Columnists: Steven Nadel, ACEEE

Published on: 13 Mar 2008

Fair winds from the other side of the Atlantic

The past year has been a period of growing energy efficiency activity in the U.S., and signs point to continued growth in the years ahead. This column addresses three recent trends – growing activity at the state level, 2007 legislation, and the prognosis for climate change legislation in the next year or two. It also outlines the role of ACEEE, eceee’s American sister organization, in the process.

With the cost of new power plants skyrocketing, and fuel and transportation costs also increasing, power from new power plants is now costing roughly 7–10 cents per kWh wholesale, making energy efficiency programs costing 3–4 cents per kWh saved increasingly attractive.

There’s also a growing consensus in the U.S. that substantial steps are needed to address global climate change, and many states are taking action. Even in Washington, significant legislation was enacted in December 2007, with more legislation likely in 2009 or 2010.

Increasing efforts at state level

Energy efficiency efforts are increasing dramatically at the state level. Some states have operated efficiency programs for many years, usually with electric and gas utility administration. Many of these states are ramping up spending and savings, with the most aggressive programs reducing electricity use by 1.5 % of sales each year (e.g. 1.5 % savings in the first year, 3 % in the second year, etc.). California and Vermont hit this level of savings in 2007, approximately offsetting load growth.

The states of Connecticut, Massachusetts and New York are now planning to at least double annual program savings, decreasing sales relative to current efforts. For example, the Governor of New York State announced an initiative to achieve 15 % electricity savings by 2015 (“15 by 15”). And in Minnesota, a new law just passed requiring both electric and gas utilities to achieve 1.5 % savings per year targets, with an amendment now pending to raise this to 2 % per year. In addition, many states that have offered only limited programs are also starting program efforts.

Legislation establishing mandatory savings goals was enacted last year in Colorado, Illinois, North Carolina and Virginia. And similar efforts are now pending in Maryland, Michigan, Ohio and Pennsylvania.

Energy issues are moving at the Federal level

At the Federal level, the new Congress moved energy issues to the front of the agenda and passed the Energy Independence and Security Act (EISA), a bill that emphasizes energy efficiency.

The bill establishes the first new U.S. car efficiency standards in 20 years, mandating that cars and light trucks achieve at least 35 miles per gallon (14.9 km/liter) by 2020, a substantial improvement over the approximately 25 mile per gallon (10.6 km/liter) average of new vehicles sold in 2007. The law also directs the establishment of fuel economy standards for heavy trucks, sets new energy efficiency standards for ten types of equipment (most notably incandescent light bulbs and electric motors), and authorizes new programs to improve efficiency in commercial buildings and manufacturing.

Climate legislation

Looking ahead, come 2009, climate change legislation is likely to be high on the agenda of the new President and new Congress. All of the major Presidential candidates are now committed to enacting climate change legislation, as is the Congressional leadership. The outlines of a likely bill are provided by legislation authored by Senators Lieberman and Warner and passed out of a Senate sub-committee. This legislation establishes a cap-and-trade program for greenhouse gases, requiring emissions to be reduced 15 % below current levels by 2020 and to 70 % below current levels by 2050. However, many details are the subject of hot debate.

To pass major legislation requires 60 votes in the U.S. Senate, so even if pro-environment candidates do well in the 2008 election, votes of moderate Democrats and Republicans will still be needed, meaning a variety of compromises will have to be made. If these compromises come together fairly quickly, legislation can pass in 2009; otherwise it may take into 2010. A new Administration will also be more willing to engage in international climate change negotiations, but approval of treaties requires a two-thirds majority in the Senate, meaning that compromises will be needed in order to come up with a treaty that the U.S. can ratify.

ACEEE’s role

ACEEE is heavily involved in most of these efforts. We are actively working in many states, conducting studies showing that aggressive savings goals can be achieved, and assisting states to reach goals that are enacted. In this work we are emphasizing large states that are not presently doing a lot of efficiency.

We also played a major roll in developing the energy efficiency standards in the 2007 legislation, and are working to ensure that energy efficiency plays a major roll in climate change legislation. Our economic analyses show that expanded energy efficiency efforts can bring the U.S. a substantial way towards these greenhouse gas emissions goals, and that these efficiency savings can help pay for other measures that reduce greenhouse gases, helping to keep impacts on the U.S. economy to modest levels. More information on U.S. program and policy efforts, and ACEEE’s role in helping to shape these efforts, can be found at www.aceee.org .

The views expressed in this column are those of the columnist and do not necessarily reflect the views of eceee or any of its members.

Other columns by Steven Nadel