2019 and 2020: The Good, the Bad, and the Ugly

The past year has been a mixture of good and bad news on the energy efficiency front, and 2020 (our 40th anniversary) promises more of the same. Overall, there’s a lot to celebrate, but much more needs to be done to advance efficiency and address climate change.

The Good

I’m an eternal optimist, so let me start with the good news. Public recognition of climate change has been gradually increasing (e.g., 72% of US adults think climate change is happening), and even former climate skeptics such as the US Chamber of Commerce are recognizing that something needs to be done. ACEEE’s Halfway There report shows how energy efficiency can halve energy use and greenhouse gas emissions by 2050, providing a critical foundation for meeting long-term energy and climate goals.

Many cities and states are taking action. Their efforts include expansions of utility energy savings programs in New Mexico and Virginia, adoption of new state equipment efficiency standards in California, Colorado, Hawaii, Nevada, and Washington, and adoption of energy performance requirements for existing buildings in New York City and Washington state.

In addition, the membership of the International Code Council approved changes to its model energy conservation code that will reduce the energy use of new homes and commercial buildings by about 10% relative to the current code. Sales of electric vehicles are generally increasing, and more electric trucks are scheduled to enter the market in the next two years (as an upcoming ACEEE report will explain). Long-delayed federal efficiency standards for commercial packaged boilers, air compressors, portable air conditioners, and uninterruptible power supplies should be issued soon under a court order. And Congress just increased the federal budget for efficiency programs at the Department of Energy (DOE) by about 20% and maintained the budget for the Environmental Protection Agency (EPA).

The Bad

Progress is stalling. The International Energy Agency reports that after many years of substantial reductions in global energy intensity (energy use per dollar of gross domestic product [GDP]), the rate of improvement is slowing due to a growing economy in many countries, structural changes, and a slowing of policy progress. Similarly, in the United States, the Energy Information Administration reports that after many years of improvement, US energy intensity increased slightly in 2018, while carbon dioxide emissions per dollar of GDP were level with 2017.

In Ohio, legislators decided to end or scale back efficiency programs so they can subsidize old coal and nuclear power plants instead. And in California, while the state has been a leader in efforts to address climate change (e.g., the state recently issued a plan for scaling up efficiency efforts), utility energy efficiency investment is unfortunately declining. This drop is due to a purported lack of available potential driven in part by an overly restrictive benefit-cost test that aggressively counts costs and misses many of the critical benefits of efficiency.

The Ugly

At the federal level, the Trump administration is accelerating work to roll back a variety of energy efficiency rules. EPA and the Department of Transportation have ended the authority of California, 14 other states, and the District of Columbia to limit vehicle tailpipe carbon dioxide emissions. Dozens of states have already sued. The administration has also proposed to roll back the federal CAFE (corporate average fuel economy) and emissions standards for 2021-2025 (though some news stories suggest it will ultimately keep small increases).

Light bulbs are another case with large energy savings at stake. DOE has issued two rules (see here and here) to prevent a 2020 standard for light bulbs from taking effect, keeping the current standard that allows some incandescent plus many halogen bulbs to be sold. States are already suing over the first rule and will likely sue over the second, because DOE is trying to do an end-run around several provisions in current law.

DOE is soon expected to finalize a proposal that would make it much harder to set new efficiency standards for more than 60 categories of appliances and equipment. It has pending proposals that would allow manufacturers to change test procedures and evade standards, prevent a furnace standard from requiring efficient condensing furnaces, and create a loophole in dishwasher standards. Lawsuits are likely in each case, with final decisions unlikely until 2021. If there is a new president, he or she could administratively reverse many of these actions.

The Coming Year

The new year promises to be very “interesting,” with the 2019 items discussed above continuing to play out, some in the courts. Because 2020 is an election year, there is likely to be more rhetoric than normal on energy and climate issues and less action, as enacting legislation in an election year, particularly at the federal level, is usually very challenging.

In 2020, much of the activity is likely to be at the state and local levels. New Jersey is developing a plan to ramp up its efficiency programs, Mississippi and Louisiana are considering proposals to expand programs, and states such as Minnesota, Michigan, and North Carolina might advance efficiency actions. At the local level, New York City and Washington D.C. will consider how best to implement building performance standards, and Montgomery County, MD, and Los Angeles may consider similar standards.

At the federal level, there will be a lot of positioning for 2021, when there will be a new Congress and possibly a new president. The House Ways and Means Committee recently released a draft “GREEN” bill, the House Energy and Commerce Committee is preparing a proposal to get to zero greenhouse gas emissions by 2050, and the House Select Committee on the Climate Crisis is due to issue its recommendations by March. Republican offices are also preparing conservative, market-oriented proposals to save energy and reduce emissions, such as Rep. Tom Reed’s bill on promoting innovation and the Clean Free Market Act, which would reduce taxes on income from clean investments.

At this point it appears likely that in 2021 Republicans will continue to control the Senate, and Democrats will continue to control the House. In this situation, passing legislation will require Republican support in the Senate (and even if Democrats win a Senate majority, if the filibuster remains, they will need 60 votes for most bills). Bills that might get bipartisan support include infrastructure investments, policies to promote technology innovation, clean energy and efficiency tax incentives, a clean energy standard (electricity targets that can be met with renewables, nuclear, and perhaps energy efficiency and fossil fuels with carbon capture and storage), and perhaps a carbon fee.

With the election still 11 months away, preparations for 2021 are just beginning, but they offer a glimmer of hope that the federal government might join states and cities in taking action on climate and energy efficiency.

ACEEE will be celebrating our 40th anniversary this year. Look for celebrations at our Summer Study on Energy Efficiency in Buildings and at an energy policy conference in DC in December. Our board has developed a new “declaration” that will be released in February, outlining how ACEEE will work to leverage efficiency to reduce energy use and cut greenhouse gas emissions in half by 2050 to address climate change and achieve many other benefits.

As part of this work, we are developing strategies to decarbonize the industrial sector, promote large vehicle and transportation system efficiency improvements, move toward zero-energy new buildings, halve the share of households with high energy burdens, and at least double the rate of efficiency improvements to existing buildings. We’ll be rolling out details over the course of the year. We look forward to working with many of you on these and other initiatives.