Overview of Energy Efficiency in the U.S.


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Speaking to participants of the Asia Pacific Research Center's Peer Review on Energy Efficiency, Castelli offered a status update on energy efficiency in the U.S., and the ways that energy efficiency programs are financed, monitored and measured there. After briefing the audience on the history of energy legislation in the U.S., Castelli introduced them to the energy efficiency provisions of the recently passed American Recovery and Reinvestment Act of 2009.

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  • Overview of Energy Efficiency in the U.S.

    1. 1. Overview of Energy Efficiency in the U.S. Brian T. Castelli Executive Vice President – Programs and Development APERC Annual Conference 2009 (Tokyo) Session 2: APEC Peer Review on Energy Efficiency (PREE) 18-19 February 2009
    2. 2. Alliance to Save Energy <ul><li>Mission: To promote energy efficiency worldwide to achieve a healthier economy, cleaner environment, & greater energy security through policy, education, research, technology deployment, market transformation and communication initiatives. </li></ul><ul><li>Established 1977; NGO coalition of 135+ prominent business, government, environmental and consumer leaders. </li></ul><ul><li>Headquartered in Washington, D.C. with operations in Eastern Europe, South Africa, Mexico, India and several states in the U.S. Staff of 50+ </li></ul><ul><li>Chaired by Senator Mark Pryor and James Rogers (CEO, Duke Energy) with strong bi-partisan congressional, corporate & public interest leadership. </li></ul>
    3. 3. U.S. Energy Efficiency: Past Successes But Much More is Needed Source: Art Rosenfeld, CEC
    4. 4. Reaching Potential Requires Overcoming Market Barriers <ul><li>Principal-Agent “Split Incentives” </li></ul><ul><ul><li>Home builder  buyer </li></ul></ul><ul><ul><li>Owner  renter </li></ul></ul><ul><ul><li>Utility  customer </li></ul></ul><ul><li>Transaction Costs </li></ul><ul><ul><li>Lack of information: measures, payback, life-cycle cost </li></ul></ul><ul><li>Consequences: Barriers affect at least half of energy use in buildings (ACEEE/IEA) </li></ul><ul><li>Public policies needed to overcome barriers </li></ul>
    5. 5. Energy Efficiency: Tools for Success <ul><li>Research and Development – Create new technology </li></ul><ul><ul><li>RD&D Partnerships with Industry </li></ul></ul><ul><li>Standards – Set a floor & trigger innovation </li></ul><ul><ul><li>Buildings, equipment, vehicles </li></ul></ul><ul><ul><li>Utility Energy Efficiency Resource Standards (EERS) </li></ul></ul><ul><li>Public sector leadership – Reduce market risk </li></ul><ul><li>Financing energy efficiency – Guaranteed savings and dedicated funds </li></ul><ul><li>Incentives & voluntary programs – Create buyer demand </li></ul><ul><ul><li>Tax incentives, rebates, loan guarantees, etc. </li></ul></ul><ul><ul><li>Utility programs (DSM, Demand Response) </li></ul></ul><ul><li>Public Education – Build market share </li></ul><ul><ul><li>Consumer education and awareness campaigns </li></ul></ul><ul><ul><li>Labeling (ENERGY STAR, LEED, GreenGlobes, etc.) </li></ul></ul><ul><li>Workforce development – Capacity building </li></ul><ul><li>KEY TO SUCCESS: Coordinate Programs among Federal Government, States, Utilities, Private Sector, NGOs </li></ul>
    6. 6. Financing Energy Efficiency <ul><li>Energy Savings Performance Contracts (ESPCs) </li></ul><ul><li>Utility Energy Service Contracts (UESCs) </li></ul><ul><li>Energy Efficient Mortgages (EEMs) </li></ul><ul><li>Public Benefits Charges (state programs) </li></ul>
