BUILDING THE UNITED STATES OF EFFICIENCY

Report: $438 annual savings for Michigan families if strong efficiency policies are part of federal energy bill; New report illuminates untapped potential to reduce home energy bills
February 24, 2010 (Michigan Environmental Council)
and
Building On The Success of Energy Efficiency Programs To Ensure An Affordable Energy Future; State-by-State Savings on Residential Utility Bills from Aggressive Energy Efficiency Policies
Mark Cooper, February 2010, (Consumer Federation of America)
and
Energy Efficiency Proposals Could Create 333,000 Jobs In 2010
March 8, 2010 (American Council for an Energy Efficient Economy)

THE POINT
The national conversation rightly oscillates at present between the issue of health insurance reform, which the uncertainties of Congress’s ways has made urgent at this inconvenient moment, and the issue of job creation, which the cruelty of economic fortunes has made urgent at this hungry moment. Waiting in the wings is the issue that will be impacting the nation and the nation’s economy long after these hard times have turned around and many more economic cycles of expansion and recession have come and gone.

A New Energy economy is struggling to be born in the U.S. despite the distractions of other issues and the best efforts of recalcitrants and naysayers to cling to fossil fuel spew and Old Energy ways. It will be based on the generation of emissions-free energy from ever-renewable sources. Because the fossil and toxic Old Energies will not willingly resign the subsidies on which they depend, the New Energy economy is being born slowly and is struggling to hold onto its meager incentives and subsidy supports.

Slow growth makes New Energy look profoundly inadequate to the task of taking over the huge responsibility of keeping the nation’s lights on and getting the nation’s citizens where they want to go. But there is a partner for New Energy that can maximize its benefits, lower its cost and supply revenues to build it faster: Energy Efficiency (EE).

The fundamental premises that make EE so crucial to the advancement of New Energy (NE) are (1) it costs much less to save energy (negawatts) than to generate it, and (2) the savings from generating negawatts can go to the building of New Energy infrastructure, allaying the necessarily burdensome costs of replacing Old Energy’s established infrastructure.

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EE offers still other opportunities ideal for this tempestuous historic moment. As detailed in Building On The Success of Energy Efficiency Programs To Ensure An Affordable Energy Future; State-by-State Savings on Residential Utility Bills from Aggressive Energy Efficiency Policies from the Consumer Federation of America (CFA), Energy Efficiency supported by effective federal and state policies will also address the economic stresses now burdening the nation’s families through utility bill reductions of hundreds of dollars a year, perhaps enough to pay a month’s health insurance premiums.

In addition, as detailed in a new analysis from the American Council for an Energy Efficiency Economy (ACEEE), current federal proposals now pending in Congress could create 330,000 new jobs in EE this year and another 184,000 next year. These promise to be good quality jobs doing the work the nation needs done, paying salaries the nation’s working class urgently needs and likely to come with benefits like health insurance coverage that the nation’s workers are losing all too quickly.

Due to the ongoing absence of cooperative effort in Congress, it is possible there will be no energy and climate legislation this year. Perhaps the universal and affordable benefits that come from EE policies offer a common ground where legislators can take a stand, serve their constituents and begin to remember that, in the face of the challenges before us, there really are no red states and no blue states but only the energy-wasteful United States and it needs to become as energy efficient as possible as it grows toward a New Energy economy.

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THE DETAILS
The CFA report, based on 24 state-level studies over the last 10 years and 3 recent major studies at a national scale from prominent research organizations (the National Research Council, McKinsey and Company, and the American Council for an Energy Efficient Economy), concluded that “robust” state and federal Energy Efficiency (EE) policies could reduce energy consumption 20-to-30% and thereby save (as an example of what can happen in every state) Michigan’s families a yearly average of $438 on their energy bills.

Estimates of available energy savings, from an assessment of engineering studies of economically efficient and presently available technologies, show energy consumption can be cut 1-to-2% per year. In 20 years, that would be 20-to-30% reduction. The cost to achieve this reduction in energy consumption (negawatts) would be significantly less than half the cost of generating a comparable amount of megawatts from even the least costly power sources. Much of the savings, estimated at ~$750 billion by McKinsey and Company, would be in lower household utility bills.

The CFA report delineates specific preferred EE policies including (1) a federal standard (Energy Efficiency Resouirce Standard, EERS) requiring utility companies to provide efficiency programs for customers, (2) strengthened building codes and appliance efficiency standards, and (3) adequate funding for retrofitting or existing homes and buildings to upgrade their EE.

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CFA also calls in the report for a BuildingSTAR program offering tax credits for retrofitting commercial buildings and apartment buildings. Besides allowing apartment dwellers to cut their utility bills, a BuildingSTAR program would help businesses save on energy costs and allow them to expand, creating more jobs.

The CFA study acknowledges that polices which create EE requirements will necessitate expenditures while diminishing energy demand, both of which could potentially cause higher energy prices. At the same time however, installing EE will reduce consumers’ use of electricity and natural gas and thereby reduce utility bills despite the rising prices.

By reducing energy consumption, EE also (coincidentally, shshsh) reduces greenhouse gas spew, relieving the advance of global climate change (but only whisper this and don’t say anything about it to deniers, just stress the cost savings).

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Programs called for in the CFA report have been tested and proven at the state level. At least 6 states have achieved the 1-to-2% EE improvements over the past 10-to-20 years. Other state programs have fallen short but the successes prove what is possible and even the 6 leading states have not captured the potential from more emphasis on appliance standards and building codes, which could double the energy savings.

