State Current: New Study Explores Energy Efficiency in Appalachia

A quick glance at ACEEE’s State Energy Efficiency Scorecard over the past few years will reveal some distinct regional divides. States on the east and west coasts and in the upper Midwest occupy the most spots at the top of the list, while the Southeast consistently ranks low in energy efficiency. Considering the region’s economic reliance on fossil fuels, it is no surprise that the concept of saving energy is met with skepticism. The region’s reliance on fossil fuels and the status of Appalachia as the historical epicenter of coal production and cheap electricity in America have contributed to the region’s lack of investment in energy efficiency.  It is critical for stakeholders in the region to understand that the economics of energy efficiency are sound and efficiency policies can be used to meet the energy needs of the region.

A recent report prepared by the Southeast Energy Efficiency Alliance (SEEA), the Georgia Institute of Technology, ACEEE, and the Alliance to Save Energy details the potential for energy efficiency in Appalachia. Commissioned by the Appalachian Regional Commission (ARC), Energy Efficiency in Appalachia assesses the energy efficiency resource in the region, how fast it can be deployed, potential policies and programs to implement, and their impact on the region’s economy. The report’s findings illustrate that energy efficiency is an economically sound way to meet the region’s energy needs.

Sub-Regions of Appalachia
(Source: Appalachian Regional Commission)

According to the report, a bold investment in energy efficiency could cut consumption by between 9 and 12 percent in 2020 and by 23 to 28 percent in 2030. Broken down by sector, the greatest opportunities for cost-effective energy efficiency lie in commercial buildings, which constitute 42 percent of the savings by 2030. Industrial sector savings make up 25 percent, transportation savings 18 percent, and residential savings 15 percent.

To achieve these savings, the report calls for the region to adopt a portfolio of policies beginning in 2010.  Most of the recommended policies require authorization from state legislatures, but municipal governments and utility commissions will also play significant roles in crafting the policies.  Recommended policies include:

  • Commercial buildings: Commercial Building Energy Codes with Third Party Verification and Compliance Incentives; Support for Commissioning of Existing Commercial Buildings; Efficient Commercial HVAC and Lighting Retrofit Incentive; Tightened Office Equipment Standards with Efficient Use Incentives
  • Residential buildings: Improved Building Energy Code with Third Party Verification and Compliance Incentive; Expanded Weatherization Assistance Programs; Residential Retrofit Incentive with Resale Energy Labeling and Incremental Cost Incentives; Super-Efficient Appliance Deployment
  • Industry: Expanded IndustrialAssessmentCenters; Increasing Energy Savings Assessments; Supporting Combined Heat and Power (CHP) with Incentives
  • Transportation: Pay-as-You-Drive Insurance; Clean Car Standards; SmartWay Heavy Truck Efficiency Loan Program; Speed Limit Enforcement

The economic impact of such a robust energy efficiency initiative would be transformational for the Appalachian region. Currently the energy industry directly generates approximately 150,000 jobs and indirectly supports thousands more producing and distributing energy products and services. Change, no matter how positive, is always difficult and a shock to the current system will certainly not be palatable to many entrenched in the current infrastructure of the energy industry. Understandably, the region resists such an aggressive push to conserve the very resource central to its economic prosperity. Reducing energy consumption, however, will not leave this energy-producing region in the cold. Energy efficiency initiatives entail substantial job creation and consumer savings, more than compensating for any job losses in the energy sector.

The report estimates that annual consumer outlays of $1 billion in 2010, $4.5 billion in 2020, and $6.2 billion in 2030 would bring about $5 billion in annual net consumer savings in 2020 and $21bn in 2030. These energy efficiency investments would also create more than 15,000 net jobs each year during the first five years, with an estimated average of 60,000 net jobs each year over the last decade of the analysis. Net jobs are the gain in jobs due to energy efficiency minus job losses in the energy-related sectors.

The report has generated interest across the region and SEEA will be working with the states on implementation of the strategies in 2010. The American Recovery and Reinvestment Act of 2009 (ARRA) pushes the states forward on energy efficiency, directing unprecedented levels of funding to the Weatherization Assistance Program, the State Energy Program, and the Energy Efficiency and Conservation Block Grant Program. The funding will enable the Southeast to aggressively pursue energy efficiency and to make energy efficiency a central strategy in meeting the energy needs of the region.