The Most Volatile Non-Energy Benefits (NEBs): New Research Results "Homing In" on Environmental And Economic Impacts

Karen Imbierowicz and Lisa A. Skumatz, Skumatz Economic Research Associates, Inc.

Keywords

Abstract

Research indicates that non-energy benefits (NEBs) are large, and can outweigh the bill or energy savings from programs. However, a large proportion of the benefits hinge on two key “societal” benefits: the environmental or green-house gas (GHG) benefits, and the economic or job-creation benefits of the programs. The valuations assigned to these categories can be large, but are very sensitive to underlying assumptions – and NEB totals can vary more than 200% based on alternative values from these categories. We conducted extensive research to develop more reliable and defensible estimates of these benefits categories.

Economic and Job Creation Benefits: We corrected a major flaw from much of the existing literature on direct and indirect economic multipliers and job-creation benefits of DSM programs. Several key studies in the existing literature err in estimating only the “gross” impacts of expenditures on programs; they do not recognize that the expenditures replace expenditures that would have occurred in different sectors of the economy. Using an input-output model, we correct this problem and develop more realistic values and ranges for the economic impacts of key categories of DSM programs.
Environmental Benefits: Using data from scores of sources, we assembled data on the emissions by fuel and generation type, and gathered dollar valuation information that were computed based on health effects, technology retrofits, “regulatory” numbers, tracking prices, and other derivations. Using these data, we estimated environmental / emissions NEBs. We estimated valuation results for these emissions that were more reliable and “citable”, but also more easily “tailored” to local conditions and priorities. The results illustrate how values change in relation to key assumptions, and provide results based on well-documented sources of data.

The revised figures have been used to compute more reliable estimates of non-energy benefits, and we present improved numbers that can be used in regulatory tests and other applications.