Forecasting an Increasing Role for Energy Efficiency in Meeting Global Climate Goals

David B. Goldstein, Natural Resources Defense Council
Marc G. Hoffman, Consortium for Energy Efficiency

Keywords

Abstract

A number of studies over the past decade and longer have shown how energy efficiency can achieve a large fraction, or all, of the greenhouse gas emissions reductions necessary to meet the goals of the Kyoto Protocol in the United States. But few studies suggest that we can go significantly beyond these goals, particularly on a global basis, as is required for climate stabilization. If energy models show that cost effective measures such as energy efficiency are not sufficient to meet climate goals, then economic models will show that the costs of climate policies are unnecessarily high.

This paper focuses on the potential for continuous improvement in energy efficiency based on voluntary efficiency programs’ ability to use demand pull strategies such as market transformation to introduce more efficient technology into the marketplace and mandatory policies such as minimum efficiency standards that are upgraded regularly to eliminate the obsolete models. These two policies are interrelated: both efficiency advocates and manufacturers are recognizing the advantages to having “premium” levels of energy efficiency induced by market transformation programs as well as mandatory standards and have recognized that the market demonstration of these higher levels of efficiency often leads to upgrades in the minimum standards. But even after the upgrade, continued existence of market transformation programs provides manufacturers with an incentive to redesign, not just to meet the standards, but to go beyond them, at least for a fraction of their products. As manufacturers strive to take advantage of this dynamic, even higher levels of energy efficiency are achieved. These new technologies are almost never included in forecasts.

We will document the dynamic process of encouraging continuous technological improvement through a combination of research, market transformation, incentives, standards, and market forces, and suggest options for forecasting and scenario planning based on these observations. We will compare forecasting assumptions used in analysis of future appliance standards for the base case to energy models used in analyses of global warming scenarios. Both will be contrasted to our analyses of the dynamic voluntary/mandatory piggybacking of demand pull and higher minimum standards policies on efficiency forecasts for common technologies in the residential and commercial sectors.