TODAY’S STUDY: GOOD NEWS FOR NEW ENERGY AND ENERGY EFFICIENY

America’s (Amazingly) Good Energy News

October 2013 (Natural Resources Defense Council)

U.S. Energy Productivity AND Security Have Never Been Better

For decades, America’s energy news trended from bad to worse, beginning with the oil crises of the 1970s. However, NRDC recently conducted an exhaustive analysis that found a remarkable turnaround. based on key economic, security, and environmental indicators, all examined below, the state of the U.S. energy economy has never been better.

And in an era of escalating Mideast turmoil and gyrating oil prices, this accumulated resilience could hardly be more timely. Extensive new government data reviewed by NRDC shows much of the credit can be given to a huge and inexpensive energy resource that deserves far more attention: energy efficiency. In fact, over the past 40 years Americans have found so many innovative ways to save energy that we have more than doubled the economic productivity of the oil that runs our vehicles and the natural gas and electricity that runs almost everything else. Factories and businesses are producing substantially more products and value with less energy.

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As a result, across the United States:

n total energy used per dollar of goods produced is down;

n gasoline per mile driven is down;

n and the cost of energy services (from lighting to refrigeration) is down.

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Because increasing efficiency is far less costly than adding other energy resources like fossil fuels, this is saving the nation hundreds of billions of dollars annually, helping U.S. workers and companies compete worldwide, and making our country more energy-secure.

Most importantly, positive energy trends are substantially reducing our national carbon footprint, putting the United States on track to meet president obama’s target of a 17 percent emissions reduction by 2020 (relative to 2005). However, these trends must continue and accelerate to offset the most damaging effects of climate change.

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A Closer Look At America’s Energy Use

Total U.S. energy use peaked in 2007 and has trended downward since; the 2012 total was below the 1999 level, even though the economy grew by more than 25 percent (adjusted for inflation) from 1999 to 2012.

Any lockstep linkage between economic growth and total energy use ended almost 40 years ago, as shown in Figure 1 below.

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The remainder of this report breaks this general trend down into some of its most important elements and explores the implications for our economy, security, and environment.electricity: From 1973 to 2000, electricity use more than doubled, during a time when the population increased by only about a third (see Figure 2). But since then, for the first time in modern history, the national growth rate for electricity consumption has dropped below that of the population for an extended period, as shown in Figure 2, thanks in large part to our increased energy productivity. From 2000 to 2012, electricity consumption rose by about 6 percent, with an average annual growth rate of about 0.5 percent, even as the population grew by about twice that rate during the same period.3

This slowdown has generated increased interest in curtailing utilities’ longstanding financial addiction to robust growth in their commodity sales.

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OIL: The amount of oil used in U.S. vehicles, homes, and businesses continued an extended decline in 2012, down 14 percent from its 2005 peak. Surprisingly, 2012 oil use was lower than in 1973 (when the nation’s economy was only about one-third its current size). As oil use declines, America also reduces its dependence on oil imports from unstable and unfriendly places, as well as its vulnerability to price spikes when conditions in those places suddenly worsen. According to the U.S. Environmental Protection Agency (EPA), new fuel economy and clean car standards will cut oil consumption in 2025 by 2.1 million barrels per day, which is more than we buy now from any OPEC country

COAL: U.S. coal use in 2012 was less than in 1985 and down almost one-fourth from the peak year of 2005. This mostly reflects a shift away from increasingly uneconomic coal-burning power plants, whose air pollution produces more premature deaths than any other form of energy use in the United States and abroad. The most important contributing factor has been a growing movement by utilities to turn away from dirty and obsolete power generation and toward integrating more energy efficiency and renewable energy, such as wind and solar, into their resource mix.

NATURAL GAS: Natural gas raised its market share above 30 percent of electricity generation in 2012, a 40-year high. Although natural gas generally has been displacing coal for electricity production, it bears noting that the trend is anything but steady and uniform, and recently coal recovered significant market share after sudden shifts in commodity prices, as shown in Figure 3

NUCLEAR: After decades of rising sales driven mostly by increased productivity at existing plants, U.S. nuclear generation has flattened, with market share dropping below 19 percent of total electric generation in 2012. Total nuclear power production in 2012 was down almost 5 percent from its peak five years earlier. A strong factor has been the retirement of aging and uneconomic plants like Southern California Edison’s two San Onofre units and Duke’s Crystal River reactor in Florida.