    7. 7. States Lead the way in Energy Efficiency <ul><li>Energy Efficiency Resource (Performance) Standards </li></ul><ul><ul><li>States establish energy efficiency as a resource through energy savings targets (TX, IL, CA, CT, HI, NJ, PA) </li></ul></ul><ul><li>Priority Loading Orders </li></ul><ul><ul><li>For California and the Pacific Northwest, efficiency is the first priority (lowest cost) energy resource </li></ul></ul><ul><ul><li>Next: Renewables, CHP, conventional fuels </li></ul></ul><ul><li>“ Decoupling” Utility Revenues/Profits from Sales </li></ul><ul><li>Regional greenhouse gas initiatives (NE, W Coast) </li></ul><ul><li>State Tax Incentives </li></ul><ul><li>Next: Rail/Transit Infrastructure & “Smart Growth” </li></ul>
    8. 8. Utility Energy Efficiency Programs <ul><li>Help customers save electricity or natural gas </li></ul><ul><li>Many kinds of programs </li></ul><ul><ul><li>Consumer education </li></ul></ul><ul><ul><li>Technical training </li></ul></ul><ul><ul><li>Energy audits </li></ul></ul><ul><ul><li>Appliance rebates </li></ul></ul><ul><ul><li>Financing </li></ul></ul>
    9. 9. Methods for Monitoring and Measuring Effectiveness of EE Programs <ul><li>ESCO projects : International Performance Measurement & Verification Protocol (IPMVP) </li></ul><ul><li>Utility DSM programs: California Energy Efficiency Evaluation Protocols http://www.calmac.org/events/EvaluatorsProtocols_Final_AdoptedviaRuling_06-19-2006.pdf </li></ul><ul><li>Guide to Program Evaluation Guides </li></ul><ul><ul><li>http://www.cee1.org/eval/eval-res.php3 </li></ul></ul><ul><li>DOE evaluation methods http://www1.eere.energy.gov/ba/pba/program_evaluation/publications.html#logic </li></ul><ul><li>DOE evaluation example: State energy programs (2003) http://www.eere.energy.gov/state_energy_program/feature_detail_info.cfm/fid=22 </li></ul>
    10. 10. Recent Federal Legislation <ul><li>Energy Policy Act of 2005 will by 2020: </li></ul><ul><ul><li>Reduce U.S. energy use by 2% </li></ul></ul><ul><ul><li>Reduce electricity demand by 4% </li></ul></ul><ul><ul><li>Reduce CO2 by 3% </li></ul></ul><ul><li>Energy Independence and Security Act of 2007 (EISA) will by 2030: </li></ul><ul><ul><li>Reduce U.S. energy use by 7% </li></ul></ul><ul><ul><li>Reduce electricity demand by 5% </li></ul></ul><ul><ul><li>Reduce CO2 by 9% </li></ul></ul><ul><ul><li>Reduce oil use by 10% </li></ul></ul>
    11. 11. EISA: Combined Heat & Power <ul><li>EPA inventory and registry of recoverable waste energy </li></ul><ul><li>DOE grant program for projects, utilities, and states </li></ul><ul><li>States and non-regulated utilities to consider a standard for sale or transport of excess power </li></ul><ul><li>CHP centers to become 8 regional Clean Energy Application Centers </li></ul>
    12. 12. Energy Efficiency In President Obama’s Campaign Platform <ul><ul><ul><li>Reduce electricity use 15% by 2020 </li></ul></ul></ul><ul><ul><ul><li>Net-zero energy buildings by 2030 </li></ul></ul></ul><ul><ul><ul><li>Overhaul federal appliance standards </li></ul></ul></ul><ul><ul><ul><li>By 2014, reduce energy use 45% in new federal buildings; 25% in existing federal buildings </li></ul></ul></ul><ul><ul><ul><li>Flip incentives for utilities </li></ul></ul></ul><ul><ul><ul><li>Invest in a “smart grid” </li></ul></ul></ul><ul><ul><ul><li>Weatherize 1 million homes/year </li></ul></ul></ul><ul><ul><ul><li>Investment incentives for “livable cities” </li></ul></ul></ul>
    13. 13. Stimulus Package: A Look at the Numbers Program HOUSE SENATE Weatherization 6.2 billion 2.9 billion State Energy Program 3.4 billion 500 million ENERGY STAR Absent Absent EE building codes Absent Absent Waste Energy Recovery Grant 1 billion No ENERGY STAR rebate Yes No
