EFFICIENCY—THE NEW ENERGY SUPERHERO & THE CHEAPEST CLEANEST ENERGY OF THEM ALL

The brilliant and celebrated Amory Lovins, also known as His Excellency of Energy Efficiency, likes to point out that the cheapest, cleanest megawatt is the negawatt, the one that is not used. Lovins has also said the authoritative source on the subject of efficiency – aside from his own Rocky Mountain Institute – is the American Council for an Energy Efficient Economy (ACEEE).

The ACEEE led a coalition of environmental and business groups in developing the newly released Reducing the Cost of Addressing Climate Change Through Energy Efficiency which details ways in which negawatts can be maximized through the climate change legislation now being fashioned by Congress.

Under the “leadership” of the Bush administration, the U.S. had no real policy on global climate change, although the public was encouraged in voluntary greenhouse gas emissions (GhGs) reductions. Towards the 8th year of the storm, the former Denier-In-Chief was slowly forced to face some reality as inevitability began to impose itself.

With science now returning to its rightful and necessary place in national policy making under President Obama and with Al Gore’s party returning to control in Congress, preparations are underway for substantial climate change legislation that will establish mandatory emissions reductions and put a price on GhG spew. An energy bill that will synchronize with the goals of the climate change bill is also expected.

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From the ACEEE website: “…it is looking likely that the legislation will use a cap and trade approach and call for 80% reductions in emissions by 2050 relative to 1990 levels. Details are very much up in the air…”

Both the House Energy and Commerce Committee (chaired by Congressman Henry Waxman, D-Calif) and the Senate Environment and Public Works Committee (chaired by Senator Barbara Boxer, D-Calif), are developing bills.

There is, of course, obstruction to the finally-emerging progress. Senator James Inhofe (R-Kansas), the ranking member on Boxer’s committee, may be the most recalcitrant and unreconciled climate change denier in the world. His failure to grasp the import of the science behind global climate change can only be described as willful ignoranance. He has, on the floor of the Senate, described the complex and sophisticated computer models of the world’s climate by which scientists are attempting to extend their understanding of what is going on as “video games.”

Of the many mischaracterizations of global climate change and the efforts to counteract it, deniers like Inhofe most readily win support with the lie that legislation to cap emissions will make electricity prices unaffordable. A public slightly baffled by the complicated science and the confusions deniers create by mischaracterizations of it understand clearly the half-truth that their utility bills might go up.

That’s why negawatts are so important.

Joe Loper, spokesman, Alliance to Save Energy (ASE): “Energy efficiency can slash greenhouse gas emissions at low cost and in large quantities. A carbon cap is essential to getting those savings but we don’t use all cost-effective energy efficiency now and we still won’t with a price on carbon…We need to design the program right to ring carbon from our homes, offices, industrial plants, and vehicles…”

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A recent report from Credit Suisse, a no-nonsense international investment bank, found that the best prices for new power generation (base case) come from geothermal ($36/megawatt-hour), wind ($43/megawatt-hour), natural gas ($52/megawatt-hour), coal ($55/megawatt-hour) and nuclear ($62/megawatt-hour). Energy Efficiency costs $15/megawatt-hour.

From the ACEEE report: “Experience in numerous states shows that efficiency improvements on average cost about 3 cents per lifetime kilowatt-hour saved compared to about 7 cents to over 13 cents per kilowatt-hour for conventional electricity generation.”

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To achieve efficiencies that will offset costs, the ACEEE report says, an investment in efficiency of $15-to-20 billion/year will be needed in addition to monies allocated to low income assistance, transportation and R&D. The climate change legislation-enacted cap-and-trade system will generate revenues from the auctioning of permits to emit up to capped levels. (Permits to emit above capped levels can be purchased through the trading system.) The administration budget projects the first revenues, due by 2012, to be $78.7 billion, ample to cover the necessary work.

There will be other benefits to consumers from the climate change and energy bills that will offset whatever short-term increases in electricity costs may come with the transition to a new Energy economy.

For example, using revenues from the cap-and-trade system to subsidize weatherization, smart meter and improved appliance programs will reduce consumers’ bills, so even if electricity is more expensive, bills will not be higher.

Van Jones calls this "the new math." His example: It is cheaper today to send a kid to school with pizza and soda for lunch. But spending a little extra on healthy food now avoids the enormous expenses of diabetes and heart disease later.

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Also, the President has voiced his intention to mandate the “decoupling” of utility profits from utility volumes and, instead, reward utilities for energy savings. With such a mandate, it will be practical for big utilities to finance ratepayers’ efficiency improvements (such as energy star appliance purchases, better insulation, windows and doors, smarter meters and better heating and cooling systems) through charges on the bill equal to but not greater than the reductions that come with efficient performance.

Finally, these changes will produce a big boost in jobs and the jobs will be local because it is unlikely, for instance, that Duke Energy will be hiring cheap Asian laborers to do efficiency upgrades and install solar panels in North Carolina (because the daily commute from rural China is inconvenient and rural Chinese laborers will be too busy upgrading homes and buildings in Guangdong province).

Donald Gilligan, President, National Association of Energy Service Companies (NAESCO): “We have seen a dramatic growth in energy efficiency jobs during the past decade…The industry today employs more than 1.5 million people. We can continue that growth with this legislation, and make energy efficiency a cornerstone of the American economy in the 21st century.”

