The Obama administration has few levers to pull to shift the United States’ position on climate change, besides enforcing the Clean Air Act of 1970. That legislation authorizes the U.S. Environmental Protection Agency (EPA) to enforce regulations on power plants and associated pollutants. The Clean Air Act put the onus on individual states to design programs to follow the EPA’s federal guidelines. Last June, the EPA released its Clean Power Plan (CPP), with a new ambitious target: carbon emission reductions totaling 30% relative to 2005 emissions by 2030. The proposed rule includes the following primary components:
- Four building blocks that define the EPA’s Best Strategy for Emissions Reductions
- State-by-state 2030 carbon emissions reduction targets and interim targets based on a 2012 base year
- Numerous alternative emissions reduction strategies, including renewables, under-construction nuclear generation, and energy efficiency
Not surprisingly, some legislators are arguing that the CPP is unconstitutional, functioning as a federalization of states’ activities via the EPA. Some utilities are also not happy with the CPP, as they are going to have to be held to real climate goals. Utilities that burn coal or other fossil fuels inefficiently will have to pay to upgrade their facilities or face stiff penalties.
In a recent white paper, Navigant reported that energy efficiency is a cost-effective way for states, utilities, and businesses to achieve the CPP targets, with considerably less investment than upgrading or building new power plants. Of all the building blocks, energy efficiency is the only one that is not a form of generation. From a cost perspective, energy efficiency is a highly competitive approach to offsetting supply requirements and reducing carbon emissions. This approach can be used for both overall total load reductions, but also for peak shaving (i.e., reducing the carbon intensity of electricity demand at the times when the grid is dirtiest – usually in the afternoons).
The major challenge for using energy efficiency as a way to achieve policy goals lies in how and where it is implemented. Utility energy efficiency programs are one approach, and are forecast to grow, according to the Lawrence Berkeley National Laboratory (LBNL).
Energy Efficiency Spending by Utilities
(Source: Lawrence Berkeley National Laboratory)
Many utility programs require 5 or 6 years to mature and develop savings streams that persist. Developing efficiency programs today will allow the savings potential to grow prior to the start of the CPP requirements.
It’s not just up to the utilities. By focusing on the bottom line – the financial savings – the business community can help states achieve their CPP goals, whether they realize it or not. Navigant Research’s report, Energy Efficient Buildings: Global Outlook, found that the current energy efficient building market is generating over $300 billion annually and is expected to grow, in major part, because the software and hardware works, and saves end-users money. If the EPA uses the green of a dollar to promote the CPP, it could help states reach its targets.