ENERGY EFFICIENCY – THE SOUTH’S ANSWER TO NEW ENERGY (from April 15)

This could be the most important report to come out in 2010. It demonstrates to the section of the U.S. most resistant to change the unequivocal value in facing the future. It may not sway those who resist change for emotional reasons or those with vested interests. But there is usually a person or two interested in making money with new technologies or saving money on their power bill. If those folks respond, the almost impenetrable wall of Southern resistance to the New Energy economy could develop cracks.

Energy Efficiency in the South
Marilyn A. Brown, Etan Gumerman, Xiaojing Sun, Youngsun Baek, Joy Wang, Rodrigo Cortes and Diran Soumonni, April 12, 2010 (Southeast Energy Efficiency Alliance)

THE POINT
A new report on energy efficiency could be the key to breaking the logjam in Congress on energy and climate legislation.

Somebody needs to slip Energy Efficiency in the South, by researchers at Georgia Tech University working on behalf of the Southeast Energy Efficiency Alliance, under the Oval Office door so the President can see that it gets to the contingent of Southern Senators who have so far managed to obstruct his administration's effort to write climate and energy legislation on the grounds that such a bill would do their states economic harm.

Report after report has emerged in the last 2 years demonstrating that the fastest transition to a New Energy economy is via a major emphasis on Energy Efficiency. At the same time, the recession and the rising cost of energy have set state and national leaders looking for ways to reduce expenditures, increase revenues and grow jobs. The economic cause has been enthusiastically embraced by those fighting climate change as a means to reduce greenhouse gas emissions (GhGs).

Previous studies have demonstrated the great value of Energy Efficiency for individual Southern states (see this on North Carolina and this on Texas). This study is uniquely important because it shows how an aggressive move to Energy Efficiency will bring net new jobs and significant revenues to states across the entire Southeast. If there are any Southern Senators looking for an excuse to move away from the Old Energies and take up the cause of the future, this study gives them an excuse to do so.

The report offers extensive detail on how much can be gained by the generation of Negawatts (the watts saved from energy not used). Not only are negawatts the cheapest source of New Energy but investing in the Energy Efficiency that produces them saves $2-to-$3 dollars for every dollar that is spent, savings that can be invested in New Energy megawatts.

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The report's primary and well-documented research offers detail on the South's Energy Efficiency (EE) capacities in the residential and commercial buildings and industry (RCI) sectors and identifies the EE policies that will drive their development. It uses an unprecedentedly rigorous computational model that applies accurately to the many states across the South. It concludes with 4 major findings.

(1) Aggressive EE initiatives in the Southern states could significantly eliminate the growth of the RCI sectors' energy consumption from 2010-to-2030.
(2) 9 identified EE policies would significantly reduce the need for fossil fuel power plants.
(3) Huge gains in jobs and cuts in energy costs would come from the 9 EE polices.
(4) The 9 EE policies would cut water consumption used for cooling by about half.

Bottom line: Implementation of the 9 EE policies would require an investment of ~$200 billion and create savings of ~$448 billion. It’s really that simple, in dollars and common sense, though certainly it will be a challenge to win political support and implement the changes.

Likewise, the region can put 2-to-3 times as many people back to work for every dollar invested in EE as it can for dollars invested in the Old Energies. Combined job growth from EE implementation is equal to 380,000 jobs in 2020 and 520,000 jobs in 2030. The South’s Gross Regional Product (GRP) would likely grow by $1.23 billion in 2020 and by $2.12 billion in 2030.

Because the report is so thorough and authoritative, the jig is up for the South’s political opposition to national energy and climate legislation. The South has an enormous opportunity, bigger than anything the coal industry, its longtime master, can offer. It is time for these modern-day slaves to the Old Energies to answer the call of their heritage and rebel.

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THE DETAILS
The 9 EE policies used in the report were selected because they were judged to be (1) realistically achievable, (2) cost-effective, (3) significantly impactful and (4) quantifiable. They are by no means the only plausible EE policies. They were divided into the 3 parts of the RCI (Residential, Commercial, Industrial) energy consumption sectors:

In the Residential sector -
(1) Appliance Incentives and Standards,
(2) Residential Retrofit and Equipment Standards,
(3) Expanded Weatherization Assistance Program, and
(4) Building Codes with Third-Party Verification.

