Ohio study committee gets it wrong on energy efficiency targets
October 02, 2015 - 2:46 pm

By Maggie Molina, Utilities, State, and Local Policy Director

On Wednesday, a group of Ohio policymakers released their recommendations to indefinitely freeze the state's clean energy and energy efficiency targets. Their misinformed recommendations, if implemented, would once again deliver a major setback to Ohio energy bill payers and the state's clean energy economy.

A cost-benefit analysis that ignores the benefits

The group, the Energy Mandates Study Committee—a special committee created in SB 310 to specifically examine cost-benefits of the energy efficiency resource standard (and renewable portfolio standard)—gets several things wrong about energy efficiency. First, while the committee’s initial task was to complete a cost-benefit analysis, the study includes absolutely no analysis of the benefits from investments in energy efficiency. They only look at the costs. ACEEE examined the benefits of energy efficiency in Ohio back in 2012, and found that continuing Ohio’s efficiency targets could save customers almost $5.6 billion in avoided energy expenditures, reduced wholesale energy prices, and capacity prices. And utilities in Ohio have extensively analyzed the costs and benefits of energy efficiency. By not basing their recommendations on an actual cost-benefit analysis of energy efficiency, the committee's study is shockingly incomplete.

Incentives alone are not enough to achieve high savings for Ohio

Ironically, the committee seems to recognize the value of efficiency, stating in their report that "the Study Committee does see great value in continuing with energy efficiency so that Ohio ratepayers will pay less for electricity and the state will use less electricity overall." But the committee then goes on to recommend voluntary programs and energy incentives for utilities to invest in efficiency instead of targets. Again, the committee fails to look at the evidence in developing their recommendation.

Yes, energy efficiency performance incentives for utilities are an effective tool if structured well (as we recently examined in ACEEE’s Beyond Carrots for Utilities report). However, the tools by themselves have been far less successful than specific energy efficiency targets at driving high levels of efficiency, as I wrote in a paper earlier this year, Policies Matter: Creating an Energy-Efficient Utility of the Future.

Utility energy efficiency performance incentives deliver the most savings for energy-bill payers when aligned with long-term, concrete targets, such as those in the original Ohio legislation. Without the targets, customers are vulnerable to large swings in program offerings and the resulting benefits, and the business community faces uncertainty in the state's commitment to invest in energy efficiency.

The results from voluntary programs in other states have not been promising. In 2014, all of the top 18 electricity-saving states in ACEEE’s State Energy Efficiency Scorecard had mandatory savings targets in place (including Ohio). Meanwhile, states with voluntary standards ranked much lower in terms of electricity savings­­­—for example, Missouri (33rd), Kentucky (34th), Tennessee (36th), and Virginia (47th). The trend of top savings occurring only in states with mandatory goals has generally held true for at least the past five years.

Emerging technologies are creating huge potential for energy savings targets

The energy efficiency targets in Ohio's original legislation are achievable and cost-effective, as we examined this summer in an analysis on energy efficiency potential in Ohio. We reviewed energy efficiency potential studies by the four investor-owned utilities (IOUs) in the state, which showed that the utilities were already planning on significant, cost-effective energy savings from efficiency programs. While the utility studies identified large amounts of untapped energy potential in the state through the next 10–20 years, they often underestimated the full efficiency potential in certain areas. For example, several emerging technologies and best practice strategies to encourage customer participation can yield significant additional energy savings, but were not fully considered in the studies. A recent ACEEE analysis further examines those emerging technologies and strategies in more depth, finding that 18 measures alone—including reduction of plug loads, conservation voltage reduction, and smart manufacturing— could collectively save up to 31% of total projected electricity use in the year 2030 .

The committee's recommendations are now in the hands of the Ohio General Assembly, which will decide whether to take them up in legislation. We hope they consider the evidence and the facts in their decisions—that energy efficiency delivers, and that policies matter. Setting concrete utility targets is the still best way to deliver energy and costs savings for Ohio customers.

4 energy efficiency trends to look for in the new DOE Quadrennial Technology Review
September 30, 2015 - 1:11 pm

By R. Neal Elliott, Associate Director for Research

Recently, the Department of Energy (DOE) and the White House Office of Science and Technology released the second Quadrennial Technology Review, or QTR. The 489 page tome bears resemblance to many other government reports that are too often relegated to the TL;DR file—too long; didn’t read. That would be unfortunate for those of us who care about the future of energy efficiency technologies.

