The Environmental Protection Agency (EPA) included many references to energy efficiency as a strategy to achieve Clean Power Plan (CPP) compliance and encouraged states and utilities to pursue this path. Even though the Supreme Court of the United States has issued a “stay” on the CPP, some states are moving ahead with CPP planning and/or related efforts. We appreciate these efforts as the CPP represents a significant step forward in our nation’s efforts to mitigate against climate change.
Including energy efficiency as a compliance option under the CPP, as the EPA has done, will enable states and utilities to meet the emissions reduction goals at "least cost" and quite likely with net economic benefits for households, businesses and the economy as a whole. Indeed, the EPA estimates that, if the CPP is implemented, CO2 emissions will decline 32% by 2030 from 2005 levels and that net benefits will be in the range of $26-$45 billion.
Establishing a least-cost compliance objective in state and agency plans will ensure that strategies under the Clean Power Plan will include a high level of energy efficiency.
Energy efficiency has long been recognized as a least-cost resource, but it is also now a potential least-cost compliance path under the CPP regulations and related state-based efforts. By establishing an overarching least-cost compliance requirement or objective in state plans and in agency decision-making under the CPP and related efforts, compliance strategies will inevitably include a high level of energy efficiency. Using the least-cost compliance path as a filter as state agencies consider which options will be included in state plans filed with the EPA or otherwise enacted by individual states ensures that energy efficiency will be a critical component of those state plans. It also ensures that consumers (ratepayers) are protected from unnecessary rate increases and that utilities are operating in a financially efficient manner in relation to CPP compliance or other state-based efforts to reduce CO2 emissions.
SWEEP has conducted its own study of the net economic benefits that could result in our region (AZ, CO, NM, NV, UT, and WY) if utilities implement well-funded and effective energy efficiency programs as one of their key CPP compliance strategies. The results are preliminary but indicate that efforts to save energy from efficiency programs implemented from 2016 through 2030 could result in around $9 billion in net economic benefits for the SWEEP region. No matter what happens to the CPP in the current legal proceedings, achieving (or in some cases maintaining) strong energy efficiency programs is a sensible strategy for all states.
The Southwest states could reap a $9 billion benefit from energy efficiency programs implemented from now through 2030.
A number of states in our region—including Colorado, Nevada, and New Mexico as well as major utilities in those states—recognize that man-made climate change is occurring and is dangerous. In response, they are actively working to reduce their utility sector CO2 emissions—and doing so regardless of whether or not the CPP is upheld by the courts. Energy efficiency can and should be an important component of these state- and utility-led efforts.
It is important to note that utilizing energy efficiency as a compliance strategy is not required under the CPP. As a result, we won’t know until individual state plans are drafted and then approved by the EPA (or adopted separately from the CPP) whether or not energy efficiency will play a prominent role in each state’s compliance or broader air quality efforts. SWEEP has been working with the states in our region to ensure that efficiency is a core component in the state plans that Arizona, Colorado, Nevada, New Mexico, Utah, and Wyoming will prepare and submit to the EPA for approval, assuming the legality of the CPP is upheld.
Every utility customer should be interested in efficiency as a least-cost energy resource, but it is certainly the case that both industrial customers and low-income advocates are particularly focused on maintaining low energy costs. And, as the old infomercials used to say, “but wait, there’s more,” energy efficiency also supports local job creation through sales and installation of energy efficiency measures such as LED lamps, smart thermostats, industrial process controls, energy-efficient cooling systems, and improvements to the building envelope. As a result, the strategy of focusing on a least-cost compliance path benefits the environment, the local economy, and consumers of all types, including vulnerable populations.
In short, energy efficiency is the smartest, least-cost compliance path under the CPP as well as for state- and utility-led efforts to reduce harmful CO2 emissions.