2010 was a mixed year for energy efficiency with significant progress at the state level, but ultimately only modest success to show on the national level, particularly from Congress. As our 2010 ACEEE State Energy Policy Scorecard documented, progress continued to be made at the state level.
Many states and utilities began implementing programs in response to legislation passed in recent years, including such states as Maryland, Michigan, Ohio, and Pennsylvania. Other states, such as Massachusetts, Rhode Island, and Utah, significantly expanded their programs. According to the Consortium for Energy Efficiency, energy efficiency program budgets in 2010 totaled about $5.5 billion in 2010, up more than 20% from 2009 levels. As the year ended, Arkansas and Wisconsin both established mandatory energy efficiency resource standards (EERS), meaning that a majority of sates have now adopted an EERS.
On the national level, the International Code Council strengthened the national model building code for new homes, making the new code about 30% stronger than the 2006 code. For commercial buildings, the American Society of Heating, Refrigerating and Air-conditioning Engineers final standard for new commercial buildings is about 22% stronger than their 2004 standard.
The big disappointment on the federal front was that while Congress talked a lot about energy and climate change, it ultimately passed little, leaving these issues for 2011 and beyond. At the beginning of the 111th Congress, there were widespread expectations that Congress would pass a comprehensive energy and climate bill. Such a bill passed in the House, but did not move to the Senate floor for lack of the 60 votes needed to consider major legislation. One troubling development is that addressing climate change became a highly polarized issue, which will likely make future progress more challenging. Fortunately, energy efficiency does have bipartisan support, so that some energy efficiency policies can probably move forward independent of climate change legislation, while making an initial “down payment” towards addressing climate change.
The one significant efficiency bill that did pass Congress, as part of broad tax legislation, was a one-year extension and revision of three current energy efficiency tax credits. Included were tax credits for efficient new homes, appliances, and improvements to existing homes. For more details, visit the Tax Incentives Assistance Project (TIAP) Web site.
Another missed federal opportunity occurred when Congress came close to enacting the Implementation of National Consensus Appliance Agreements Act (INCAAA) containing consensus energy efficiency standards on 12 products. ACEEE led negotiations of these standards with manufacturers and other efficiency supporters. INCAAA includes new standards for residential central air conditioners and heat pumps, furnaces, refrigerators, freezers, clothes washers, clothes dryers, dishwashers, room air conditioners, and outdoor lighting fixtures.
ACEEE estimates that these standards will reduce U.S. electricity use by more than 100 billion kWh in 2030 (equivalent to the annual output of 29 baseload power plants of 500 MW each) and provide net savings to consumers and businesses of nearly $50 billion. The bill, which had broad support and nearly garnered unanimous consent in the Senate, is likely to be reintroduced early in the next Congress.
One of the bright spots on the federal level was DOE’s publication of new minimum efficiency standards for a variety of products, most notably a strong standard for new water heaters that requires the very largest units to use heat pump or condensing technology. Other products with new standards include small electric motors, pool heaters, and residential direct heating equipment.
In addition, states and municipalities offered many programs funded under the American Recovery and Reinvest Act of 2009 (ARRA). Federal energy efficiency tax incentives for retrofits to existing homes also appear to have driven a lot of investment in new residential windows and heating/cooling systems (see the TIAP Web site). ACEEE estimates that more than $10 billion in qualifying equipment was sold in 2010.
At the macroeconomic level, 2010 was not a good year for efficiency. While the economy began to rebound, energy use also rebounded. The Energy Information Administration’s Short-Term Annual Energy Outlook (Dec. 2010) estimates that the economy grew around 2.7% in 2010, while energy use grew more than 3.0%. 2010 appears to have been the first year since 1991 that energy use has grown more than GDP. Part of this trend may have resulted from the economic situation, in which investments in new plants and equipment continued to be depressed and consumers and businesses nursed along aging equipment. As the economy continues to recover, we hope that new investments in more efficient equipment pick up since they are an important driver of improved energy efficiency.
In summary, while significant progress was made on energy efficiency in 2010, there were many missed opportunities. In a few weeks I will post on the outlook and priorities for realizing some of the energy efficiency opportunities in 2011.