The report contains a wealth of numbers about energy use and the technologies that can affect the future of energy efficiency in the US economy, and it presents four trends:

  • Convergence. All sectors of the economy are becoming increasingly interdependent.
  • Diversification. Energy sectors are shifting to diversified, distributed resources—a trend that ACEEE has been seeing in state and local energy planning.
  • Confluence. Computing power and simulation are ushering in a new era of “systems by design,” much the same as the concept of intelligent efficiency that ACEEE has been advancing.
  • Efficiency everywhere. Energy efficiency is a critical element in achieving national energy security, cost, and environmental goals—a theme that is at the core of our Energy Efficiency as a Resource Conference that took place last week in Little Rock.

The report highlights the role of energy technology in all parts of the energy production and consumption chain, including energy supply, buildings, manufacturing, and transportation and vehicles, with an emphasis on the shift from component performance to optimization of systems. Importantly, the QTR provides a roadmap for research, development, demonstration, and deployment of energy technologies. Secretary Moniz and Undersecretary Franklin Orr both indicated that DOE intends to use this report to guide its research efforts in the coming years.

While it may not be something everyone wants to read cover to cover, I recommend it to researchers as an important guide for future directions on energy efficiency technology. In particular, Chapter 5 focuses on building systems with an emphasis on smart buildings, an increasingly important element of the intelligent efficiency space, and Chapter 8 focuses on transport and vehicle systems and technologies.

Chapter 6 focuses on smart manufacturing, the topic of a recent ACEEE report. We are already seeing the roadmap aspect of this document reflected in the recent DOE solicitation for an innovation institute for smart manufacturing. We look forward to other announcements from DOE on activities that are set forth in this roadmap.

Why we are suspending Volkswagen diesel Green Scores on
September 25, 2015 - 11:13 am

By Shruti Vaidyanathan, Senior Transportation Researcher

On September 18th, the Environmental Protection Agency issued a notice of violation of the Clean Air Act to Volkswagen for including software in their diesel vehicles that helps circumvent EPA emission standards for nitrogen oxides. As a result, has suspended Green Scores for the affected vehicles until further notice as these scores are no longer valid. Read more at

True, energy efficiency investment creates jobs. But how many?
September 22, 2015 - 4:02 pm

By Jim Barrett, Chief Economist

Even when the economy is doing well, economic growth and job creation always seem to be at the center of focus for policymakers at every level of government. So it’s only natural that when energy efficiency policies and programs are being discussed one of the questions that often comes is how will proposed initiatives affect jobs.

The good news is that job creation is one of the many benefits that results from smart investments in energy efficiency. We at ACEEE have conducted several studies that demonstrate this point. In our new report Verifying Energy Efficiency Job Creation: Current Practices and Recommendations, we took a look at efforts to quantify job creation from energy efficiency projects to see how they are being done and to try to establish some best practices to help people in the field tackle the problem.

When efficiency projects and programs are sold at least in part on their ability to create jobs, it’s only natural that people would want to know after the fact whether they lived up to their promise, but accurately quantifying the job creation impacts can be hard. The problem is that of all the different ways efficiency creates jobs, only a relatively small fraction are actually observable.

How energy efficiency creates jobs

Efficiency investments create jobs in at least two different ways. One is during the implementation of the project itself, like installing a new water heater in a home. The other is when the homeowners re-spend the money the new water heater saves them. Every job created through these two channels falls into one of three categories. “Direct” jobs are created from the initial change in spending patterns. “Indirect” jobs are created one step removed, along the supply chain. “Induced” jobs are created yet one more step further away when the people hired to fill the first two types of jobs take their new income and spend it on rent, groceries, going to the movies, or whatever.

In our water-heater replacement example, the implementation phase direct jobs are the water heater installers, the indirect jobs include things like workers at the water heater factory, and induced jobs are created when the installers and factory workers use new income to go out to dinner. The savings phase creates jobs in the same three categories. When the homeowner uses the money he or she saves on energy bills to buy a book, direct jobs are created at the book store, indirect jobs are created at the publisher, and induced jobs are created when employees at the bookstore and publishing company go out to dinner.