    14. 14. International EE Cooperation: Asia Pacific Partnership on Clean Development & Climate (APP) Partners: Australia, Canada, China, India, Japan, Korea, United States Task Force Country Chair/Co-Chair Lead US Agency or Agencies Clean Fossil Australia/China DOE & EPA Renewable Energy and Distributed Power South Korea/Australia DOE & DOC Power Generation and Transmission USA/China DOE Steel Task Force Japan/India DOC & DOE Aluminum Australia/USA DOC & EPA Cement Japan EPA Coal Mining USA/India DOI Buildings and Appliances South Korea/USA EPA & DOE
    15. 15. THANK YOU! <ul><li>Brian T. Castelli </li></ul><ul><li>Executive Vice President – Programs and Development </li></ul><ul><li>[email_address] </li></ul><ul><li>www.ase.org </li></ul>
    16. 16. Overview of Energy Efficiency in the U.S. Additional Materials
    17. 17. Overview of Presentation <ul><li>Energy Efficiency in the United States </li></ul><ul><li>Tools for Success: Initiatives by Federal Government, States, Utilities, Private Sector, NGOs </li></ul><ul><li>Recent Legislation and Outlook for 2009 </li></ul>
    18. 18. Prospects For Energy Efficiency in the United States <ul><li>Worst economic downturn since 1930s, but: </li></ul><ul><li>Obama Administration is committed to green Infrastructure, investing in people & technology </li></ul><ul><li>Congress is willing to invest $ in efficiency </li></ul><ul><li>Slow growth buys time for climate policy, but… </li></ul><ul><ul><li>Low oil prices encourage wasteful practices </li></ul></ul><ul><ul><li>New taxes (including a carbon tax) difficult in a recession </li></ul></ul>
    19. 19. Policy Drivers for Energy Efficiency: A “Perfect Storm” <ul><li>Gasoline Prices (and electricity, natural gas) </li></ul><ul><li>Global Climate change </li></ul><ul><li>Energy Security </li></ul><ul><ul><li>World markets for oil and gas </li></ul></ul><ul><ul><li>Electricity generating capacity & grid reliability </li></ul></ul><ul><li>… and the lowest-cost source of pollution prevention! </li></ul>
    20. 20. Energy Efficiency is Already Our FIRST Energy Resource
    21. 21. Policy Tools: Appliance Standards <ul><li>Appliance standards are among the most effective EE policies </li></ul><ul><li>Total savings from existing standards in 2000: </li></ul><ul><ul><li>2.5% of U.S. electricity use </li></ul></ul><ul><ul><li>21,000 MW of peak power demand </li></ul></ul><ul><ul><li>$50 billion in net consumer savings </li></ul></ul><ul><li>Total savings from existing standards by 2020: </li></ul><ul><ul><li>7.8% of projected U.S. electricity use </li></ul></ul><ul><ul><li>120,000 MW of peak power demand </li></ul></ul><ul><ul><li>$186 billion in net consumer savings </li></ul></ul>
    22. 22. Track Record of Appliance Efficiency Standards <ul><li>Today’s new refrigerators use 75% less energy than in 1973 </li></ul><ul><li>From 1972 to 2003: </li></ul><ul><ul><li>Energy Use down 74 % </li></ul></ul><ul><ul><li>Capacity up 29% </li></ul></ul><ul><ul><li>Price down 64 % </li></ul></ul>Source: Graphic -- Collaborative Labeling and Appliance Standards Program Statistics – Art Rosenfeld (CEC) and David Goldstein (NRDC)
    23. 23. Energy Efficiency Endorsement Labeling <ul><li>Energy Star: EPA and DOE program </li></ul><ul><li>Label energy efficient products: </li></ul><ul><ul><li>Appliances </li></ul></ul><ul><ul><li>Lighting products </li></ul></ul><ul><ul><li>Furnaces and Air-Conditioners </li></ul></ul><ul><ul><li>Computers and electronics </li></ul></ul><ul><li>Energy Star Homes </li></ul><ul><li>Commercial Building Label </li></ul>
