In Support of a National Energy Efficiency Resource Standard

As Congress looks for meaningful ways to address the climate crisis and transition to a clean energy economy in an equitable way, the best place to start is with energy efficiency. That’s why today’s introduction of a bill to establish a national energy efficiency standard is so important.

Smarter energy use is the quickest, cleanest, and cheapest way to reduce carbon emissions while saving money and reducing pollution from power plants, and help people who need it the most. According to NRDC’s report, America’s Clean Energy Frontier: the Pathway to a Safer Climate Future, the United States could reduce its annual carbon pollution emissions by over a third through energy efficiency alone. But we need national energy-saving policies to succeed.

Source: NRDC

The American Energy Efficiency Act, introduced today by Senators Tina Smith of Minnesota, Angus King of Maine, and Jeff Merkley of Oregon, is a welcome proposal, not only to address climate change, but to reduce energy waste and save people money. The bill would establish a national energy efficiency resource standard (EERS), setting targets for utilities and other power providers to help their customers reduce energy consumption. It would encourage electricity and natural gas distributors to implement programs that avoid wasting energy, cut consumer energy bills, and decrease the amount of climate- and health-harming pollution from power generation from fossil resources.

Twenty-six states accounting for nearly half of the nation’s electricity demand already have successful EERS programs in place, but a national standard is needed to fully capitalize on this opportunity and to make sure Americans in every state can benefit from efficiency. Right now, as the below graphic illustrates, each state EERS is designed differently. Sen. Smith’s home state of Minnesota passed an EERS in 2007 that set an incremental energy-savings savings target for electric and gas utilities to help their customers achieve energy savings of 1.5 percent of gross annual retail sales starting in 2010, and at least 1.5 percent after 2013.

Source: ACEEE

A national EERS would save utility customers nearly $150 billion on their energy bills and reduce carbon dioxide (CO2) pollution equivalent to the emissions of nearly 50 million cars by 2030, according to the American Council for an Energy-Efficient Economy (ACEEE).

Furthermore, a national EERS will benefit states that have been laggards when it comes to strong energy efficiency policies. For example, Indiana in 2014 made the decision to roll back its EERS. A report from the Applied Economics Clinic estimates that this decision cost consumers more than $140 million in lost utility bill savings, while harming electricity savings and negatively affecting job growth. Consequently, Indiana is ranked 40th out of 50 states and Puerto Rico in energy efficiency, per the American Council for an Energy Efficient Economy. States with the highest energy consumption, including Louisiana (ranked #46 in efficiency by ACEEE), Wyoming (#51!), and Alaska (#41), have very weak state energy efficiency policies. These are the places that would benefit most from a national EERS.

In addition to being a core solution to address the climate crisis, energy efficiency saves businesses and households money and creates jobs.

A national EERS would help low- and middle-income households in both urban and rural areas who face a disproportionately larger financial burden from monthly energy bills than the average household in America. In cities, the median monthly energy bill for low-income households was more than 7 percent of monthly income, over twice as much as the median for all households (3.5 percent). The same situation affects low-income households in rural America, where the median financial burden of monthly energy costs is around 9 percent, compared to a median monthly energy burden of 4.4 percent for all households. Energy efficiency will help ensure they don’t have to make difficult tradeoffs between food, medicine, keeping the lights, and other basic necessities.

Energy efficiency also supports the largest number of jobs of any clean energy sector, according to the E2 Clean Jobs America Energy 2019 report. There are over 2.3 million energy efficiency workers in the United States and this employment sector is expected to grow by 7 percent this year. These jobs include efficiency-related construction of new buildings and retrofits to existing buildings; manufacturing ENERGY STAR® appliances, LED bulbs, and other advanced building materials; and installation and maintenance of HVAC systems. A national EERS would support and accelerate this continued growth in clean jobs.

Whether it’s saving money and creating jobs or fighting climate catastrophe, energy efficiency resource standards can be appealing to people of all political persuasions. They’ve been successful in both red and blue states. That’s why we are optimistic that a national EERS has the potential to gain bipartisan support in Congress. Now that it’s been introduced, it’s our hope that it will quickly move through Congress to become law, especially given the urgency of the climate crisis and the ability of energy efficiency to help combat it.

A national EERS will help drive growth in the clean energy economy, promote innovation, create jobs, save consumers money, and reduce waste, all while helping the United States bend its emissions curve downward to help us avoid the worst effects of climate change in the decades to come.

About the Authors

Dan West

Legislative Advocate, Government Affairs

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