So we have two channels of job creation each creating three categories of jobs, and of those six possibilities, only one is generally observable: the direct jobs created in the implementation phase. It’s easy to point at workers putting new water heaters in buildings and identifying those jobs as part of the benefits of the efficiency investment, and sometimes it might be possible to go to the water heater factory and see new hires (or extended work hours) brought on to make those extra heaters, but when it comes to finding a server hired because the installers went out to dinner or tracking any of the impacts that occurred because the homeowner had more money to spend on books, putting a face to the people who got hired or worked more hours is almost impossible.

How jobs are counted

Despite this difficulty, policymakers, politicians, and other stakeholders still want to know how many jobs an efficiency policy or program created. Efficiency implementers do their best to respond to this demand by the people who control their destiny.

As you might expect with the complexity of this challenge, we found a wide range of approaches to addressing the problem and an equally wide range of results. Some assessments use “bottom-up” approaches that rely on head counts or surveys, some rely on “top-down” methods typically employing economic models, and a good number use both. Assessments differ in what kinds of jobs they count and how they report them, and we found that different assessments use different definitions for key terms. It seems clear to us that each one of the assessments we looked at represents a solid effort at addressing a difficult analytical problem, but that taken as a whole, the variation in what is done and how it’s done makes clear apples-to-apples comparisons very difficult.

Tackling job-counting issues

In response to this variety of methods and results, the report outlines an approach that we hope is clear, straightforward, and tractable to produce accurate ex-post evaluations that will help program administrators and policymakers make good decisions about how to invest resources. We recommend starting with the jobs that can be directly counted and using simple economic modeling tools and program data to build out a comprehensive estimate. We try to add clarity around the definitions like the direct, indirect, and induced jobs described above, and we highlight a number of tricky issues that evaluators should be aware of when conducting analyses. In the report, we highlight best practices around issues like accounting for negative job impacts that result from reduced energy demand, how to treat the costs of program implementation, and how to create tools that will produce reliable estimates of unobservable job creation impacts.

Our aim in the paper is less to establish a uniform methodology that all assessments should follow than it is to highlight some of the more important issues that often arise, and to provide a framework for evaluators to address them. We hope that our proposed approach will lend credibility to the job creation potential of energy efficiency investments, and that other industries will conduct comparable analyses with similar transparency and rigor.

The next generation of energy efficiency programs could save 22% of electricity use in 2030
September 15, 2015 - 11:12 am

By Dan York, Utilities, State, and Local Policy Program Fellow

Energy efficiency has come a long way. From its roots in the energy crises of the 1970s, it has grown and evolved to become an integral part of our energy landscape. Examples of energy efficiency advances are ubiquitous and often invisible. We see the results of such advances in the slow growth of electricity demand in recent years. Our homes, offices, businesses, and factories continue to become more energy efficient due to innovation in technologies and applications. Rooting out energy waste has spawned new ways of examining and managing how we use energy.

While energy efficiency has done much to improve our economy and environment, we want it to do more. Most states have policies and programs in place that seek to achieve even higher energy savings. A number of national efforts similarly aim to increase energy efficiency to achieve economic and environmental benefits. A clear example is the EPA Clean Power Plan, which seeks to achieve significant reductions in carbon emissions. Energy efficiency can play a major role in achieving emissions reductions under the plan.

After all this success with energy efficiency, what’s left? Have we reached the limit of how much energy efficiency we can squeeze out of our economy? This is a particularly vexing question for utilities and organizations that run efficiency programs for utility customers, and this is the subject of ACEEE's latest report, released today. While we're achieving higher overall savings from energy efficiency than ever before, a variety of factors are limiting the amount of such savings that efficiency programs can harvest:

  • Building energy codes have become more stringent—requiring higher energy efficiency for new construction and major renovations.
  • Appliance and equipment standards have increased.
  • The number of customers who haven’t participated in relevant energy efficiency programs has diminished due to the success of some programs serving large numbers of customers.

The icon of energy efficiency—the compact fluorescent lightbulb (CFL)—has been the workhorse of efficiency program portfolios. This single technology has delivered large shares of energy savings for program administrators. However, with recent federal lighting standards in place, programs can no longer rely on CFLs to deliver such large savings. The recent standards raise the baseline against which savings are measured, thus reducing the savings that can be attributed to energy efficiency programs.

A team of ACEEE researchers examined the fundamental question, “What are the next large savings opportunities for energy efficiency?” The resulting research is described in the major report released today. The research objective was to identify a set of energy efficiency measures that are capable of delivering substantial energy savings by the year 2030. We use the term “measure” broadly—it includes individual end-use measures, system improvements, and even entire buildings or programs. We define substantial savings as at least 1% of total annual electricity sales in 2030 from the cumulative impact of each of the measures or programs from 2015 to 2030.

