"There has been steady progress in efficiency," says David Doniger of the NRDC, who led the Clinton administration's EPA studies of climate change. "These standards have been leveraging up all those kinds of equipment … the Energy Star programs really work."

Bush's energy plan says that homeowners can cut their energy bills by 30 percent, or an average of roughly $400 a year — although Hawkins argues that keeping the program intact "is not enough, because it's on top of a rollback in air-conditioning efficiency standards [by the Bush administration] that will cost consumers more in the long run."