NRDC and Utilities Agree: Efficiency Works

On Friday, I took the train to DC to join a panel discussion on energy efficiency at the National Press Club. NRDC is working with a broad coalition of energy groups that are calling on Congress to use part of the $700 billion stimulus package to promote energy efficiency in our homes, schools, offices and businesses.

Our coalition includes NRDC, the Edison Electric Institute, representing investor-owned utilities, which comprise 70 percent of the U.S. electric power industry, and two energy advocacy organizations, the Alliance to Save Energy and the Energy Future Coalition. Together, we urged that Congress direct about $33 billion toward increasing the energy efficiency of America.

NRDC has long held that energy efficiency is the fastest, most cost-effective and cleanest energy resource, which will save consumers millions, cut global warming pollution, and reduce our dependence on old, dirty fossil fuels.

Yet commercial and residential buildings today account for approximately 40 percent of national energy consumption, 70 percent of electricity consumption, and the largest portion of global warming pollution in the United States.

Most of this energy is wasted -- our houses leak warmth, our lights emit more heat than light, and our appliances drain energy even when they are "off." It's like we have a hole in our pocket, and our money just keeps falling out.

But we have the opportunity to change this direction. We can move our country to a new more efficient approach to energy, an approach where we save energy, instead of wasting it. This will help to immediately create jobs, reduce consumer bills, cut carbon pollution and create the foundation for long-term improvements in all of these areas.

By making our buildings, homes and schools more efficient, we can create a half million green permanent jobs, reduce global warming emission by between 700 and 900 million tons of CO2 (according to a McKinsey analysis), and cut electricity demand enough to reduce the need for about 50 average-sized power plants.

Here's the kicker: by moving in this direction, consumers would save tremendous amounts of money.

The proposal we put together would invest approximately $33 billion for greater energy efficiency. This one-time investment would trigger private sector investments and government minimum efficiency standards that would ultimately save about the same amount -- more than $30 billion -- each year within a decade or two.

One of our primary recommendations is to make grants available to states and local governments giving them a huge incentive to increase efficiency. Under this program, states would provide funding under the grants program to entities such as utilities, cooperatives, energy service companies and school districts. The grants would fall into the following broad categories:

  • Home Energy Efficiency Retrofits. $3 billion for a home retrofit program with the goal of retrofitting 1.5 million homes within two years.
  • Retrofits of Public Buildings. $3 billion for energy audits, advanced metering and the co-funding of comprehensive energy efficiency retrofits for state and local government buildings, including buildings and facilities of state government agencies, public universities, municipalities, counties and vocational districts.
  • Commercial Building Efficiency Retrofits. $3 billion for a program that would provide an incentive to commercial building owners for efficiency improvements based on demonstrated energy savings.
  • Efficiency Programs Matching Fund. $3.5 billion for a federal match of state approved energy efficiency programs that are monitored and verified to ensure that energy efficiency measures are being implemented and are saving energy on a cost-effective basis.

Having worked in state and local governments for 17 years, I can attest to this approach being a very effective way to mobilize action on this front.

One of the key objectives of this plan is to increase retrofitting for buildings -- private, public and commercial. Retrofitting homes is a good example of how energy efficiency can help us to save money, cut global warming pollution and create new jobs.

According to our analysis, home retrofits will within 10 years :

  • Save consumers some $25 billion annually in utility and oil bills.
  • Cut carbon dioxide emissions by 140 million tones annually.
  • Create about 500,000 jobs, about half in the building construction trades and the rest from spending the money saved on utility bills on other goods and services.

Commercial retrofits will within 10 years:

  • Save businesses at about $13 billion annually and reduce everyone's bill by another $10 billion annually.
  • Cut carbon dioxide emissions by 90 million tonnes annually.
  • Create about 150,000 permanent jobs.

There were many other important issues that we discussed -- like the importance of decoupling our utility services, meaning that states begin regulatory reforms that include breaking the link between utility sales and revenue (this is critical to promoting efficiency because efficiency reduces utility sales), and improving building codes. All of which are vital to saving money and greening our planet.

But here's the take away: We know that efficiency works. We know that utility regulatory reforms to promote efficiency work. We know that Americans have the ingenuity and skills to get working with new, green jobs. By making these investments in energy efficiency, we can cut our waste and build the foundation for a new clean energy future.