We identified a large set of measures that spanned the spectrum of residential, commercial, and industrial uses of electricity, and then we screened them based on our estimates of savings possible by 2030. The result was a set of 18 measures that we estimate collectively could save 22% of total projected electricity use in the year 2030. We bounded this mid-range estimate with a high case of 31% and low case of 15%. While this is not a comprehensive analysis of all energy-savings measures and programs, it represents a large share of the electricity savings potential. The top five measures are:

  • Large reductions in key targeted plug loads
  • Conservation voltage reduction
  • New construction programs
  • Comprehensive commercial building retrofits
  • Smart manufacturing

Our analysis clearly shows that the well of energy savings from energy efficiency is not running dry. Instead, it is being replenished through advances in technologies and practices, system optimization, and behavioral approaches. While our analysis reveals a wealth of new and expanded opportunities for energy efficiency, a key conclusion is that no single measure will yield a dominant share of energy savings for utility program portfolios, as have CFL programs in the past. Without a single, dominant energy-efficient technology like the CFL, utilities and other program administrators will have to rely on a wider set of measures and attract greater numbers of participants. They also will have to ensure programs reach and serve all types of customers, including such often underserved markets as small businesses and multifamily housing.

Diversification is just one of the signs that energy efficiency has entered a new era. High levels of savings from programs and other advances in energy efficiency have helped to dramatically reduce US electricity demand. As this study shows, the future holds many opportunities for even greater energy savings. The cornucopia of energy efficiency will remain bountiful.

Can energy-intensive manufacturers be winners under the Clean Power Plan?
September 14, 2015 - 10:59 am

By Meegan Kelly, Senior Research Analyst, Industry Program

There is a concern that any new environmental regulation can hurt the bottom lines of energy-intensive manufacturers. In the case of the EPA Clean Power Plan, states that comply with the rule by investing in energy efficiency will find the opposite is likely to be true: their businesses will be more productive and their economies will grow.

A coalition of energy efficiency and industry representatives spread that message last week in a letter urging governors to include industrial energy efficiency in their plans to comply with the Clean Power Plan. Fifteen organizations, including ACEEE, signed the letter and sent it to governors across the country to illustrate the multiple benefits that industrial sector energy efficiency provides, and to suggest tools and resources to help states assess industrial efficiency opportunities.

There is great potential in the industrial sector for saving both energy and money. A recent study led by the Department of Energy estimated that up to 32 percent of industrial energy use could be saved through cost-effective efficiency measures. These savings could significantly contribute to state efforts to comply with the Clean Power Plan, which clearly identifies energy efficiency as an important, proven strategy for cost-effectively lowering carbon dioxide emissions from the power sector. Meanwhile, many states harness only a fraction of their industrial efficiency potential, even though industrial programs have a lower cost of saved energy than any other end-use sector.

To help states capture these industrial sector savings in their compliance plans, a short list of helpful resources accompanies the coalition letter. The list distills the top ten most useful resources on industrial efficiency that states can use to assess market potential, evaluate options for policy and program design, and obtain guidance on including industrial efficiency in a state compliance plan. Several of the resources were discussed in detail during a July 31 webinar hosted by David Gardiner and Associates. Audio and slides of presentations given by the Regulatory Assistance Project (RAP), ACEEE, and Institute for Industrial Productivity (IIP) are available separately online.

The states and their industrial customers will end up better off if states commit to including industrial sector energy savings in their strategy for meeting Clean Power Plan targets. Industrial energy efficiency can achieve significant, low-cost emissions reductions, while also increasing in-state jobs, increasing economic competitiveness, and improving energy reliability. At the same time, industrial customers can also earn revenue from Clean Power Plan crediting mechanisms that encourage and reward the implementation of energy efficiency in the industrial sector, in addition to lowering their own operating costs through energy efficiency investments. That’s why states can’t afford to ignore industrial energy efficiency as they piece together their compliance plans.

Will Congress score a touchdown or drop the ball on energy efficiency?
September 09, 2015 - 10:00 am

By Lowell Ungar, Senior Policy Advisor

The NFL season is opening tomorrow, but the legislative season is already entering crunch time. Energy efficiency legislation is now on the field: energy efficiency titles are in the Senate bill, which passed out of committee in July and awaits time on the Senate floor, and the House bill, which may be considered by the full committee as early as next week.