RENEWABLE ENERGY: Much media attention rightly accompanied announcements that wind power led all competitors—both renewables and fossil fuels—in terms of new generating capacity installed over the course of 2012; but even more impressive was the 24-fold increase in wind- produced electricity from 2000 to 2012. By the close of that period, wind was providing 3.5 percent of all U.S. electricity, and the absolute increase in wind generation from 2000 to 2012 was almost nine times greater than the increase in nuclear generation over the same period. Solar power is surging too, although still a small fraction of 1 percent of total U.S. generation.

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What We’re Using Instead To Power Our Economy

On the basis of its own analysis of all these energy trends, which show no signs of abating, the Bipartisan Policy Center concluded that “over the past four decades, energy savings achieved through improvements in energy productivity have exceeded the contribution from all new supply resources in meeting America’s growing energy needs,” highlighting “the importance of treating demand and supply-side resources on an equal footing.”11 Figures 4 and 5 underscore these points.

Energy efficiency is a proven resource with significant potential to dramatically reduce power plant emissions, which represent 40 percent of the nation’s total carbon pollution, and to do so at low cost. Additional investments in efficiency could cut U.S. energy consumption by 23 percent by 2020, save customers nearly $700 billion, and create up to 900,000 direct jobs (plus countless more when consumers spend their savings elsewhere).

Some argue that energy efficiency creates excessive upfront costs to consumers. However, the result is typically quite the contrary, as demonstrated by recent assessments of long-term trends in refrigerator efficiency and the inflation- adjusted cost of refrigeration (taking into account the cost of buying and operating increasingly efficient refrigerators) as shown in Figures 6 and 7. Today’s new refrigerator uses a fourth of the energy of its 1973 counterpart, offers 20 percent more storage, and costs half as much.

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We Need To Do More

Although these energy trends have been pushing U.S. emissions of greenhouse gases down since 2007, the decline is not nearly sufficient to fully address the climate change threat. While we are on track to meet the president’s 17 percent emissions reduction target by 2020, stabilizing the atmosphere will require the United States and other major economies to achieve a more rapid rate of decline, and ultimately an end to these emissions…

Fortunately, numerous studies have uncovered vast untapped energy efficiency opportunities that can further reduce emissions. At both the personal and government levels, we must focus on achieving more of these efficiencies, which cost (and pollute) far less than the electricity, natural gas, and oil they replace. Options include upgrading homes and other buildings with energy-saving appliances and products such as light bulbs and insulation. In addition:

n The federal government and the states must keep tightening efficiency standards for buildings, equipment, and vehicles. The EPA must end the unlimited free dumping of carbon pollution into our atmosphere by adopting standards for existing power plants that recognize the contribution energy efficiency can make to reducing such pollution.

n State regulators should reward utilities for helping residential, business, and industrial customers use energy more efficiently, and stop the unintended but widespread practice of automatic financial penalties when the utility’s sales level off or decline because customers do the right thing. Half the states have instituted “revenue decoupling” systems for investor-owned natural gas and/or electric utilities to avoid those penalties that understandably might reduce their motivation to inspire customers to save energy. But progress is too slow, and only two publicly owned utilities (serving Los Angeles and Glendale, California), have adopted this reform. The rest should step up—to cut customer bills, save energy, and help reduce carbon emissions.

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Energy efficiency is America’s most productive energy resource. In a nation—and a world—with funding constraints, an “all of the above” energy policy that includes our most expensive and environmentally risky resources like oil and coal is a guarantee of costly disappointment. Instead, we should build on America’s positive energy trends, and give priority to efficiency improvements that cost far less than the energy they displace. The ultimate prize extends well beyond America’s borders, as NRDC’s Dr. David Goldstein concludes in his book Invisible Energy: “Energy efficiency can become the cornerstone of a global effort to stabilize the earth’s climate.” Goldstein is referring to an 80 percent reduction in carbon pollution before 2050, achieved at a net economic savings to energy users, thanks to energy efficiency. As this report shows, the journey began decades ago and the results so far are most promising.

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