    24. 24. Public Sector Leadership: Federal Buildings Example <ul><li>A credible energy/climate policy requires government to do more (sooner) than it asks of private businesses and the public! </li></ul>FISCAL YEAR 10% Goal - 1995 (NECPA ) 20% Goal - 2000 (EPACT) 30% Goal - 2005 Actual Energy Use 35% Goal - 2010 Actual site energy use 1985 1990 1995 2000 2005 2010 110 100 90 120 130 140 Site Energy, 1000 Btu/sq.ft. 29.6% Reduction, 2005
    25. 25. Policy Tools: Industrial Systems Energy Efficiency <ul><li>Industrial firms tend to invest in process changes for EE and productivity – long term and high cost </li></ul><ul><li>Cross-cutting energy systems (motors-driven, steam, process heating) offer 20-50% savings potential </li></ul><ul><ul><li>Inefficient systems found in nearly every plant </li></ul></ul><ul><ul><li>Near-term, lower-cost savings are from optimizing systems not components (only 2-5% savings) </li></ul></ul><ul><li>Customize system energy efficiency for each site </li></ul><ul><li>US DOE strategy since 1992 (BestPractices): </li></ul><ul><ul><li>Educate plant engineers – training, software, technical publications </li></ul></ul><ul><ul><li>Industry partnerships </li></ul></ul><ul><ul><li>Cost-shared plant energy assessments </li></ul></ul>
    26. 26. Energy Savings Assessments <ul><li>US industry energy use is concentrated in relatively few plants </li></ul><ul><ul><li>10 largest industries use >90% of manufacturing energy </li></ul></ul><ul><ul><li>Of 320,000 manufacturing sites, 1000 largest use 25% of energy </li></ul></ul><ul><li>Over 15 years, USDOE Industry program has compiled plant-level data on 14,000 plants </li></ul><ul><ul><li>Data initially used for tech. analysis & recommendations </li></ul></ul><ul><ul><li>Important second use to target outreach & technical assistance </li></ul></ul><ul><li>These data – combined with System Assessment Tools and a network of DOE-trained specialists – allow quick response to policy directives </li></ul><ul><ul><li>Example: Federal government response to expected oil and gas shortages after Hurricane Katrina </li></ul></ul>
    27. 27. US DOE’s Save Energy Now <ul><li>Energy Saving Assessments (2-3 days) for 200 large plants </li></ul><ul><ul><li>train plant personnel </li></ul></ul><ul><ul><li>track actions and savings </li></ul></ul><ul><li>First 21 Energy Savings Assessments identified a US$64 million/year in energy cost savings </li></ul><ul><li>26 engineering schools (Industrial Assessment Centers) to provide 1-day assessments for ~500 small to medium-sized plants </li></ul><ul><li>Use industry partners and Web tools to reach thousands of additional plants </li></ul><ul><li>For more information: </li></ul><ul><li>http://www.eere.energy.gov/industry/saveenergynow/ </li></ul><ul><li>http://www1.eere.energy.gov/industry/bestpractices/ </li></ul>
    28. 28. Building Energy Efficiency Codes <ul><li>Minimum requirements for residential and commercial building energy efficiency design </li></ul><ul><li>Energy codes primarily regulate: </li></ul><ul><ul><li>Wall and roof insulation (R-value) </li></ul></ul><ul><ul><li>Windows, doors and skylights (U-factor, SHGC) </li></ul></ul><ul><ul><li>HVAC equipment installed in new buildings </li></ul></ul><ul><ul><li>Control systems (SEER, EER, COP, etc.) </li></ul></ul><ul><li>Model energy codes developed by national organizations </li></ul><ul><ul><li>International Energy Conservation Code by ICC (residential) </li></ul></ul><ul><ul><li>ASHRAE Standard 90.1 (commercial) </li></ul></ul><ul><li>Codes adopted and enforced by state and local governments </li></ul>