We thought it was time to look at the stats. As we have in other years, we estimated the likely impacts of 15 proposed energy efficiency policies here. Since the House and Senate bills are moving targets, we combined the policies into three packages: the first down package with provisions that have received wide support, a more aggressive touchdown package, and a fumble package of provisions that drop the ball. Some of the impacts are shown in the figure below.

The first down package includes several provisions in the Senate bill and a few that should be added. It would really move the ball down the field. More specifically, it would:

  • save consumers almost $100 billion due to lower energy bills, even after needed investments,
  • create over 100,000 additional jobs by 2030, and also
  • reduce carbon dioxide emissions in that year by almost 50 million metric tons, the emissions of 10 million cars and light trucks.

More than half the savings are from a provision promoting better building energy codes from the Portman-Shaheen bill. Other notable provisions in the Senate bill include one on smart buildings from Senator Cantwell, and part of a bill on smart manufacturing from Senators Shaheen and Alexander—these would encourage faster deployment of new control technologies. Notable among provisions not yet in the Senate bill are the SAVE Act from Senators Bennet and Isakson on energy efficiency in mortgage underwriting, as well as the E-Access Act on consumer access to utility bill information from Senator Markey. These would be important additions to the team.

In contrast, the fumble package includes measures under consideration that would lose yardage from current energy efficiency efforts, including a provision that would limit assistance to states on building energy codes (Blackburn-Schrader) and bills that would block important efficiency standards for furnaces and for ceiling fans—and perhaps threaten the billions in consumer savings from the broader appliance efficiency standards program. This package would cost consumers $35 billion over time and result in 35,000 fewer jobs in 2030. That’s not a smart play.

The current House bill is not close to either of those packages. It only includes one relatively small, though positive, provision we analyzed that would strengthen Industrial Assessment Centers (it also is in the Senate bill). We hope they’ll be able to put some more points on the board as play goes on.

Finally, to show how far a long drive could take us, we analyzed a more comprehensive policy, a federal “energy efficiency resource standard” in a bill by Senator Franken. It would set minimum savings levels for electric and natural gas utility efficiency programs nationwide. We called it the touchdown package because it would change the game: almost $150 billion in net consumer savings, 400,000 more jobs in 2030, and 280 million metric tons lower carbon dioxide emissions in that year.

Like football, legislation can be a rough sport, and any season will have its highlight reel and its blooper reel. We hope that Congress won’t drop the ball, but will instead score some big wins this year with effective energy efficiency legislation—wins for consumers, the economy, and the environment.

Here are some new tools to support local energy efficiency
August 27, 2015 - 10:00 am

By Tyler Bailey, ACEEE Intern

Each step of a home improvement project requires the right tool. If you are planning to put up a new set of cabinets, for example, the first step requires measuring tape, assembly of the cabinets may require a drill, and then, finally, a hammer would be needed to actually mount them. A variety of tools—the right tools—are needed to complete the task.

This logic is no different when applied to the planning, design, and implementation of energy efficiency policies. Tools can provide localities with the know-how to advance energy efficiency throughout their communities. Policymakers, for example, can be tasked with assessing what energy efficiency policies make the most sense for their community, or with identifying which local stakeholders they should engage. The extent to which communities are equipped to readily answer those questions will vary; yet, all communities stand to benefit from learning about effective policies and strategies being implemented across the country. With the addition of some new resources, ACEEE hopes to expand communities’ toolboxes and provide the tools that help them achieve lasting energy savings.

The New and Improved LEEP-C

The Local Energy Efficiency Policy Calculator (LEEP-C) is a decision making tool for local policymaking. It estimates the impact select public and residential buildings policies have on energy savings, cost savings, pollution, and other outcomes. We have upgraded the original tool (v. 1.0, released in 2011) to include measures­ in the commercial building and transportation sector. Version 2.0 is being released as an open beta version, so ACEEE welcomes any feedback users have on the tool.

LEEP-C is not a panacea for energy efficiency planning. The projections provide a beginning to a much more in-depth analysis of potential policies. But, it can serve as a resource for communities planning to advance energy efficiency policies, including building retrofits and combined land use, to name a few. The tool’s value centers on its ability to incorporate a wide range of inputs, such as population, priorities, goals, and financing, when estimating policy impacts.

