Why do states struggle so much with implementing energy efficiency policies and programs? Saving money on electric bills “gives families more money to spend on groceries, childcare, and other necessities of life,” according to pediatrician Barbara Nabrit-Stephens, writing recently in the Tampa Bay Times. As a member of Florida Clinicians for Climate Action, she is concerned about how these underlying challenges are aggravated in a warming world with “brutal heat waves and stronger storms.”
However, there is a solution. “When we use less electricity, we save money and reduce power plant pollution that creates smog, accelerates warming, and harms our health,” Dr. Nabrit-Stephens says.
Building energy consumption is approximately 40% of global energy. By 2020, global energy consumption is estimated to upsurge by 2.2% per year. Most states have energy efficiency programs to help homeowners save money on their electric bills. Power companies are required to spend a fraction of their sales to help people use less electricity at home. Rebates and incentives help homeowners change lightbulbs, install insulation and other retrofits that lower bills, reduce demand, and prevent the need to build polluting power plants.
Florida’s Energy Efficiency Problems As Example Of States’ Struggle
According to the American Council for an Energy Efficient Economy (ACEEE), utility-led energy savings programs are essential for bringing the benefits of energy efficiency to homes and businesses, but in Florida, many are being left out. The efficiency programs there are saving a fraction of the national average because of state rules and practices that discourage practical, high-impact investments.
In 2019 Florida utilities argued for efficiency goals of zero, pointing to a clear lack of motivation to achieve energy efficiency savings. Florida ranks at the bottom for efficiency programs — the national average for energy efficiency programs as a percentage of sales is about 1%. Florida captures only 0.17%. Florida is the only state that still uses what is generally considered an outdated test called RIM, which tends to overestimate costs and undervalue benefits from energy efficiency.
As a result, Floridians pay the 11th highest electricity bills in the country.
The average single-family home in Florida can reduce its energy use by up to 23% through efficiency upgrades, such as improved HVAC, water heating, and lighting, according to the National Renewable Energy Laboratory. Many people live in older homes, with leaky windows and inefficient, outdated air conditioners. Reducing waste and using electricity wisely is an inexpensive, efficient, and clean way to meet energy goals.
Florida’s Public Service Commission (PSC) is going through a process to reconsider its goal-setting rule, which has the potential to reform the state’s outdated efficiency benchmarks. Florida can move to eliminate detrimental policies and dramatically expand efficiency goals to meet the national average of at least 1% savings.
Promoting The Renewable Energy Of Community
Other states are setting examples of ways that many states’ struggle with energy efficiency can be overcome. States can accomplish a whole lot with focused and deliberate policies around energy efficiency and renewable energy.
The Connecticut Green Bank was established by the Connecticut General Assembly in 2011 as the nation’s first green bank. The Green Bank’s mission is to confront climate change and provide all of society a healthier, more prosperous future by increasing and accelerating the flow of private capital into markets that energize the green economy. This is accomplished by leveraging limited public resources to scale-up and mobilize private capital investment into Connecticut.
The Connecticut Green Bank is offering a 2021 “Promoting the Renewable Energy of Community” webinar series. Over the next year, these webinars will feature Green Bank staff and special guests speaking on topics such as clean energy policy, financial innovation, social justice, and cleantech advances. The webinar series involves Connecticut Innovations as a technology partner and the Public Utilities Regulatory Authority (PURA) as a regulatory partner exploring innovative regulatory structures to support the implementation of public policy.
The “Energy Trends and Transformations” webinar will start the series on Tuesday, March 2, 2021 from 12 to 1:30 pm. Katherine Hamilton, co-host of the podcast The Energy Gang, will lead a conversation exploring the rapidly shifting US policy and business landscape for clean energy, cleantech, and climate. From the Biden Administration to Congress, attendees will learn what policy movements are underway, and what these changes mean for states and for clean energy project activity.
The New York State Energy Research and Development Authority (NYSERDA) has a toolkit to help municipalities voluntarily adopt higher energy efficiency standards for new and renovated buildings. Called the NYStretch Energy Code – 2020, the toolkit shares best practice standards that NYSERDA developed with guidance from a 25-member group of public and private stakeholders. A stretch energy code is one that’s more efficient than the state’s base energy code.
“Communities that adopt and implement NYStretch will accelerate energy cost savings, reduce emissions from buildings, improve resiliency from power disruptions, and lower utility bills for New York consumers,” according to the public benefit corporation. The corporation expects the new toolkit to provide roughly 11% in energy cost savings over the model energy codes that are the basis for New York State’s 2020 Energy Conservation Construction Code. NYSERDA estimates paybacks in the six- to 12-year range.
Currently 30% of New York’s overall emissions come from onsite fuel combustion in buildings and 15% from electricity generation, the corporation noted.
Energy Act Promotes Energy Efficiency In Government Data Centers
The Energy Act of 2020 covers a broad range of energy efficiency and research and development initiatives, including a few specifically targeting the data center industry, according to the National Law Review. The portion of the Act addressing the data center industry outlines the following initiatives and next steps:
- Collaboration between the Department of Energy and the Environmental Protection Agency and key industry stakeholders, including data center operators and facility managers, to assess “specifications, measurements, best practices, and benchmarks” for increased energy efficiency
- Publication of an in-depth report on data centers analyzing historical energy and water usage and efficiency, and suggesting best practices
- Creation of an information-sharing initiative relating to energy usage at federally owned data centers to encourage further data center “innovation, optimization, and consolidation”
- Establishment of a program to certify energy practitioners qualified to evaluate the energy usage and efficiency opportunities in federally owned and operated data centers
This portion of the Act was advanced, in large part, by Congress’s desire to save costs and achieve greater efficiency for federal government data centers, but it also codifies a broader trend in the industry toward helping states’ struggle with energy efficiency and toward a move to “green” power. Now, with the federal government moving more swiftly in the same direction, this trend could soon be the norm.
The Relationship Of Climate Crisis To Credit Ratings & States’ Struggle With Energy Efficiency
The climate crisis has deep consequences for a state’s finances.
The International Monetary Fund (IMF) argues that the benefits of climate resilience are clear, and outlines in a new working paper how municipal vulnerability or resilience to climate change can have a direct effect on its creditworthiness, its costs of borrowing, and ultimately, the likelihood it might default on its debt. An increase of 10 percentage points in climate change vulnerability is associated with an increase of about 30 basis points in long-term (10-year) government bond spreads relative to the US benchmark in their sample of countries.
On the other hand, they find that an improvement of 10 percentage points in climate change resilience is associated with a decrease of 7.5 basis points in long-term government bond spreads.
A better understanding of how climate change affects sovereign credit ratings could provide valuable guidance on how much governments and firms can safely borrow and how much it will cost them. The IMF research group contends that governments and states’ struggles with the climate crisis can be diffused through changing public finances and reducing the cost of borrowing associated with lower credit ratings with a series of dedicated strategies:
- pursuing cost-effective climate change mitigation and adaption strategies
- building structural resilience to climate risks, including through resilient infrastructure; strengthening financial resilience through fiscal buffers and insurance schemes
- improving economic diversification to reduce excessive reliance on climate-sensitive sectors
Energy use in cities has global climate effects, says NOAA research.
Featured image retrieved from NOAA (public domain)