Energy Efficiency: Engine of Economic Growth

Daniel L SoslandExecutive Director

Delivering the Promise of Energy Efficiency: Strategies for Lowering Energy Costs and Creating Jobs

August 17, 2010

ENE – About Us

Environmental Policy, Research, and Advocacy

Non-profit NGO working at the state, regional and federal levels

Rockport, ME / Boston, MA / Providence, RI / Hartford, CT / Charlottetown, PEI, Canada

Funded by private foundations and individuals

Program Areas Climate Change and Air Quality Energy Transportation Forest and Land Use

States Face Three Major Challenges:Efficiency Investments Address All Three

Jobs National Unemployment Rate:

9.7% U.S. Total Jobs lost over 13

months: 3,600,000

Economy U.S. Consumer Credit Card Debt:

$858,100,000,000 Lack of investment, drop 2008 to

2009: 31%

Climate Hottest March on Record (since

1880): March 2010 Hottest Decade on Record (since

1880): 2000-2009 Northeastern States Have GHG

Reduction Goals

Investments in Efficiency Programs are Proven to: Spur Job Growth Improve the Soundness of the

Economy And Reduce GHG emission

….and yet…. We Continue to Massively Under

Invest in Efficiency EE Program Investment of only

roughly $4 billion per year, with a 3-4x opportunity left on the table

Several Policy Tools Hold the Potential to Correct this…. State: Buy All Cost Effective

Efficiency; PACE and Financing Regional: Use RGGI Proceeds Federal: Support State Activities

ENE’s Energy Efficiency: Engine of Economic Growth

What are the broad economic and job benefits of increasing efficiency investments? Need to understand the positive impacts of EE to the broader economy Encourage state leaders to consider the overall economic impacts of

efficiency and other resource options when making energy policy decisions Other assessments only look at the direct costs and savings of the

program to participants and ratepayers ENE study of macroeconomic impacts of EE

Using the Regional Economic Models, Inc (REMI) – multi-state Policy Insight forecasting tool used for RGGI

Conservatively modeled all cost-effective EE investment in six New England States and Cumulatively for New England Region

Impacts on Energy costs; Emissions; Gross State Product (GSP); Employment: forecasts for 70 different industries

Efficiency Investments Drive Job Growth, Help Consumers, and Raises GDP

Energy savings, lead to increased spending in local economy

Consumer $$ shift from being exported to pay from out of region oil, gas to being redirected into state economic activities

Efficiency Spending Modeled: All Cost Effective Levels for 15 Years for All Fuels

Results - Energy Cost Savings

February 12, 2010 7

$29 billion in electric savings

$15 billion in heating oil savings

Economy-Wide Job Impacts

8February 12, 2010

26,000 more jobs in 2016 in 6 state study region as $$ saved enter economy

Dollars of GSP per Program Dollar

CO2 Emissions Reductions: Most Effective Way for States to Meet GHG Goals

Making Efficiency Happen: Policies and Funding

Programs Are Needed to Correct market Failures and Assist Consumers: Liquidity Constraints – inadequate access to capital Split Incentives – EE investor does not receive savings benefits

(landlord/tenant) Information Problems – uncertainty of future savings of today’s

investment Behavioral Problems – complexity of decisions are beyond one’s ability

Funding Efficiency: 2 Sides or Perspectives Energy Resource Acquisition: Utility (Electric and Gas) and

Unregulated Fuels (heating oil) Consumer: Encourage Participation & Assist with Finance

Current Practice Has Been to Massively Under-Invest in Efficiency: How do We Achieve All-Cost Effective EE?

Funding Efficiency

Utility Resource Funding and Acquisition Perspective Mandate Purchase (procurement) of all cost-effective efficiency

before buying more expensive power plant contracts: “Least Cost Procurement”, adopted in MA, CT, RI, VT, ME

Unregulated Fuels: Need to find a funding mechanism, such as charge on wholesale oil

Consumer Participation and Funding Perspective Facilitate Participation through rebates, incentives (proven to be

effective): buy down incremental cost of efficient appliances, insulation, etc

Combine with Other New and Emerging Tools On-bill repayment, on-bill financing Property Assessed Clean Energy (PACE)

Working Together: Coordinated Approaches Including Building Codes and Appliance Standards

Selected Northeastern States Advancing with Funding

Conclusions

Experience shows that mandates and incentives are needed to overcome barriers to investing in efficiency

ENE Engine study shows that the economic benefits of EE investments are much greater than typically calculated Because these efficiency investments deliver cost-effective

savings, the resulting economic stimulus is greater Results should encourage states to expand programs to capture

all cost-effective efficiency for all fuels Funding/Policy Approaches Should Be Mutually Supportive and

Coordinated Utility programs, financing, codes/enforcement and product standards

Contact Information

ENE (Environment Northeast)

Rockport, ME / Boston, MA /Providence, RI

Hartford, CT / Charlottetown, PEI, Canada

www.env-ne.org

Daniel L Sosland, dsosland@env-ne.org (207) 236-6470Jamie Howland, jhowland@env-ne.org

(860) 246-7121

Job Years per Million Program Dollars

Allocation of Employment Impacts

Allocation of Employment Impacts (cont.)

EE Scenario Economic Modeling Results

Components of Economic Impacts

Connecticut Results Summary

Electric

Natural Gas

Unregulated

Fuels

Energy Savings (GWh) (TBTU) (TBTU)

Maximum annual savings 8,600 22 29

Maximum savings vs. Business as Usual 25% 20% 28%

Lifetime savings (15 years of programs) 125,900 272 368

Equivalent GHG Emissions Avoided (Millions short tons)

(Millions short tons)

(Millions short tons)

Maximum annual avoided emissions 4.3 1.3 2.3

Maximum annual avoided emissions vs. 2005 total Connecticut Emissions 9.7% 2.9% 5.2%

Lifetime avoided emissions (15 years of programs) 72 21 41

Connecticut Economic Impacts - Recap

Electric Natural Gas Unregulated Fuels

Total Efficiency Program Costs ($Billions) 4.4 .93 1.6

Increase in GSP ($Billions) 25 6.6 12

Maximum annual GSP Increase ($Billions) 1.37 0.41 0.65

Percent of GSP Increase Resulting from Efficiency Spending 11% 10% 8%

Percent of GSP Increase Resulting from Energy Savings 89% 90% 92%

Dollars of GSP Increase per $1 of Program Spending 5.7 7.0 7.1

Increase in Employment (Job Years) 183,000 42,000 78,000

Maximum annual Employment Increase (Jobs) 9,700 2,700 4,600

Percent of Employment Increase from Efficiency Spending 15% 14% 11%

Percent of Employment Increase from Energy Savings 85% 86% 89%

Job-Years per $Million of Program Spending 41 45 48

How do we get Every State to MA Levels?