It is important to remember that LEEP-C is just one tool in the toolbox, and ACEEE has a variety of other tools to aid local policymakers in other steps involved in adopting energy efficiency policies and programs, which can be found in our Local Technical Assistance Toolkit.

The New Local Government-Utility Engagement Strategies Fact Sheet Series

We have also released new resources on Local Government-Utility Partnership Strategies that expand our local toolkit. The four webpages outline strategies and best practices for local government-utility engagement to expand or improve energy efficiency in communities. Together, these resources demonstrate the mutual benefits of energy efficiency partnerships to cities and utilities. Each page focuses on a different engagement strategy that can be adapted to meet the specific needs of the communities that use them. The partnership strategies that are in this toolkit include:

We document the ways in which communities and their utilities benefit from energy and cost savings coming from increased participation in energy efficiency programs, installation of highly efficient LED streetlights, and better understanding of community-wide energy usage. It’s a win-win for local governments and the utilities that serve them. Cities gain additional resources to help meet their energy goals, while utilities achieve greater customer satisfaction, more program participation, and higher energy savings to further their policy objectives.

Future Resources

ACEEE has developed the resources on local government-utility partnership strategies to meet communities’ needs for more information about the topic. Our goal is to continue developing valuable policy resources for communities, so we want to hear ideas directly from you on how we can best do that. Are there other areas of energy efficiency policy for which your community needs assistance? Or are there other specific resources that would help your community implement efficiency policies? Feel free send your thoughts to David Ribeiro,

Michael Jarrett contributed to this blog.

How does your country rank for energy efficiency?
August 19, 2015 - 3:55 pm

By Chetana Kallakuri, Research Analyst, Federal Policy

Evaluating how countries use energy provides valuable information necessary to identify energy waste, improve energy systems, and promote smarter economic growth. An efficient economy is one that minimizes its energy needs while providing better access to goods and services.

For the past 35 years at ACEEE, we’ve informed policymakers and the public to advance energy efficiency in the United States through in -depth technical and policy analysis.

We leverage this expertise to understand how other countries manage their energy. Today ACEEE released the 2015 International Scorecard Self-Scoring Tool. Anybody can use this Excel-based tool to analyze the status of energy efficiency in their country or province, and compare themselves with the largest economies of the world.

The tool is based on the 2014 ACEEE International Energy Efficiency Scorecard, which is our second comparative study of energy efficiency policies and performance across the 16 top economies of the world. Countries examined include the United States, China, Japan, Germany, France, United Kingdom, Brazil, Italy, Russia, Canada, and Australia, along with the European Union as a whole. New entrants in the 2014 race were India, Spain, Mexico, and South Korea. In the analysis, we evaluate each of these economies using 31 metrics in four sectors: national efforts, industry, buildings, and transportation. The new self-scoring tool reflects these advancements in our analysis. The tool also has a more user-friendly interface than the first version.

The self-scoring tool is accompanied by a detailed user guide and a case study on South Africa. For the case study, we collected data using centralized sources available in the self-scoring tool and collaborated with South Africa country experts. South Africa scored a total of 36/100, indicating that there is much scope for improvement of energy efficiency in all sectors. More details are available in the case study.

The biggest challenge we face in comparing energy efficiency across economies is the lack of quality data. Partly, this difficulty arises from the lack of measurement of energy use in countries. For example, the metric “vehicle miles traveled per capita” in the self-scoring tool is an indicator of fuel used for motorized personal transport. The higher this number, the more the energy consumed for personal transport per capita in the country, and hence the lower the score for this metric. Tracking such data helps not only to understand travel trends of citizens, but also to identify strategies to reduce fuel consumption and formulate policies to provide efficient modes of transport, such as trains, buses, bicycle pathways, etc., that meet the mobility needs of the citizens.

Energy efficiency indicators become all the more significant in countries looking to develop or restore their infrastructure. Directed by this information, good energy policies can strengthen energy security and transform energy guzzlers into lean and mean economies.

We welcome your feedback on the 2015 International Scorecard Self-Scoring Tool. Please direct all comments and questions to You can also help us improve our analysis by sharing the most recent data available for your country.

