15 February 2011
Energy Conservation Good Business for States
Washington — Energy efficiency programs target what some call the “low-hanging fruit” — relatively inexpensive and effortless fixes that can have a big effect on greenhouse gas emissions.
Just ask the many American states that are pushing ahead, full-steam, with energy-savings targets for power companies. Together, these states will help the United States reduce emissions in a significant way.
The Pacific island state of Hawaii, for example, has passed a law to use energy conservation measures to reduce statewide electricity sales by 40 percent by 2030. Others use their targets to offset an expected future growth in energy consumption. A new Texas law says that energy efficiency programs in that Southwestern state must reduce such growth by 25 percent by 2012, and by 30 percent by 2013.
The states then use incentives and rebates to encourage homeowners to replace leaky windows, spray insulation in their walls and replace aging and inefficient dishwashers, washing machines and air conditioning units. Businesses also get help with such things as replacing machines with new ones that use less energy, or with insulating commercial buildings.
In all, 26 of America’s 50 states either have passed or introduced legislation requiring utilities to reduce state energy consumption by a certain percentage annually, according to the American Council for an Energy-Efficient Economy (ACEEE), a nonprofit group. That’s up from just a handful a few years ago.
As a result, energy companies doubled their budgets between 2007 and 2009 for programs aimed at helping consumers retrofit buildings and invest in more efficient equipment and appliances. The trend continued in 2010, when utility budgets for such programs grew another 25 percent, said Michael Sciortino, an ACEEE research assistant.
“It’s a clean, fast and cheap way of reducing energy waste and putting money back into consumers’ pockets,” he said. “It’s a real economic growth strategy, and it fulfills so many different objectives.”
Generation of electricity accounts for about 40 percent of greenhouse gas emissions in the United States. That means even a relatively small drop in electricity consumption has an immediate effect — not just in consumer wallets, but also in the environment.
President Obama has told the international community that U.S. emissions should be reduced by 17 percent below 2005 levels by 2017. This will require new and cleaner energy sources, along with a focused effort to reduce consumption of oil and coal.
SELL LESS POWER, GET REWARDED
The states use a mix of incentives and disincentives to prod power companies to conduct energy audits and help their customers use less energy. Historically, power companies would make more money when they sold more electricity or natural gas. Many states are now revising payment schemes for the utilities they regulate to instead reward them for being good energy stewards.
Some, such as Vermont in the northeastern United States, got an early start.
Vermont set up the nation’s first arrangement with an independent “energy efficiency provider,” an organization that provides technical assistance and financial incentives to households and businesses. The programs that Efficiency Vermont runs are paid for with a small energy efficiency charge on customers’ bills.
Between 2008 and 2011, the projected savings are expected to reduce energy demand by at least 6 percent below 2008 sales.
By leveraging purchases of products used to retrofit homes and by providing easily accessible rebates for small businesses, the program has quickly gained traction, along with a reputation outside state borders. Efficiency Vermont now gets inquiries about “how Vermont’s model can be exported to other states, and even other nations,” said George Twigg, the organization’s deputy policy director.
Other states are just now coming on board as they discover that energy conservation helps the local economy. In Arizona, for example, Democrats and Republicans recently found common ground on energy, passing some of the most ambitious regulations for saving energy in the country.
Arizona adopted rules in 2010 requiring power companies to reduce electricity demand by 20 percent by 2020, twice the goal set by most other states. The Southwestern desert state also required natural gas companies to trim demand for gas by 6 percent by 2020, most of it through energy efficiency programs.
“Energy efficiency is the cheapest, cleanest form of energy around and today’s ruling will ensure that we’re maximizing its use,” Kris Mayes, chairwoman of the Arizona agency that regulates energy providers, said when the new rules were adopted.
The new standards will help Arizona energy consumers save an estimated $9 billion by 2030, according to Southwest Energy Efficiency Project, an energy conservation group that helped push for the changes.
States have also taken advantage of federal funds to plug holes in their own programs.
Connecticut, for example, was able to use federal dollars from the 2009 American Reinvestment and Recovery Act, the economic stimulus package, to make thousands of homes heated by oil waste less energy. The state has energy efficiency standards for providers of electricity and natural gas, but they don’t cover unregulated oil heating companies.
“States are basically saying, ‘We should get ahead of the curve here and give utilities, customers and the private sector a signal that energy efficiency is something that we’re going to have a long-term investment in,’” Sciortino said.
(This is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://www.america.gov)
