Efficiency resource standards: the next Big Bang for energy policy

provided by ACEEE

n Energy Efficiency Resource Standard (EERS) could save as much energy as increasing US vehicles’ fuel economy to 40 mpg, according to a report by the American Council for an Energy-Efficient Economy (ACEEE). The report, “Energy Efficiency Resource Standards: Experience and Recommendations,” profiles energy efficiency resource standard policies in ten states and four European countries, and concludes that implementation of similar policies at the federal or state level could reduce nationwide energy use by nearly 5% in 2020 and save consumers and businesses about $170 billion from efficiency measures implemented over the 2007-2020 period.

    “An EERS is perhaps the single most effective energy efficiency policy the federal government could adopt today,” said ACEEE Executive Director Steven Nadel, lead author of the report. “To put these energy savings in perspective, they are about triple the energy efficiency savings of the Energy Policy Act of 2005 that was signed into law last summer.“

    An Energy Efficiency Resource Standard, according to the report, consists of electric and/or gas energy savings targets for utilities, with flexibility to achieve the target through a market-based trading system. EERS targets are achieved through end-user energy-saving improvements, aided and documented by utilities or other program operators. Distribution system efficiency improvements, combined heat and power (CHP) systems, and other high-efficiency distributed generation systems may be included as well. With the trading provision, a utility that saves more than its target could sell savings credits to utilities that fall short of their savings targets, permitting the market to produce the lowest-cost savings. To date, EERS programs are most commonly implemented at the state level but can also be implemented over smaller or wider areas.

    ACEEE recommends that both state and the federal government enact EERS policies covering both electric and gas utilities.

    The report concludes with an analysis of the energy and economic savings that could result from a national or state EERS. Assuming savings targets start at modest levels (e.g., savings of 0.25% of sales annually) and ramp-up over several years to 0.75% additional savings each year (a level many current programs are achieving), by 2020 annual electricity and natural gas use in the covered region would be reduced by nearly 10% compared to a reference-case forecast. At the national level, EERS savings would amount to about one-quarter of the currently projected growth in electric sales over the 2007-2020 period and about one-half of projected growth in natural gas sales over this same period. A national EERS at this level would reduce forecasted US energy use in 2020 by about 5.6 quadrillion BTU (“quads”), which represents about 4.6% of total projected US energy use for that year (i.e., also including energy use that would not be affected by an EERS). Overall, ACEEE finds that such an EERS implemented over the 2007-2020 period would provide net benefits to consumers and businesses of about $170 billion.

    “Energy Efficiency Resource Standards: Experience and Recommendations” is available for free download at aceee.org/pubs/e063.htm or a hard copy can be purchased for $20 plus $5 postage and handling from ACEEE Publications, 1001 Connecticut Avenue, N.W., Suite 801, Washington, D.C. 20036-5525, phone: 202-429-0063, fax: 202-429-0193, email: aceee_publications@aceee.org.

    The American Council for an Energy-Efficient Economy is an independent, nonprofit organization dedicated to advancing energy efficiency as a means of promoting both economic prosperity and environmental protection. Visit aceee.org