Energy Efficiency in the Clean Power Plan: Take One
August 12, 2015 - 2:12 pm

By Cassandra Kubes, Research Analyst, Environmental Policy

On August 3rd, EPA released the final Clean Power Plan (CPP), a rule that sets performance rates and individual state targets for carbon dioxide emissions from existing power plants. Now that the emissions targets are set, energy efficiency plays a prominent role as a proven strategy that states can use to reduce energy, cut emissions, and boost the economy. As we have said, it’s not important that energy efficiency is no longer a CPP building block. The fact is that it’s prominently featured as a key compliance option for states in EPA’s materials (see Energy Efficiency TSD and Key Topics and Issues Fact Sheet), as a component of the rule’s Regulatory Impact Analysis, and even in the president’s speech announcing the rule.

Now that we’ve had time for a first read-through of the final rule, we’ve found some significant changes from the proposed version.

Setting targets

EPA revised several aspects of the CO2 target-setting calculation. While the resulting changes in target stringency vary by state from the proposed to the final rule, on average the new 2030 targets are slightly stronger. The final rule provides emissions targets in the form of a state average emissions rate (pounds of CO2/MWh of electricity generated), and translates the targets into a mass-based goal for each state (tons of CO 2 per year from affected electric generating units [EGUs], i.e., coal and natural gas power plants). In addition, the rule now accounts for uniform CO2 performance rates for two specific EGUs. States can choose to comply using any of one of these emissions targets. Energy efficiency and nuclear energy were both removed from the building blocks that are used to set CO2 targets, while the application and data used for the remaining building blocks (heat rate improvements, fuel switching to natural gas combined cycle, and increasing renewable energy) were altered considerably from the proposed rule.

Timeline and pathways for compliance

The timeline for compliance with the rule has been pushed back to 2022, with the final compliance deadline remaining 2030 and thereafter. In addition, states are required to meet a series of interim compliance goals in 2024, 2027, and 2029. Under the final rule, energy efficiency improvements can count if they are installed after January 1, 2013 and will still be saving energy in 2022. These savings can continue to receive credit for each year over the 2022–2030 period in which they save energy.

In the final rule, EPA identifies a variety of energy efficiency measures, programs, and policies that can count toward compliance. These include utility and nonutility energy efficiency programs, building energy codes, combined heat and power, energy savings performance contracting, state appliance and equipment standards, behavioral and industrial programs, and energy efficiency in water and wastewater facilities, among others.

States can now comply using a variety of expanded pathways. The final rule allows for rate- or mass-based compliance at the EGU or statewide level. In addition, states can choose a pathway to trade individually or with other states. Within a rate-based compliance pathway, states can trade energy efficiency savings or bank them indefinitely using Emission Rate Credits (ERCs). EPA also released a draft EM&V guidance document for states complying with demand-side efficiency using a rate-based pathway. The key item is this guidance is that states must determine energy savings relative to a “common practice baseline.” While energy efficiency strategies used for mass-based compliance do not require EM&V to be documented within a state plan, the associated energy savings will help states meet their allowance goals.

EPA has also proposed an early-credit option for states called the Clean Energy Incentive Program (CEIP). The CEIP awards early credit for low-income energy efficiency programs and certain renewable energy projects implemented in 2020 and 2021. The program offers a two-to-one match for state energy efficiency savings in order to jump-start these efforts in low-income communities.

Planning for the future

Energy efficiency will be a key component in low-cost plans as states contemplate their compliance options. State compliance plans are due September 6, 2016, but states can request a two-year extension. The final rule also requires states to incorporate the needs of low-income and underserved communities within their compliance plans, and fully engage these communities along with other stakeholders during the planning process. EPA is also requesting comments on several items that have not been finalized. These include the CEIP for early action credit and the draft federal plan for states that fail to submit a compliance plan by the September 2018 deadline, both available here. The EPA is also seeking comments on the Draft EM&V Guidance for Demand-side Energy Efficiency. The deadline for all three comment periods is 90 days after the final rule is published in the Federal Register, which likely means sometime in December. In the coming months, EPA will also be engaging stakeholders regarding the definition of low-income communities and the types of energy efficiency programs allowed under the CEIP.

Along with other organizations, ACEEE will be providing assistance to states as they develop compliance plans. We will also submit comments to the EPA regarding the outstanding energy efficiency items. Stay tuned for more information about these efforts and additional resources on energy efficiency in the CPP in future blog posts. For more resources on incorporating energy efficiency as a compliance strategy, visit ACEEE’s webpage and our joint NASEO-ACEEE State 111(d) Resource Hub.