Transcript Energy Efficiency: Meeting the Challenge

Energy Efficiency –
Good for the World’s Economy;
Good for the Nation’s Economy; and,
Good for Yours!
Presentation by
Kateri Callahan, President
Charlotte Regional Partnership Investors Forum
July 29, 2009
Overview





A Few Words About the Alliance
Why Energy Efficiency? Why Now?
Policy: Tapping the Full Potential of Energy
Efficiency
Regional/State Leadership: Building Green
Economies One by One
Forecast for the Future: Energy Efficiency as
the Foundation of a New, Green Economy
What is the
Alliance to Save Energy?
 A unique
 Guided
-
NGO formed and still led by Members of Congress
by a 37-Member, Elected Board of Directors
Led by Senator Mark Pryor (D-AR) and Jim Rogers, CEO of Duke Energy
Includes 9 Members of Congress – Bi-Cameral; Bi-Partisan
Also includes environmental, consumer, and trade associations heads, state
and local policy makers, corporate executives
Forging Alliances:
Business, Govt. & Public Interests


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Sponsorship and participation of more than 160 organizations
Involvement by businesses in all economic sectors
Initiatives underway in research, policy advocacy, education, technology
deployment, and communications
Energy Efficiency: Faithful Friend
America's Greatest Energy Resource
Energy Efficiency and Conservation Improvements Since 1973
Have Reduced Annual Energy Consumption by 50 Quads
50
Energy Efficiency and Conservation
40
Petroleum
Natural Gas
24
Coal
23
8
Nuclear Electric Power
4
Wood, Waste, Alcohol
Conventional Hydroelectric
3
Geothermal, Solar and Wind
0.8
0
Alliance to Save Energy
August 2008
10
20
30
Quads
2007 Domestic Production
40
50
Net Imports
60
Energy
Efficiency
has been
powering
the U.S.
economy
for over
30 years!
Enormous Savings

Energy Efficiency AVOIDING roughly 2.5
billion tons of CO2 annually

Saving roughly $400 billion annually
Why Now? Energy Use is a Global
Climate Issue
Source: Energy Information Administration
Why Now? Growing Energy Demand is
Unsustainable
18
Other renewables
Biomass
Hydro
Nuclear
Gas
Oil
Coal
billion tonnes of oil equivalent
16
14
12
10
8
6
4
2
0
1980
1990
2000
2010
2020
2030
Global demand grows by more than half over the next quarter of a
century, with coal use rising most in absolute terms
Why Now? U.S. Growth in Energy Use
Poses a National Security Threat
Why Now: Energy Efficiency is a
Pocketbook Issue
Why Efficiency? Cheapest,
Quickest, Cleanest….

Annual world-wide investment of $170 billion
in energy efficiency through 2020 could:
- cut global growth in energy demand by ½!
- save $900 billion a year in avoided energy costs
- dramatically reduce greenhouse gas emissions
 Source: The McKinsey Global Institute
Why EE? Enormous Potential for
Savings in ALL Sectors…
Source: McKinsey Global Institute
Why Efficiency? Local
Benefits
EE: Enormous Potential for
Regional Job Growth…
The same study reveals
that cost-effective energy
policies can positively
impact the larger
Appalachia economy,
creating 77,378 jobs
regionally.
The Challenge?
Market Distortions

Principal Agent or “Split Incentives”
- Home/Commercial builder versus buyer
- Landlord versus tenant
- Utility versus customer

Transaction Costs
- Lack of information on life-cycle cost for products
and/or paybacks for upgrades

Lack of Investment in RD&D and EE Programs
How Do We Unlock the Potential
of Energy Efficiency?
Five Tenants of Sound
EE Public Policy
1)Research, development and deployment (RD&D)
2)Education and outreach
3)Incentives and Financing Mechanisms
4)Standards & Codes
5)Government “Leadership by Example”
A Big Year for Energy Efficiency
in Public Policy
Obama’s
election
platform
American
Recovery &
Reinvestment
Act (ARRA,
or Stimulus
Bill)
President’s
Fiscal Year
2010 budget
President’s
new CAFÉ
standards
NEW! American
Clean Energy
and Security
Act (ACES)
House
PASSES
ACES (6/26)
Ongoing
appropriations
in House and
Senate climate
& energy bills
DOE: new
lighting
standards
President Obama:
Energy Efficiency Advocate
–
–
–
–
–
–
–
–
–
Reduce electricity use 15% by 2020
Net-zero energy buildings by 2030
Overhaul federal appliance standards
By 2014, reduce energy use in new
federal buildings 45%; 25% in existing
federal buildings
Flip incentives for utilities
Invest in a “smart grid”
Weatherize 1 million homes/year
Investment incentives for “livable
cities”
Showed early commitment to large
green energy component in the
economic recovery bill
American Recovery & Reinvestment Act:
$65B Related to Energy Efficiency
Funding in Millions of US Dollars
ARRA: Built on the Five Pillars of
Good Public Policy
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RD&D
– Smart Grid ($4.5 bill)
– DOE RD&D ($2.25 billion)
Incentives and Financing Tools
– Extension of tax incentives
– PACE Bonds
Codes & Standards
– “Conditions” State funding on strong building codes
Education & Outreach
– State Energy Star rebate programs ($300 million)
Government Leadership by Example
– Federal “High-Performance Green Buildings” ($4.5 billion)
Funding Rollout

