Energy Efficiency, Executive Insight

ACEEE Says Energy Efficiency Policies Could Save US Economy Almost $1 Trillion

The American Council for an Energy-Efficient Economy (ACEEE) released a new report highlighting 16 policies that remove market barriers across the economy to investments in energy efficiency. The report, Overcoming Market Barriers and Using Market Forces to Advance Energy Efficiency, provides Congress and state policymakers with a road map to address national energy consumption through policies that could save the country approximately $1 trillion in energy bills and 19 quads in energy consumption.

The United States has made much progress in energy efficiency in the last few decades but large, cost-effective opportunities are still available to advance efficiency further, while improving the economy at the same time. A variety of market failures and market barriers, however, are keeping the country from fully realizing its energy efficiency potential, ACEEE said.

“Eliminating barriers that keep us from reducing waste is an approach both sides of the aisle can support,” said Steven Nadel, ACEEE executive director. “By removing these barriers, Congress and state policymakers have an opportunity to let smart investments help strengthen the economy while saving the nation billions.”

The report discusses several targeted policies that leverage market mechanisms and address specific market failures to energy efficiency, without requiring substantial spending or government mandates. For example, the development of a comprehensive building labeling and benchmarking program could save approximately 1.6 quads of energy and $60 billion between 2014 and 2030. Even more impressive are the benefits gained from adjusting corporate tax legislation to encourage the replacement of inefficient equipment and from removing regulatory barriers to combined heat and power (CHP) projects. These two policies alone could reduce national energy consumption by 7 quads and save the economy close to $300 billion.

“We want to show policymakers that there are a number of cost-effective policies out there that could promote energy efficiency and kick start the economy at the same time. This report highlights a number of inventive approaches that we haven’t made much use of to date,” said lead author and ACEEE senior research analyst Shruti Vaidyanathan.

The report includes policy interventions targeted at residential and commercial buildings, the industrial sector, and the transportation sector, as well as a number of policies with economy-wide benefits. For each measure, the report provides a brief description of the policy, its legislative history, general estimates of associated costs and benefits, and recommendations about future policy design.