Energy Efficiency and the Clean Power Plan

On August 3rd, 2015, EPA released the Clean Power Plan Final Rule.

Read SPEER’s comments, in coordination with others, on the proposed Federal Plan requirements and Model Trading Rules (January 21, 2016)

Read SPEER’s comments on the Clean Energy Incentive Program (December 14, 2015)

Read SPEER’s report on Efficiency and the Low-Carbon Future (March 2016)

Energy efficiency can help reduce emissions of all air pollutants, alleviating air quality compliance issues facing the region.  In fact, many states, local governments, and utilities are exploring how to get environmental credit for their efficiency efforts.  As states begin to comply with the Clean Power Plan, and as many areas strive for attainment with increasingly stringent ozone standards, energy efficiency efforts are among the most cost-effective methods for compliance.

SPEER does not take a position on 111(d) or other air quality regulations; rather, SPEER works to ensure that if the Clean Power Plan withstands court challenges, energy efficiency can and will be used as a cost effective compliance strategy. Specifically, we are working to ensure that many varieties of efficiency programs can qualify for credits or allowances within state plans or a Federal Implementation Plan (if the states refuse to create a plan and abrogate the responsibility to the EPA). Read SPEER’s comments on the proposed Federal Plan requirements and Model Trading Rules. In addition to utilities’ incentive programs, these would include, but not be limited to: adoption of higher building codes, Combined Heat and Power deployment, commercial financing programs including local Property Assessed Clean Energy (PACE) districts, public building retrofit projects, voluntary industrial efficiency projects, residential financing programs including Warehouse  for Energy Efficiency Loans (WHEEL), and more.

The Role of Energy Efficiency 

The convoluted litigation surrounding the EPA’s Clean Power Plan (CPP) has cast a roadblock in the way of its implementation, but this should not obscure the reality that a transition to a greener grid will continue.  Aggressive pollution regulation, low natural gas prices and the extension of incentives for renewable energy are currently driving this transition irrespective of the outcome of CPP litigation.  Looking at the time horizon envisioned by the Plan, it is almost inevitable that as the deleterious impacts of climate change begin to be felt worldwide, some sort of action will be taken to control the emissions of greenhouse gases.

Energy efficiency can be a key contributor to reducing the cost of the transition to a greener grid. Energy efficiency can buffer the impact as the generation mix changes dramatically in a relatively short period of time. Aggressive pursuit of cost-effective energy efficiency measures is not only beneficial to consumers, and creates a net social benefit, it reduces the rate at which new generation and transmission lines must be built. Given the long lag times for approval and construction of some electricity grid infrastructure, energy efficiency can buy time to make the transition less disruptive, limiting the impact on grid reliability.

The CPP rule analyses (by both ERCOT and the EPA) show that energy efficiency can create significant savings in electricity markets by putting downward pressure on wholesale electricity prices, by as much as 7-13%. While these studies were done in the context of the CPP implementation, they provide an estimate of the potential impact of an aggressive energy efficiency program on wholesale energy prices. We estimate that demand in 2030 could be reduced by as much as 10 percent using a modest mix of energy efficiency programs, building codes and appliance standards (which would help “lock in” savings created by efficiency programs). The cost of these programs would be far less than the combination of savings to consumers, reduced energy prices, and reduced transmission and distribution costs.

SPEER Presentations on Clean Power Plan

Why Texas Should Stop Worrying and Learn to Love the Clean Power Plan, delivered to the American Council for an Energy Efficient Economy (ACEEE ‘s) Market Transformation Symposium. Lewin presented data showing that Texas will reach 75% of the EPA’s goal with business as usual projections for wind and natural gas and that there are only 240 megawatts (MW) of coal in the interconnection queue at ERCOT, while there are over 9,000 MW of natural gas and 9,000 MW of wind. ERCOT also projects 10,000 MW of solar by 2030.

But Texas will not come close to the levels of energy efficiency under business as usual scenarios. Lewin’s presentation showed how higher levels of efficiency could be achieved  while strengthening the economy.  SPEER recommends that each state create an Energy Efficiency Registry to track savings from non-utility programs. This was a key recommendation of the SPEER Commission on Energy Efficiency Policy and a central focus of SPEER’s comments to the EPA (see below).

SPEER also responded to an ERCOT paper which asserted that Texas could not attain as much energy efficiency as EPA suggested in the draft rule.

SPEER Comments to EPA Before Issuance of Final Rule:

Comments on the proposed Federal Plan requirements and Model Trading Rules (MTR):

These joint comments are provided to the U.S. Environmental Protection Agency (EPA) in response to EPA’s request for comments on the proposed Federal Plan requirements and Model Trading Rules (MTR). Our intent is to describe ways that energy efficiency projects could receive value for carbon emissions reductions delivered within a mass-based system in the hopes that EPA will include them in the model trading rules and federal plan. These comments are signed by the following organizations: Alliance to Save Energy (ASE), American Council for an Energy Efficiency Economy (ACEEE), The Climate Registry, E4theFuture, Natural Resources Defense Council (NRDC), Southeast Energy Efficiency Alliance (SEEA), South-central Partnership for Energy Efficiency as a Resource (SPEER), Third Party Delivered Energy Efficiency Coalition.

Other Resources:

We continue to work with our members, other organizations, and state and local policy makers to ensure that energy efficiency and renewable energy contribute to cleaner air throughout the region.