Energy Funds Slow to
Unroll:
-

1% of FY2009 awards
90% of FY2009 awards go to
health, transportation and
education
Projected timing of
all funds made
available to states
and localities.
Funding allotted in
segments:
-
For SEP & WAP:



10% on initial app approval
40% on comprehensive app
approval
Remaining 50% contingent on
demonstrated success
http://www.recovery.gov/sites/default/files/GAO-09-580+Recovery+Act.pdf
FY09 and FY12
funding for states
and localities
Core Energy Funding
Obligation & Spending to date
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SEP
-
Appropriated: $3.1 billion
Obligated: $301.6 million
Spent: $9.4 million
EECBG
-
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-

Appropriated: $3.2 billion
Obligated: $0
Appropriated: $5 billion
Obligated: $553.4 million
Spent: $8.3 million

-
Appropriated: $500 million
Obligated: $0

Appropriated: $615 million
Awarded: $4.7 million
Spent: $0
HUD’s EE Public Housing Capital
Funds
-
Green Jobs
Appropriated: $4.5 billion
Obligated: $0
Smart Grid Demonstration
Projects
-
WAP
-
Smart Grid Investment Grant
Program
Appropriated: $4 billion
Awarded: $0
HUD’s Green Retrofit Program
-
Appropriated $250 million
Obligated: $0
$890 million of $18 billion awarded (.5%)
ARRA Funding for EE
North Carolina:

State Energy Program (SEP)
- Appropriated: $76 million
- Awarded: $30.4 million (June
South Carolina

State Energy Program (SEP)
- Appropriated: $51 million
- Awarded: $20.2 million (June 25)

Weatherization Assistance
- Appropriated: $59 million
- Obligated: $24 million (June
25)

Weatherization Assistance
- Appropriated: $132 million
- Obligated: $53 million (June

18th)
Weatherization goal: 23,500
homes
Energy Efficiency and
Conservation Block Grants*
- Appropriated: $ 58 million

18th)
Weatherization Goal: 6,500
homes
Energy Efficiency and
Conservation Block Grants*
- Appropriated: $ 31 million
State Energy Program Plans
State
Energy Efficient Buildings
Performance
Contracting Residential
Arizona
x
x
Georgia
Revolving
Loans
x
x
x
x
x
x
x
x
x
x
x
x
Iowa
x
x
Maine
Massachusetts
State
Commercial
x
California
Colorado
Industrial
Financing Mechanisms
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
New York
West Virginia
x
x
Montana
North
Carolina
South
Carolina
Transportation
x
x
x
Green Education
Jobs
and
Training Outreach
Credits
x
Minnesota
New Hampshire
Grants
Building
Code
Compliance
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
Updated regularly on our stimulus resources page: www.ase.org/stimulusresources
x
x
x
Uses of Funds:
State Energy Programs Plans
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North Carolina:
- Support small business and industry through energy savings ($11.5 million)
- Grow North Carolina’s green workforce- ($8.85 million)
- Foster renewable energy technology and resource innovation ($13.5 million)
- Improve energy efficiency in local and state government ($9.5 million)
- Promote residential energy efficiency and renewable energy ($10 million)
- Create an Energy Investment Revolving Loan Fund ($18 million)
South Carolina:
- Improve energy efficiency in Public Institutions ($40 million)
- Create South Carolina Energy Efficiency Training Center Collaborative ($.9
million)
- Establish Small Business/Utility Partnership for Energy Efficiency Equipment
($50 thousand)
- Improve energy efficiency in Low-Income Manufactured Housing ($3
million)
- Establish Carolina Clean Green Investment Incentives ($3 million)
- Establish Competitive Renewable Energy Grants Program ($3 million)
Oversight and Advocacy

Immense problems of implementation
- size and complexity;
- challenge of administration within limited
time frame;
political appointees not in place;
demands on career appointees
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Credibility of future energy efficiency
initiatives depends on competent and
effective implementation
Problem of EM & V: How do we measure
savings?
Continuity of Programs: What happens
when the funding goes away?
A Word on Federal Tax
Incentives
New Homes
Builder tax credit - up to $2,000 if 50% more efficient
compared to 2004 IECCC code; $1,000 for an Energy
Star manufactured home. (Through 2009)
Existing Homes
Homeowner tax credit – 10% of cost of installing
building envelope components consistent with IECC
2000; capped at $1,500 (Through 2009)
Commercial Buildings
Deduction up to $1.80/sq.ft. for buildings designed to
use 50% less energy than ASHRAE-90.1 (Through
2013)
Public Buildings: Assignable deduction!
A Word on Financing: PACE (Property
Assessed Clean Energy Bonds)

