The National Association of State Energy Officials (NASEO) released a working paper
designed to provide states with ideas on low cost energy efficiency approaches that can help them address the U.S. Environmental Protection Agency's new Clean Power Plan.
The Clean Power Plan, announced by President Obama and the EPA on Aug. 3, poses significant challenges to states in reducing the carbon pollution driving climate change. NASEO’s paper, Energy Efficiency Strategies for Clean Power Plan Compliance: Approaches and Selected Case Studies, explores a range of approaches – such as building energy codes and energy savings performance contracting – that states can use to aid in Clean Power Plan compliance.
Nationwide, the new climate change regulations are expected to cut the electricity sector’s greenhouse gas emissions 32 percent below 2005 levels by 2030, according to EPA estimates. The rules, issued under the federal Clean Air Act, give each state its own pollution reduction goal and allow each to choose the measures it will use to comply.
“While NASEO has not taken a stand for or against the Clean Power Plan, we do think states should have as much flexibility as possible and should have a wide variety of opportunities to try to achieve least cost compliance with the plan,” said Rodney Sobin, NASEO senior program director. “We think energy efficiency approaches provide those.”
“Even though energy efficiency is not an official building block in the final Clean Power Plan rule (due to accounting challenges), the EPA has made it clear that efficiency is in fact a key compliance option,” said Sonia Aggarwal, director of strategy at Energy Innovation, where she leads America’s Power Plan.
According to NASEO’s research, roughly half the states already have Energy Efficiency Resource Standards or similar requirements in place to help electric utilities achieve savings.
“Those policies can easily be amplified or shared and adopted by states that don’t already have policies,” Sobin said.
Non-utility energy efficiency options, such as building energy codes, can also be very effective. Buildings account for about 70 percent of U.S. electricity consumption, according to NASEO.
“States that adopt building energy codes requiring things like a certain amount of insulation, certain types of windows, or standards for efficient lighting or heating or cooling can also save substantial amounts of money and energy,” said Sobin. “Building energy codes therefore represent another way states can apply policies and count that for compliance in the Clean Power Plan.”
NASEO’s paper includes a template for states looking to use building codes as part of their compliance strategy.
“Once they’re built, buildings stick around for a long time,” said Aggarwal. “So a great building code, well enforced, is an important minimum requirement for long-term, large-scale energy efficiency. Building commissioning and performance contracting can address energy from existing buildings, saving occupants money by cutting waste.”
Texas, Florida and Massachusetts currently achieve the most energy savings from building energy codes, according to the U.S. Department of Energy.
Meanwhile, several states are also using energy savings performance contracts (ESPC) to reduce energy use in state or local government-owned buildings such as schools or hospitals.
Under an ESPC, companies will work with a government or institutional entity to identify energy savings investments that can be made to an existing building. The company will then front the capital to complete those efficiency improvements and offer a savings guarantee (often more than enough for the entity to pay off the investor while also providing significant energy savings going forward).
“That way, the project owner comes out ahead and does not have to dig into capital budget to make energy efficiency improvements,” said Sobin. “This appears to be a growing option and another area where we think states can benefit in terms of the Clean Power Plan.”
Sobin said Virginia and Kentucky have both rapidly been increasing the number of ESPC’s they utilize. Kentucky is also among the leaders in developing net zero energy K-12 schools.
In addition to improving energy efficiency, the Clean Power Plan also calls on states to reduce their reliance on coal for energy. In that area, California is among the leaders, having already practically eliminated coal from its energy portfolio. California also leads the nation with the toughest regulations to cut greenhouse gas emissions. Officials there say their existing climate change programs have put the state on course to meet the EPA’s new carbon-dioxide emissions target years ahead of schedule.
According to Sobin, energy efficiency approaches like these not only help states reduce energy use and save money, they have the added benefit of supporting energy system reliability.
“Consider natural gas pipelines serving power plants as well as residential, commercial and industrial customers; or [during winter] propane and fuel oil distribution when there’s a polar vortex or heat wave or if a major power plant goes offline or some other constraint is placed on energy supply,” he said. “Moderated energy demand means less stress on the electric grid and energy infrastructure more broadly.”