In the Commercial sector -
(5) Aggressive Commercial Appliance Standards, and
(6) Commerical Retrofit Incentives.

In the Industrial sector -
(7) Process Improvement Policy,
(8) Assessments of Plant Utility Upgrades, and
(9) Combined Heat and Power Incentives.


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The report’s 4 major findings:

(1) "Aggressive energy-efficiency initiatives in the South could prevent energy consumption in the RCI sectors from growing over the next twenty years.” This would require state and local, national, utility, business, and personal actions. RCI energy consumption is expected to grow ~16% from 2010-to-2030 without strong EE efforts and standards.

(2) “Fewer new power plants would be needed with a commitment to energy efficiency.” The implementation of 9 selected EE policies could generate enough Negawatts (i.e., reduce consumption) to allow the retirement of ~25 gigawatts of older fossil fuel-consuming power plants, ~10 gigawatts beyond what is expected with business-as-usual (BAU). Such an implementation would also make it unnecessary to construct a further 49 gigawatts of new power plants to meet RCI electricity needs from 2010-to-2030.

(3) “Increased investments in cost-effective energy efficiency would generate jobs and cut utility bills.” The 9 EE policies would drive public and private investment that would quickly bring significant economic advances in Southern states. By 2020, the South’s cumulative energy bill would fall $41 billion, moderating the rising cost of electricity. The work to implement EE aggressively would create 380,000 new jobs. The South’s economy would grow by $1.23 billion.

A series of cost/benefit ratios for 9 policies are almost uniformly favorable, some quite significantly so. Factoring in the value of reduced GhGs, only one policy is not cost effective (though it could be restructured to be moreso).

(4) “Energy efficiency would result in significant water savings.” The 9 policies would conserve 8.6 billion gallons of freshwater used for cooling in 2020, eliminating 56% of the BAU growth in expected water use for cooling. In 2030, this could be as much as 20.1 billion gallons of conserved water, 45% of growth with BAU.

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The impact of EE investments on peak demand reductions is treated in the report as an ancillary benefit and not included in the calculations separately. The report does not assume demand-response or load-management capabilities. Cumulatively, these will undoubtedly make the EE policies described even more effective and beneficial by shifting costly peak energy consumption to off-peak hours.

The report uses the U.S. Census Bureau definition of the South: The District of Columbia and 16 States from Delaware down the Appalachian Mountains and Southern Atlantic coast and across the Gulf Coast to Texas. It is the largest and fastest growing U.S. region.

The South has 36% of the U.S. population, 44% of U.S. energy consumption and 48% of the U.S. energy supply. Much of U.S. fossil fuel supply and by far the majority of U.S. fossil fuel consumption is in the South.

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The South consumes a disproportionately large part (51%) of U.S. industrial energy. It also has an above-average per capita energy consumption in the RCI sectors: 43% of U.S. electric power, 40% of residential energy and 38% of the commercial building energy.

The South’s high energy intensity is due to (1) historically low electricity prices, (2) high heating and (especially) cooling loads, (3) a rejection (according to polls) of the energy conservation ethic, (4) a low market penetration (according to market studies) of EE products, and (5) below-average public and private expenditures on EE programs.

BAU energy consumption in the RCI sectors of the South is expected to grow from ~30,000 TBtu to 35,000+ TBtu between 2010 and 2030. Implementing the 9 EE policies would keep consumption from growing, representing a 16% energy reduction in 2030. EE’s biggest potential impact in percentage reduction of energy use is in the commercial building sector. The biggest potential for absolute energy use reduction is in the industrial sector.

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Commercial appliance standards can have the biggest impact. Commercial retrofit incentives can also have cost-effective impacts. Industrial sector process improvements will save natural gas and other fossil fuels. Plant utility upgrades and incentives for combined heat and power systems will also be cost-effective.

Retrofit incentives and heating, cooling, and water heating equipment standards would have the highest potential for energy savings in the residential sector, more than all 3 other selected EE residential policies (building codes, appliance standards, and expanded weatherization).

