Energy Efficiency Can Help Us Emerge from the Pandemic

Part 1 of a 4-Part Series (See here for Part 2)

Energy efficiency policy may seem far removed from the immediate need to support COVID-19 pandemic frontline workers and lift up people struggling to pay their bills in this devastating health and economic crisis. But energy-saving programs can help make buildings healthier and more comfortable while sustaining good jobs. By lowering electric and gas bills, these programs also help free up much-needed cash that can be used for food, rent, and medicine, and by municipalities for things like fire stations and schools.

The pandemic has also exposed terrible inequities in our society and is plunging millions of Americans into economic uncertainty. And, as short-term moratoriums on utility shutoffs expire, people facing economic hardships will have a harder time paying their energy bills. This makes it imperative to scale up efficiency programs—especially for those who need it the most—to reduce utility bills in the immediate and long terms.

Furthermore, investing in efficiency programs—like weatherizing buildings or switching out energy-guzzling appliances with efficient versions—can help resurrect the economy and get people back to work. Prior to the pandemic, there were more than 2.3 million energy efficiency jobs and a predicted 3 percent increase—or 70,000 new jobs—by year’s end. Instead, there was a loss of 400,000 energy efficiency jobs through April, alone. Many of these jobs are inherently local as professionals must enter buildings to conduct energy efficiency improvements. When such work halts, it further impacts the local economy already hard hit by the pandemic.

Efficiency is without doubt a critical tool to reduce our energy burdens, sustain and create good jobs, and build the cleaner energy future we all want. But it will take increased action at the state and federal levels to make it happen.

What’s the big deal about energy efficiency programs?

In addition to state and federal funding for energy-saving efforts, utilities invest more than $8 billion each year to cut energy waste that lowers the cost of providing critical services—like light and heat—to customers. These programs cannot stop during the pandemic and need to be scaled up as soon as possible to build the demand for jobs and ensure people are living in healthy and safe conditions. These programs can also lead to bill relief for cash-strapped customers and local governments struggling with severe budget shortfalls.

In addition, investing in energy efficiency programs continues to be cheaper than conventional electricity or gas for utilities to meet customer needs. At about 2 cents per kilowatt hour (on average), efficiency is much cheaper than other electricity sources, making utility bills more affordable for everyone.

Lazard Levelized Cost of Energy & Lawrence Berkeley National Lab ($/MWh)

Using less energy also means deferring costly investments in transmission and distribution systems that would otherwise be financed via customers’ energy bills. Efficiency programs can solve for other challenges, as well. They can increase comfort, help improve indoor air quality, and avoid the harmful power plant pollution contributing to climate change because when people use less energy, the plants run for fewer hours. Energy efficiency also can help keep people more comfortable in their homes during heat waves and out of public cooling shelters, which further protects them from COVID-19 exposure.

Thanks to efficiency investments dating back to the 1980s, U.S. customers pay 40 percent less for energy than they would have, saving nearly $800 billion through 2017, alone. Carbon emissions also would have been 60 percent higher. All of these benefits are sorely needed to help our country emerge from this crisis.

Where are these programs?

The numerous energy efficiency programs at the federal and state levels can be catalysts to jumpstart the economy, especially at the local level where there are many clean energy jobs.

As we emerge from the crisis, it is important to set strong safety protocols and shift programs to focus on customers who need them the most as well as to scale up work where upgrades are more feasible, such as in buildings currently vacant because of the pandemic or alongside other planned projects.

Maintaining programs whenever possible, even if remotely, and protecting efficiency funding will help ensure that as many people as possible keep working during current restrictions. We also need to expand funding for existing programs and complement them with smart and equitable policies at the federal and state levels to maximize the benefit from and reach of these programs:

  • Federal efficiency programs (1) serve low-income customers through the weatherization assistance program that helps seal and insulate homes for under-resourced households; (2) advance efficient products for everyone by establishing national standards for appliances and equipment to ensure the products we buy use the least amount of energy feasible, and (3) aid customers in their purchasing decisions by providing the ENERGY STAR© blue and white label indicating which products are more efficient.

Other federal funding flows directly to states (like the state energy program) or to municipalities (e.g., energy efficiency conservation block grants) to provide additional resources to scale up efficiency. Federal small business loans or grants also can keep the momentum going. Updated tax credits for homeowners and businesses installing efficiency upgrades would provide yet another opportunity to further enhance efficiency across America.

  • State programs include those managed by the State Energy Offices (such as offering low-cost loans or focusing on programs to upgrade schools or municipal buildings) and programs regulated by energy utility commissions (like upgrading heating and cooling equipment and installing efficient appliances). Utility programs come from small cost additions on customer bills and replace more expensive conventional and dirty power. They are administered by utilities, third-party entities, non-profits, companies, or local governments.

How do we adapt?

Most in-home energy efficiency upgrades are on hold due to orders intended to stop the spread of COVID-19. This requires creative ways to serve customers while keeping workers safe, and flexibility from decision makers to enable program and policy changes.

In addition, program designers now must create or adapt programs to address a wider range of customers facing economic hardships, including those who consistently struggle to pay bills and others forced into that category due to current circumstances. Stakeholders will need to strategize together around the “new norm.” This provides an opportunity to reimagine how to deliver efficiency services to improve effectiveness and serve more people (e.g., through enhanced partnerships or with expanded health requirements). Many revised programs will likely require additional online interfaces, so it also is important to ensure available and affordable internet is accessible to all customers.

Stay tuned for a deeper dive into how specific efficiency program ideas at the federal and state levels can get people back to work and help ensure they are living and working in more efficient and healthy buildings.

Next Blog: A look at energy efficiency reform

About the Authors

Lara Ettenson

Director, Energy Efficiency Initiative, Climate & Clean Energy Program

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