Energy Efficiency
Policy Note for Capitol Voice
Jim Christiansen 12 August 2010
INTRODUCTION
Increasing the end-use efficiency of energy we use (in other words, doing the same work with less energy) is the largest and least expensive way to reduce the amount of energy we use. Unfortunately, it is also the least understood and most neglected way to save energy. Government can do significant good by using the tools at its disposal to encourage significant investment in increasing energy efficiency throughout the economy.
During the thirty year period from 1975 through 2005, the amount of energy needed to produce a dollar of GDP in the US dropped by 46%. In recent years, this has amounted to a 2.5% decline, each year, in the amount of energy needed to produce a fixed amount of national income. Unfortunately, far more attention has been paid to efforts to expand energy supply, when much more gain is available from reductions in energy used to produce a fixed amount of consumption.
According to the American Council for an Energy-Efficient Economy (ACEEE), areas where substantial efficiency gains are available include: (1) more fuel-efficient vehicles, (2) more energy-efficient buildings, and (3) more energy-efficient industrial processes. The ACEEE further identifies three ways to achieve energy efficient buildings, including (a) cogeneration [using the heat created during electricity generation to heat homes or buildings, rather than letting it go to waste], (b) more energy efficient building codes, and (c) better air conditioning standards. In this short paper we will explore these three areas.
It is important to note that investments in energy-efficiency often pay back in very short periods. For instance, increasing the insulation in a building, or redesigning an industrial process, will cost something. But often the cost is paid back within a year or two by the savings in energy cost. The benefit to the company and the country is great, at little cost.
WHAT GOVERNMENT CAN DO
Federal, state and local governments can support increased energy efficiency by (1) setting standards, (2) education & training, and (3) loan guarantees, tax incentives and other fiscal means.
1. Setting Standards for Buildings and Motor Vehicles
The Obama administration recently increased motor vehicle fuel efficiency standards. This is a good step. Additional steps could be taken in other areas to save energy.
For instance, building codes do not normally say much about the energy efficiency of new or old buildings. This should change. Standards for insulation and energy use should be set throughout the country, for both new and old buildings, with a transition period to allow retrofitting of older buildings. This could and should be supported through (a) education and training of engineers and architects, and (b) loan guarantees or direct subsidies through the tax system.
On a broader scale, suburban development in the US is increasingly oriented towards mixed commercial-residential development which reduces commuting times and, thus, saves the energy used in the daily commute. This trend should be encouraged through changes in zoning laws. Zoning could also encourage local production of energy through small and unobtrusive wind, solar and other installations.
2. Education & Training
Many, if not most, of today’s engineers and architects were trained during times when the oil price was less than $20/barrel. Their training did not emphasize energy efficient design. This can and should be remedied. A federally-established Energy Efficiency Commission including prominent energy efficiency experts could recommend curriculum changes and specific material to be covered in engineering and architecture courses. Similar changes should be made in the training of accountants, finance people, and other business specialists who make key decisions that impact our energy use.
3. Loan Guarantees & Tax Subsidies
Since many, if not most investments to achieve energy efficiency (insulating buildings, reducing energy use in industrial processes) pay back in a very short time, why not encourage investment in energy efficiency with (1) federally guaranteed loans, (2) direct loans from the government, or (3) investments by the government in the energy efficiency of its own buildings? The same Energy Efficiency Commission mentioned above could identify the areas where the largest gains could be achieved most quickly, and loans could be directed into those areas first.
4. Guiding the Policies of Public Utilities and Other Key Organizations
Public utilities are routinely granted local monopolies in return for the energy services they provide. Historically, many utilities tried to maximize energy use in order to maximize their revenues and profits. But the most advanced utilities have, in cooperation with their regulators, adopted policies which enable them to maximize profits by helping their clients conserve energy and reduce or stabilize overall energy use. Such a model should be encouraged by governments and regulators throughout the country.
THINGS INDIVIDUALS CAN DO
1. Call your representatives and tell them to support legislation which implements the goals above.
2. Learn as much as you can about your own energy use and how to reduce it, without reducing your lifestyle
3. Talk to your local utility about how to reduce our own energy consumption and the consumption of your region or neighborhood.
ACTION IN EUROPE
The member countries of the European Union (EU) have invested much more heavily in energy efficiency measures than the US has. Since 1990, the European Union has reduced its carbon emissions (an overall measure of fossil energy use) by 11.3%. Not content with this, in December 2008 EU leaders committed to achieve an overall 20% reduction in its greenhouse gas emissions by 2020 (compared with 1990 levels), mainly by increasing energy efficiency and boosting the use of renewable energy. The measures will also reduce Europe’s dependence on imports of gas and oil and help shelter the economy from volatile energy prices and uncertain supplies. As part of this program, individual European governments have introduced numerous programs, too many to mention here, to encourage (1) more energy-efficient buildings, (2) more energy-efficient transportation, and (3) more production of renewable energy, among other programs.
By comparison, since 1990, the US has increased its carbon emissions by15.8% (compared to Europe’s reduction of 11.3%. The Obama administration is now talking about a 17% reduction in greenhouse gas emissions compared to a 2005 levels. This is equivalent to a 4% reduction compared to 1990 levels (the European base line). This is significantly less ambitious than the European target. Can’t we be at least as ambitious as Europe?