    29. 29. National Benefits of Building Energy Codes <ul><li>41 US states have adopted model energy codes </li></ul><ul><li>Since 1991, cumulative energy cost savings of $7.4 billion </li></ul><ul><li>Annual energy savings of >0.50 Quads today </li></ul><ul><li>Savings potential if all states updated their energy codes: </li></ul><ul><ul><li>Energy savings 0.85 quads annually </li></ul></ul><ul><ul><li>Cumulative savings through 2020 of about 5 Quads </li></ul></ul><ul><ul><li>CO 2 reductions> 50 million metric tons </li></ul></ul><ul><ul><li>$7 billion in energy cost savings to consumers </li></ul></ul><ul><ul><li>Avoid 32 new 400-MW power plants </li></ul></ul><ul><li>National energy codes program: $1 cost = $105 benefit </li></ul><ul><li>Simple payback for code measures: about 2.5 - 6 yrs. </li></ul>
    30. 30. Building Code Adoption and Compliance
    31. 31. Consumer Education/Campaigns <ul><li>Super Powers </li></ul><ul><li>EPA, NYSERDA, Alliance </li></ul><ul><li>Nationwide TV & Radio </li></ul><ul><li>(ABC, CBS, CNN) </li></ul><ul><li>Consumer Website </li></ul><ul><li>Powerful $avings </li></ul><ul><li>DOE & Alliance Partnership </li></ul><ul><li>All Media Outlets </li></ul><ul><li>The Power is In Your Hands </li></ul><ul><li>Industry, DOE, EPA, Alliance </li></ul><ul><li>All Media Outlets, Web & Collateral </li></ul>Energy Hog DOE, Ad Council, Alliance, States All Media Outlets Web, Collateral Materials P&G ColdWater Campaign P&G, Alliance All Media Outlets & Web Eureka $mart House Energy-Efficiency Challenge NBC Universal, Industry, DOE, Alliance On Air, Web–Home Makeover Contest
    32. 32. Consumer Education through Schools: Alliance to Save Energy Green Campus Program UC Santa Barbara UC San Diego UC Berkeley Humboldt State CSU San Bernardino San Diego State UC Irvine Sonoma State CSU Chico UC Merced Cal Poly Pomona UC Santa Cruz Student Internship Program Between two and five paid student interns on each campus State-wide implementation team - Based in SF-Bay Area - Guides intern efforts, develops program- wide projects - Develops partnerships with other energy efficiency programs Program funded through grants from California IOUs - PG&E, SCE, SDG&E, SoCal Gas Est. 2004 Est. 2005 Est. 2006
    33. 33. Policy Tools: Utility DSM Programs Pre capita spending on utility energy efficiency (excludes load management)
    34. 34. States with EERS HI: Public utilities to provide 20% of their electricity from eligible renewable sources, including EE by 2020. TX: Offset 20% of load growth through end-use EE.  Targets of 30% and 50% are being investigated as potential options for the future. VT: Goals met: 5% by 2006 and 3.5% of 2006 sales. CA: Energy savings between 2004 and 2013 should save 1% of total forecast electricity sales each year. PA: Qualified power sources, including EE in Tier II, to provide 18.5% of electricity by 2020. CT: Minimum 1% of electricity sales from distributed generation or EE in 2007, 2% in 2008, 3% in 2009 and 4% in 2010. NV: EE can meet up to 25% of the state’s 20% renewable portfolio standard. CO: Xcel Energy will achieve 0.38% electricity savings by 2013. WA: utilities to acquire all cost effective energy efficiency. VA: 10% energy savings target by 2022. IL: Yearly savings of 0.2% of energy delivered in 2008, 0.4% in 2009, rising to 2.0% annually for 2015 and subsequent years. NC: Combination of EE and renewable energy goals of 3% of prior-year electricity sales in 2012; 6% in 2015; 10% in 2018, and; 12.5% in 2021 and thereafter. MN: 1.5% annual energy savings from electric and NG sales, 1% of which must come from EE.