While local efforts to implement more and better state policies will increase efficiency results, only a federal policy that sets the highest and best EE standards and requirements can achieve nationally the full range and extent of savings opportunities.

Benefits are available at a very low cost to ratepayers that will dramatically reduce their consumption, their energy costs and the nation’s dependence on greenhouse gas-emitting fossil fuels. But it will take broad enactment of policies to achieve the household level and national savings that are within reach.

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The average annual savings per household from a 20-to-30% EE improvement in 2030 on utility bills (electricity and natural gas) would be $301-to-$451. After the cost of implementing the efficiencies, the savings would be $200-to-$299. The national savings from a 20-to-30% EE improvement in 2030 on utility bills (electricity and natural gas) would be $37.3-to-$65.8 billion and after the cost of implementing the efficiencies, the savings would be $24.7-to-$37.0 billion.

Households in every state would benefit from implementation of the best EE programs. Savings on household utility bills would range from ~$300 per year in Idaho to $600+ per year in Connecticut. Even if the cost of EE implementation falls entirely on households, benefits would be seen in every state and range from ~$106 per year to $460 per year.

Even by conservative estimates that do not include rising real energy prices, improving EE technology, improving EE economics and the likelihood of a price eventually be put on emissions, EE is economically justified by a purely rational cost-benefit analysis.

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It also increases consumers’ capacity to absorb any costs associated with the fight against climate change in the form of pricing emissions and building a New Energy infrastructure.

Needed next steps:
(1) Federal mandates, incentives and guidelines to implement EE nationally, including a national Energy Efficiency Resource Standard (EERS), improved national building code and appliance efficiency standards and the funding of building retrofits and upgrades.
(2) State implementation of EE best practices, especially through programs at the Public Utility Commission (PUC) level that drive utility behavior, programs from building code and appliance standard authorities that guide new construction, retrofit/upgrade practices and consumer purchases, and policies enacted by state legislatures to create mandates, incentives and guidelines to drive best EE practices.

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The ACEEE analysis sees the 330,000 new jobs in 2010 and the 184,000 jobs in 2011 coming from proposed programs to fund residential and commercial retrofits and grants to make U.S. manufacturing facilities more energy efficient.

The potential of EE implementation to generate jobs lies in the facts that (1) products used in building retrofits (insulation, windows, etc.) are manufactured domestically, doubling the potential employment from each EE effort. EE construction cannot, of course, be outsourced and would inevitably be largely done by locals. This means that EE investment represents investment in 3 vital sectors of the U.S. economy, blue collar labor, government expenditure and small business expansion.

The HomeSTAR program (aka “Cash for Caulkers”) in Congress's proposed jobs legislation will be a major source of EE employment. Rebates to homeowners for up to 50% of retrofit/upgrade projects (or $1,500 per project) will be available instantly at the retail store. Verified 20% whole home energy savings will earn a $3,000 credit. ACEEE estimates this will involve 3 million homes at a cost of $6 billion dollars and generate ~126,000 jobs in 2010 and 36,000 jobs in 2011.

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BuildingSTAR, a comparable commercial retrofit program giving businesses 30% rebates for improvements to lighting, insulation, and energy management, can generate an estimated 130,000 jobs in 2010 and 57,000 jobs in 2011.

Grants to manufacturers for EE and NE manufacturing investments would add $4 billion to a $156 million stimulus bill program run by DOE. ACEEE estimates that the additional grant funding will generate 77,000 jobs in 2010 and 91,000 in 2011, based on existing, unfunded applications and an anticipated second round of proposals.

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QUOTES
- Dr. Mark Cooper, report author/research director, Consumer Federation of America: “Our research shows we’ve only begun to tap the energy efficiency potential that can create jobs, conserve energy, and save families hundreds of dollars each year…Cap-and-trade has monopolized the headlines. But given its stellar record of success, it’s time for senators to view energy efficiency as a cornerstone of the nation’s climate policy.”

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- Steven Nadel, Executive Director, ACEEE: “The energy efficiency programs in these proposals would create jobs because energy efficiency improvements are labor intensive and net job creators. These programs would produce more construction and service-sector jobs than those energy sector jobs lost from reduced energy consumption…In addition, these programs would continue creating small numbers of jobs even after the stimulus period is over, because energy bill savings enable consumers and businesses to spend that money elsewhere in the economy…These estimates of job creation are probably conservative…since we did not examine the impact of lower energy consumption on energy prices. When energy prices go down, money is freed up for spending in more labor-intensive parts of the economy.”

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- From the report: “This report shows that there is a consumer-friendly way to address the challenge of climate change, which is to get the maximum amount of reduction in greenhouse gas emissions from energy efficiency. Many of the most important measures the U.S. can take to cut emissions in the utility sectors cost less than the current or projected price of energy, which means that bills can be lowered, not raised. This reduction in consumer utility bills provides a vital cushion to soften the blow of more expensive measures to reduce greenhouse gas emissions in other sectors. Therefore, getting the most out of energy efficiency is a critical component of a sustainable, cost-effective climate change policy…The bottom line of this study is that maximizing the role of energy efficiency in America’s energy future is vital to keeping energy affordable, and its importance is magnified in a carbon-constrained environment. Therefore, getting the most out of energy efficiency must be a critical component of a sustainable climate change policy. The potential savings are huge. The obstacles to achieving these savings are widely recognized and substantial, but the benefit of overcoming them make a maximum effort to do so urgent.”