Relying More on Smarter Energy Use Will Strengthen Limits on Carbon Pollution, Lower Costs

We have an obligation to protect our children’s health and their futures and that means trying to put the brakes on climate change, much of which is caused by the fossil fuels burned in power plants to meet our energy needs. And while the Environment Protection Agency (EPA) plan to cut that dangerous pollution would let states use energy efficiency to help meet their emissions reductions targets, it doesn’t take into account nearly enough of the energy savings that are possible without sacrificing our comfort or economy.

The Clean Air Act requires EPA to set the limits on smokestack.jpgcarbon pollution from existing power plants at a level based on measures that have been proven to work. There’s no doubt that energy efficiency qualifies because for more than 30 years, America’s utilities, state regulators, businesses, and energy service companies have relied on investments designed to optimize our energy use and cut waste. The result? Savings for customers and avoiding the need for more costly investments like having to build new power plants that also pollute our air.

We can do more

EPA’s proposed power plant emissions limits only assume utilities and state programs (like weatherization and rebates for highly efficient appliances) can help customers save enough energy to equal 1.5 percent of total electricity sales in each state every year. But this is big underestimation of energy efficiency’s potential, which I noted in June, because it:196_Weatherizing.jpg

  1. Understates the amount we can save and how quickly we can do it;
  2. Overestimates the costs of achieving that level; and
  3. Excludes a number of important additional opportunities for cutting energy waste in buildings, appliances, multi-family housing, and industry.

When NRDC filed formal comments this week on EPA’s proposal, we focused on making a good plan even better. We showed it’s possible without much additional effort to get savings equal to at least 2 percent of annual electricity sales. And upping the target by just one-half of a percent per year would deliver major savings on customer utility bills, trigger a boom in clean energy middle class jobs, and cut power plant carbon pollution by more than 40 percent by 2030. That would far surpass the 30 percent emissions reduction goal President Obama outlined when the EPA announced its proposed Clean Power Plan last June.

Specifically, we found:

  • EPA’s projection that the equivalent of 1.5 percent of retail electric sales can be saved through energy efficiency in every state is achievable, but too low. In fact, 15 states have already achieved that level, or have standards in place to meet that target or surpass it (Arizona, California, Colorado, Hawaii, Illinois, Iowa, Maine, Massachusetts, Michigan, Minnesota, New York, Ohio, Rhode Island, Vermont, and Washington). NRDC calculates that using updated assumptions and additional proven energy-saving measures could produce savings equal to at least 2 percent of retail sales annually.
  • EPA projected efficiency savings could only grow by the equivalent of two-tenths of a percent of total annual electric sales, which is too low.  Arizona and Michigan are just two interesting examples of states ramping up efficiency far faster, as shown in two new charts below. In addition, our comments provided EPA with evidence of a wide cross-section of states, representing different electric industry structures, electricity costs, parts of the country with different climates and electricity needs, mixes of residential, commercial, and industrial customers, and various modes of implementation that increased savings at more than double or triple that rate. An assessment by the Analysis Group, also submitted to EPA, provides additional and significant examples of both growth and overall savings achievements.

Arizona’s Annual Energy Efficiency Savings and Ramp Rates Expressed as a Percentage of Retail Sales, 2006 – 2013

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Michigan’s Annual Energy Efficiency Savings and Ramp Rates Expressed as a Percentage of Retail Sales, 2007 – 2013

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Source for both figures: Paul J. Hibbard, Andrea M. Oakie, and Katherine Franklin, Assessment of EPA’s Clean Power Plan: Evaluation of Energy Efficiency Ramp Rates and Savings Levels, Analysis Group, Inc. December 1, 2014.

  • EPA assumed that energy efficiency programs cost 8.5 to 9 cents per kilowatt hour (kWh) to implement but a recent study by Lawrence Berkeley National Laboratory shows the average price is just 4.4 cents kWh. Improvements in products like LED light bulbs, energy thermal windows and other building materials that cut energy losses have made it easier for the nation to use energy smarter – and cheaper.

We need more efficiency

A recent NYT article quotes the head of energy efficiency at the International Energy Agency, Philippe Benoit, as saying “Efficiency will have to account for 40 percent of the emissions reductions if warming is to be limited to 2 degrees Celsius, as world leaders have pledged.” The agency estimates that it will cost $14 trillion between now and 2035, more than $600 billion a year, doubling the current rate of spending on efficiency. (Note: the upfront costs for cutting energy waste pay off big in reduced utility bills and less pollution when we don’t need to make as much electricity.)

Fortunately, our energy efficiency resource is vast, and grows continuously as new technologies are developed. One recent example can be found in the Northwest Power and Conservation Council (which includes Washington, Oregon, Idaho and Montana), whose Sixth Power Plan estimated available cost-effective energy efficiency potential at more than double the already aggressive levels in its plan five years earlier. The council attributed this increase in large part to technological innovation that resulted in creating new efficiency opportunities and reduced costs. In fact, the region has already greatly surpassed its doubled five-year goal.

That kind of progress shows efficiency also can help us give our children a better world. Shouldn’t we fully take advantage of the cleanest, cheapest and fastest way to reduce our carbon footprint?

About the Authors

Sheryl Carter

Codirector, Energy program

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