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BAU forecasts predict 49 gigawatts of new power plants to come on line from 2010-to-2030, mostly combined cycle natural gas plants and new combined natural gas/diesel plants, as well as nuclear, coal plants, and New Energy generation. Some oil and natural gas steam plants are expected to be retired.

Implementation of the 9 selected EE policies will eliminate the need for all but 7 gigawatts of new generation and allow for a further 20+ gigawatts of plant retirements. It also eliminates the need for most New Energy development in favor of more cost-effective natural gas generation.

Implementation of the 9 EE policies can save the South $41 billion in lower 2020 energy bills and $71 billion in lower 2030 energy bills. 2030 residential electricity rates would be 17% lower. A typical household would save $26 per month on its electricity bill in 2020 and $50 per month in 2030.

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There were 5.4 million unemployed in the South in 2009. The region can put 2-to-3 times as many people back to work for every dollar invested in EE as it can for dollars invested in the Old Energies. Direct and indirect jobs are ~5.6 per $1 million in spending in the South's electric utility sector and ~8.4 jobs per $1 million spending in the South's natural gas sector. Sectors that implement EE (construction, manufacturing) provide ~16.5 jobs per $1 million. (For comparison, all other sectors in the South employ ~13.9 jobs per $1 million dollars.) Combined job growth from EE is equal to 380,000 jobs in 2020 and 520,000 jobs in 2030.

The South’s Gross Regional Product (GRP) would likely grow by $1.23 billion in 2020 and by $2.12 billion in 2030, a small but significant contribution to the South’s $4.7 trillion economy in 2007.

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Each of the 9 EE policies has a different cost-benefit ratio. They are all thoroughly documented in the report. The bottom line is in keeping with the general findings of most other studies. EE implementation in the South will cost ~$200 billion and save ~$448 billion. In other words, the South will get back about $4.50 for every $2 it spends.

Having been threatened continuously by droughts in this century, the South has become increasingly conscious of water conservation. EE is a means to dramatic water savings because fossil fuel and nuclear power plants require huge quantities of water to generate electricity. Implementation of the 9 EE policies avoids the need for those power plants.

The result is the elimination of 56% of BAU water consumption through 2020 and 43% of BAU water consumption through 2030. The total water use savings equal the current total water requirement of the entire city of Atlanta.

On the whole, the citizens of the South (by polling data) do not demonstrate any great interest in climate change or the greenhouse gas emissions (GhGs) that are worsening it. It is nevertheless worth noting that in the coming emissions-constrained economy (the report refers to it as the Carbon Constrained Future, CCF), dialing back the use of its power plants cannot help but save the South significantly.

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The report uses a version of the National Energy Modeling System (NEMS) dubbed “SNUG-NEMS” (SNUG = the Southeast NEMS Users Group). It incorporates both “bottom-up” and “top-down” modeling to include complicated factors overlooked by other reports about energy and climate policies.

QUOTES
- From Energy Efficiency in the South: “The savings from the greater efficiency stimulated by these nine policies would total approximately $448 billion in present value to the U.S. economy. It would require an investment over the 20-year planning horizon of approximately $200 billion in present value terms. These costs include both public program implementation costs as well as private-sector investments in improved technologies and practices.”

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- From Energy Efficiency in the South: “If the South could achieve the substantial energy-efficiency improvements that have already been proven effective in other regions and other nations, carbon emissions across the South would decline, air quality would improve, and plans for building new power plants to meet growing electricity demand could be downsized and postponed, while saving ratepayers money.”

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- From Energy Efficiency in the South: “Without new supporting policies, this potential for energy-efficiency improvement will not be realized. Energy-efficiency upgrades require consumer and business investment and they compete with other priorities. With so many demands on financial and human capital, cost-effective energy-efficiency improvements are easily ignored. Through a combination of information dissemination and education, financial assistance, regulations, and capacity building, consumers can be encouraged to invest in energy efficiency. In addition, expanded research and development and public-private partnerships are needed to innovate and deploy transformational technologies that enlarge the efficiency potential over the long run…The ability to convert this vision into reality will depend on the willingness of consumer, business and government leaders to champion the kinds of policies modeled here.”