It is estimated it will take through mid-century to fully transition U.S. houses and buildings to energy efficiency. So kids who are graduating from high school now can have blue collar careers in efficiency upgrades and train those kids just born to OctoMom to do the same and those 8 kids can do efficiency upgrades through retirement age. (Although by then retirement age might be 150 if the President’s investments in healthcare and science research pay off like they are expected to.)

Another major policy concern from ACEEE is a national Energy Efficicency Resource Standard (EERS). Some 19 states currently have such standards and 5 more have them pending. An EERS drives efficiency by setting a goal of minimum efficiency that utilities are required to achieve. This forces utilities to aggressively become efficient and guarantees innovators an attentive marketplace.

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Reducing the Cost of Addressing Climate Change Through Energy Efficiency - A Synopsis

Broad Coalition Finds Energy Efficiency Provisions Key for Managing Costs of Climate Change Legislation
March 5, 2009 (ACEEE)
and
National Climate Legislation
(ACEEE)

WHO
The American Council for an Energy-Efficient Economy (ACEEE) (Steven Nadel, Executive Director and coalition coordinator); Coalition participants (The Alliance to Save Energy (ASE); American Institute of Architects (AIA); Environmental and Energy Study Institute (EESI); Environment Northeast (ENE); Johnson Controls; National Association of Energy Service Companies (NAESCO); Natural Resources Defense Council (NRDC); Sierra Club; Real Estate Roundtable); House Energy and Commerce Committee (Henry Waxman (D-Calif), Chairman); Senate Environment and Public Works Committee (Barbara Boxer (D-Calif), Chairwoman)

WHAT
Reducing the Cost of Addressing Climate Change Through Energy Efficiency identifies the role of energy efficiency in federal climate change legislation and makes a battery of recommendations, including a national Energy Efficiency Resource Standard (EERS).

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WHEN
- House Energy and Commerce Chairman Henry Waxman has promised a climate change bill from his committee by Memorial Day.
- Senate leaders has indicated they will bring a bill to the floor by summer.
- Congressional leaders hope to get a bill to the President’s desk in 2009 but the challenge of getting 60 votes in the Senate may prevent final action until 2010.

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WHERE
- The House Energy and Commerce Committee and the Senate Environment and Public Works Committee are developing climate change legislation.
- 19 states have EERSs and 5 have 1 pending.

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WHY
- The coalition report is designed to direct efficiency investments in climate legislation.
- The coalition recommends 2 approaches: (1) funding energy efficiency from cap-and-trade revenues and mandating complementary energy efficiency policies in the legislation.
- Needed investment is ~$15-20 billion/year for energy efficiency deployment programs for the residential, commercial, and industrial sectors above and beyond $6 billion/year for low-income energy efficiency programs, $8 billion for transportation programs and $3 billion for New Energy R&D.
- Complementary energy efficiency policies recommended (in either the energy or climate bill): (1) a national energy efficiency resource standard (EERS) setting utility energy saving targets; (2) advanced building energy codes and appliance standards; (3) extended federal energy efficiency tax incentives; (4) comprehensive energy retrofits programs for existing homes, commercial buildings, multifamily buildings, and assisted housing; and (5) a fuel efficiency standard of 42 miles per gallon (cars and light trucks) by 2020.
- Cap-and-trade is expected to produce a major increase in employment by driving the need for new jobs in the New Energy and Energy Efficiency.
- House Energy and Commerce staff have begun discussions on bill specifics.
- Senate Environment and Public Works Chair Barbara Boxer has suggested a simple bill, leaving most details to be worked out by EPA through a regulatory process.
- EPA is considering the regulation of carbon dioxide as a pollutant, as ordered by the Supreme Court but eschewed by the Bush Administration. Congressional action is preferable but the threat of EPA action pushes Congress.
- ACEEE’s 2008 paper on the role of energy efficiency in federal climate change legislation

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QUOTES
- Steven Nadel, coalition coordinator/Executive Director, ACEEE: “Including energy efficiency in a cap-and-trade bill is essential because energy efficiency provides ‘avoided tons’ of greenhouse gases at the lowest cost…Energy efficiency,” he continued, “reduces the cost of cap-and-trade because fewer new power-producing facilities are needed and because a smaller portion of existing facilities need to be upgraded to help meet emissions ceilings.”
- Marvin Malecha, FAIA & President, AIA: “Energy efficiency is truly the low-hanging fruit in the climate change discussion. We can and we must make our buildings, appliances, and transportation systems more energy efficient.”
- Jim Presswood, spokesman, NRDC: “Energy efficiency is an essential component of a comprehensive energy and climate policy anchored by a cap on global warming pollution. The level of investment recommended by this broad-based coalition builds on the huge boost the economic recovery bill gives to energy efficiency programs, which have been ramping up over the past several years…Congress must act this year to establish a carbon cap and provide these funds to accelerate the momentum already created by the recovery bill’s funding for energy efficiency…”
- Derek Murrow, ENE: “The recommended policies and programs reinforce how critically important energy efficiency is to any cap-and-trade program that seeks to reduce environmental impacts while enhancing the nation’s economy…”
- ACEEE’s 2008 paper on the role of energy efficiency in federal climate change legislation