On Energy Efficiency Day, Advocates Strive to Connect Incentives to Carbon Successes

In Brief

Saving energy and saving money can motivate much of the repowering investment America needs to climb out of the Covid recession. 

Many utilities offer incentives and discounts to ratepayers who save energy, but the scale of efficiency incentives has a ways to climb. 

As we focus on efficiency's potential to drive up innovation and drive down carbon, this summary looks through what the technique can achieve to discern where it's falling short and how it can rise. 

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Dominion in Utah, like most utilities, makes energy efficiency look simple and costless. 

Energy efficiency improvements, to building engineers, look like free savings: they prevent costs and carbon while helping appliances and networks endure. Yet as a recent panel showed, sparking enthusiasm for wide-scale efficiency programs remains a tricky business. 

Programs for energy efficiency save a few cents per kilowatt-hour on an average consumer’s bill, creating small increments that can hide in the shadows of new solar arrays or wind farms. But policies that require landlords to measure buildings’ energy use and correct energy waste can add up to real carbon impact. They can also lower energy prices for the low-income ratepayers who sometimes have to choose between electricity and food. On the American Council for an Energy-Efficient Economy’s “Energy Efficiency Day” this October 7, participants in a virtual conference pressed for federal laws in process that they said could create jobs, save money and tamp down carbon all at once. 

The panelists placed Covid-19’s warping effect on the economy and its long-term legacy as reasons to invest broadly in efficiency. Office building use will reset to lower occupancy, they said, and residential energy burdens will hurt people who've lost jobs. They urged practitioners to speak up for laws that would motivate landlords and cities to agree on advancing building codes and standards. Staffers for Senator Jeanne Shaheen (D-NH) plugged the bill their boss had drawn up with cosponsor Rob Portman (R-OH) as a commonsense, bipartisan and business-friendly baseline. But with lawmaking slowed in a Congress gripped by Covid and contentiousness, energy efficiency leaders highlighted business opportunities to save carbon without adding new power supplies. 

The Council’s executive director, Steve Nadel, framed the discussion optimistically. He said that efficiency alone, if running at capacity, can reduce greenhouse gas emissions by half in the next thirty years. Shaheen staffer Janelle DeLuccia put in that it can deliver “half a billion dollars in health benefits.” The trick to scaling efficiency programs lies in focusing benefits to the economic agents who care about them. 

Landlords rarely see incentive to tune up their building systems if tenants pay most energy costs. Clay Nesler of the Alliance to Save Energy told panelists that tenant expenses on electricity have kept claiming a big share of energy costs even with office buildings empty. “An ordinary building that’s completely empty can only reduce energy use by 25 percent, and green ones are reporting reductions of up to 50 percent,” he said. “The Empire State Building is essentially empty and energy use only went down 28 percent as servers are spinning, hosting Zoom and Teams.” 

Broader savings, then, can come from agreements between landlords and tenants or from policies. The Council’s marketing for the day included “scorecards” for cities on energy-efficiency policy, which helped describe the challenge’s shape. “Star” cities like New York collect data from building owners. Low-scoring cities like Augusta, GA don’t systematically analyze such data- and crafting programs that make actionable sense of building data can take years. 

Nadel stayed optimistic. Code improvements have cut [aggregate] energy use in buildings by about half, he said, “even with Covid.” He pointed to programs promoting home efficiency from Consumers Energy in Michigan, Dominion Energy in Utah, and 18 other utilities. For upgrades to larger existing buildings, he conceded that an overall “green recovery” package of economic support “seems to be dead” until after the presidential election- and pointed to sharper building performance standards in St. Louis, New York City, Washington, DC and the state of Washington. 

On the merits, Nadel underlined, investment of $83 billion in recommended efficiency steps can save $123 billion and create 600,000 jobs.  On establishing clear benefit from this kind of investment when landlords and tenants follow different economic logic, paths forward look more contingent. 

In residential buildings, the path forward looks fraught. Panelist Khalil Shayd, senior policy advocate for the Energy Efficiency for All project at the environmental organization NRDC, spoke of shutoff dangers facing 180 million Americans, with shutoff bans in place in only a minority of states. This highlights the case for making appliances, gas and electricity cheaper- another result of making them less wasteful. 

Policy instruments have emerged to deal with this risk, too. Virginia’s legislature, for instance, passed a measure in April tagging half the proceeds from its share of the Regional Greenhouse Gas Initiative to support energy efficiency programs for low-income people. The price of carbon tons on the exchange remains at $6.82 per allowance as of September 4: the exchange will auction allowances next on December 2. 

Between now and then, the scheduled presidential contest should produce a winner, which would clarify odds for policies like the Shaheen-Portman Act. Given the uncertainty clouding national politics and election outcomes, innovators and activists in clean energy might look to cities that go beyond ACEEE’s scorecard kudos for collecting data. 

Cities that own their utilities have evolved means to encourage landlords to improve efficiency in offices and homes, including through programs that let residents repay improvements with energy savings. In this series’ next step, we’ll look at how Austin, TX and Gainesville, FL evolved such programs-and at how investor-owned utilities might be learning to play the same game. 

 

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