New research shows Michigan could actually profit from Clean Power Plan compliance

Blog | October 14, 2016 - 10:14 am
By Martin Kushler, Senior Fellow

My home state of Michigan recently released two reports summarizing how Michigan could comply with EPA’s Clean Power Plan requirements.  As has been the case with numerous other analyses, they found energy efficiency to be a core strategy for reducing the total costs of Clean Power Plan (CPP) compliance.  In fact, the modeling showed energy efficiency would help Michigan achieve excess carbon credits, which could be sold to other states. As a result, a Michigan compliance plan would cost less than a “business as usual” future with no CPP policy at all!

Setting efficiency targets pays off in Michigan

The importance of energy efficiency was emphasized by the executive director of the Michigan Agency for Energy, Valerie Brader.  She noted that expanding Michigan’s utility energy efficiency programs beyond the current statutory 1% annual savings requirement “is absolutely key to our energy future”, and would result in lower total costs to ratepayers than a business as usual path.  She added: “This is absolutely vital to control Michigan’s energy costs in the future.  It is saving us literally billions of dollars.”

While Michigan is officially “pencils down” in terms of working on CPP issues, until the courts lift the current ‘stay’, they did allow some modeling work that had been previously contracted-for to proceed to completion.  These results should be very helpful in guiding policy when CPP planning resumes.

Among the key findings were analyses which showed that doubling the state’s Energy Efficiency Resource Standard for utilities from 1% annual savings to 2% would produce net savings of an additional $900 million compared to a compliance plan with the current 1% standard. The modeling results also revealed that using a mass-based approach and engaging in interstate trading (to sell excess credits) would be the most advantageous path for Michigan.

Resources to get started in your state

The final Clean Power Plan rule makes it clear that energy efficiency has a big role to play to reduce greenhouse gas emissions. ACEEE has done extensive work examining the implications of using energy efficiency as a Clean Power Plan compliance approach and consistently finds opportunity for efficiency to eliminate pollution at a lower cost than the alternatives. Tools such as ACEEE’s SUPR calculator and Synapse’s CP3T are free and can provide states with a first look at the role energy efficiency can play in different states.

Michigan’s new analyses tell us what we at ACEEE know to be true for most states: energy efficiency puts the state in an excellent position to adopt a compliance approach that improves both the state economy and citizen health through reduced pollution. We hope that policymakers and regulators take notice of how effective and beneficial energy efficiency can be in achieving Clean Power Plan compliance.