    35. 35. Federal Tax Incentives for Buildings (2006-2007) <ul><li>New Homes </li></ul><ul><ul><li>Builder tax credit - up to $2,000 if 50% more efficient compared to 2004 IECCC code; $1,000 for an Energy Star manufactured home. </li></ul></ul><ul><li>Existing Homes </li></ul><ul><ul><li>Homeowner tax credit – 10% of cost of installing building envelope components consistent with IECC 2000; capped at $500; $200 can apply to windows. </li></ul></ul><ul><li>Commercial Buildings </li></ul><ul><ul><li>Deduction up to $1.80/sq.ft. for buildings designed to use 50% less energy than ASHRAE-90.1 (2001) </li></ul></ul><ul><li>Public Buildings: Assignable deduction! </li></ul>
    36. 36. Tax Incentives Extended (10/08 Financial Rescue Bill) <ul><li>Commercial Buildings : Deduct $1.80/sqft (5 years) </li></ul><ul><ul><li>Assignable deduction for public buildings </li></ul></ul><ul><li>New Homes : Builder tax credit $1-2K for 30-50% (1 yr) </li></ul><ul><li>Home Improvements : Homeowner tax credit (1 yr) </li></ul><ul><li>Appliances : Manufacturer tax credit for efficient appliances (+3 years) </li></ul><ul><li>Plug-in Hybrid Vehicles : Buyer tax credit $2500-7500, similar to hybrid vehicle credit </li></ul><ul><li>Combined Heat & Power : New investment tax credit </li></ul><ul><li>Smart Meters : Accelerated 10-year depreciation for utilities </li></ul>
    37. 37. EISA: Utility Smart Grid <ul><li>Creates a DOE Smart Grid Advisory Committee and Smart Grid Task Force </li></ul><ul><li>Authorizes a DOE RD&D program and a matching fund for private investments </li></ul><ul><li>Directs NIST to lead development of interoperability protocols and standards </li></ul><ul><li>Requires states to consider smart grid investments </li></ul>
    38. 38. Prospects for a new Energy Bill <ul><li>Senate may discuss Energy Bill around April/May </li></ul><ul><li>Interest in renewable/efficiency “portfolio standards” (RPS/EERS) </li></ul><ul><li>Authorize new programs to be funded from auctioning GHG emissions credits </li></ul>
    39. 39. ASE Recommendations for Energy Bill <ul><li>Advanced building energy code targets </li></ul><ul><ul><li>30% improvement in 2010 </li></ul></ul><ul><ul><li>50% improvement in 2020 </li></ul></ul><ul><li>Building energy labeling and disclosure (at time of sale or lease) </li></ul><ul><li>Energy Efficiency Resource Standard </li></ul><ul><ul><li>Utilities to save 10% of electricity sales and 7% of natural gas sales by 2020 </li></ul></ul><ul><li>Long-term extensions and restructuring of energy efficiency tax incentives </li></ul><ul><ul><li>Performance-based </li></ul></ul><ul><ul><li>New & existing homes and commercial buildings </li></ul></ul>
    40. 40. A Climate Bill in 2009? <ul><li>Obama Administration looking for action from 111 th Congress </li></ul><ul><li>Expectations that a climate bill will be considered by summer or fall 2009 </li></ul><ul><li>Efficiency advocates working together on climate bill recommendations – key issues include: </li></ul><ul><ul><li>Program funding from GHG credit auctions </li></ul></ul><ul><ul><li>Allocate credits to efficiency program implementers </li></ul></ul><ul><ul><li>Third-party energy savings eligible for GHG credits? </li></ul></ul><ul><ul><li>Condition allocation of other GHG funding on State actions for energy efficiency </li></ul></ul><ul><ul><li>Harmonize methods for evaluation, measurement ,& verification </li></ul></ul>
    41. 41. Energy Efficiency in Climate Bills <ul><li>Cap-and-trade cuts emissions for covered sectors (e.g., 70% by 2050) </li></ul><ul><li>Adding carbon credit price to energy prices reduces energy demand </li></ul><ul><li>Allocation of credits may go to: </li></ul><ul><ul><li>utilities for efficiency programs and customer help </li></ul></ul><ul><ul><li>states for building codes, decoupling policies, mass transit, other efficiency </li></ul></ul><ul><li>Auction of credits would produce funds for: </li></ul><ul><ul><li>efficient appliances, advanced vehicles, home retrofits, RD&D, etc. </li></ul></ul><ul><li>Complementary measures </li></ul><ul><ul><li>e.g., efficiency targets for building energy codes </li></ul></ul>
    42. 42. Conclusion: Need a Balanced Approach to Energy Efficiency <ul><li>Building Energy Codes & Appliance Standards </li></ul><ul><ul><li>New construction and renovation </li></ul></ul><ul><ul><li>Appliances & equipment efficiency standards </li></ul></ul><ul><li>Voluntary market transformation (Energy Star) </li></ul><ul><ul><li>Appliance labeling </li></ul></ul><ul><ul><li>Building performance rating/disclosure </li></ul></ul><ul><ul><li>Incentives </li></ul></ul><ul><ul><li>Public sector leadership </li></ul></ul><ul><li>Targeted portfolio of utility DSM </li></ul><ul><li>RD&D Partnerships </li></ul>