Financing of commercial and residential EE and small RE
- Authority for municipal financing districts or finance companies to
issue bonds
- Bond proceeds loaned for EE and small RE retrofit investment
- Repaid through annual assessment on property tax bill
- Potential market could exceed $500 billion
- Dramatically improves economics
Advantages of PACE finance
Our Nation:
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Accelerates market and transition
Very low fiscal cost & high probability of success
Creates jobs
Property Owner:
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Improved return on investment/positive cash flow on retrofits (annual savings>cost)
Lower energy bills and substantially reduced upfront costs for energy retrofits
States, Cities & Municipalities:

Obligation is liability of real estate owner
Opt in: Only those real estate owners who opt in pay for it

Lender:

Virtually no risk of loss as property tax liens are senior to mortgage debt
97% of property taxes are current & losses are less than 1%
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Next Up?
Energy and Climate Legislation
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
In the House
- ACES (The American
Clean Energy and
Security Act, or
Waxman-Markey)
Status: Narrowly
passed the House on
June 26th by a vote of
219 to 212.
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
In the Senate
- ACELA (The
American Clean
Energy Leadership
Act)
Scope: Energy Only
Status: Approved by
Energy Committee on
June 27th
ACES:
Cap is the crown jewel
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85% of US GHG emissions covered
-
Could be higher
Covered emissions reduced 83% in 2050
Defend and protect the cap!
ACES:
Goals for Energy Efficiency
Policies will no longer save more energy.
Instead they will—

Reduce cost of meeting carbon cap by

Addressing market barriers, especially
among energy end-users
ACES: EE Programs

Complementary EE policies
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Codes, standards, building labeling, electric efficiency
resource standards
Complementary Programs
- EE in WM is 3-6% of allowance value

$81 to $167b over 2012-2050
- 12.5% of allowance value could get



Allowance prices 10% lower
Electric, nat gas and petrol prices 1-3% lower
Electric and natural gas demand 3-7% lower
according to EPA analysis April 20
Climate Outlook in Senate
Senate EPW to release draft in September
 At least six other committees have jurisdiction
over climate legislation; Senator Reid has
asked these Committees to conclude
deliberations by Sept. 18
 Majority Leader Reid wants to bring
comprehensive bill to the floor in the fall; we
are hearing October for floor action
 Opponents/Proponents in “Pitched Battle”

ACES: Where the Votes Are
States with majority of votes in the delegation
for the Waxman-Markey bill are in green;
states with majority opposing W/M are in red
The Challenges Can Be Overcome:
Unleashing NC and SC’s Potential!
Retail Electricity Consumption per Capita
18.0000
16.0000
Thousand Kilowatt Hours per Person
14.0000
12.0000
NC
10.0000
NY
VT
8.0000
USA
EU
JAPAN
6.0000
4.0000
2.0000
0.0000
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
Unleashing the Power of Public Policy:
A “Prescription for Success”
Western Governors “CDEAC” Recommendations
 Migrate “Best Practices” to ALL western states
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Institute Electric & Natural Gas DSM Programs
Update & Enforce New Building Codes
Government Leadership in Facilities/Practices
Financial Incentives
Pricing Policies (Pay more for the more you use)
Education & Outreach
Technology R&D and Transfer
Form Regional Initiatives
Feasible to reduce electricity use 20% in 2020
Leadership in the States
California Cut Energy Use and Peak Demand


“Flex Your Power Campaign”
-
Retail promotions
TV, Print & Radio Advertising
20/20 Utility Rebate Program
-
Automatic Enrollment
Executive Order
Simple Requirement
All Investor-owned Utilities
Results
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Reduced energy consumption at peak by 14%
32% of residents & businesses cut energy use by at least 20%
Per capita energy use lower than any industrialized nation
Cost of savings lower than contract or spot market power purchases
Unleashing the Power of Charlotte:
Suggestions for Success

National
Action Plan
for Energy
Efficiency
- EEI, NARUC,

EPA, DOE…

Western
Governors
Association
Energy
Efficiency Task
Force Report
EPA Clean
EnergyEnvironment
Guide to Action
- DOE, NARUC,
NASEO, ASE, RAP

State Energy
Efficiency Policies: a
Series of Briefs,
pub. by the Alliance
EE Global 2010
Monday, May 10 to Wednesday, May 12, 2010
Washington DC Convention Center, Washington DC
EE Global 2010, will serve as the “Davos” of the energy efficiency
community, drawing over 600 leaders from government, industry, NGOs,
and media from 40+ countries together to share best practices and
policies for global implementation of energy efficiency.
With over 80% of 2009 participants self-identifying as executive or
management-level, participation in EE Global will provide access to
energy efficiency’s most notable leaders and decision makers.
Final Words…
“Our greatest national energy
resource is the energy we currently
waste.”
Former Energy Secretary Spence Abraham
Thank you!
For More Information….
Kateri Callahan
President
Alliance to Save Energy
1850 M Street, NW
Washington, D.C. 20036
[email protected]
www.ase.org
202.857.0666