by Dan Watkiss
Running up to the 2008 elections, a group of 27 distinguished American “elder statesmen”—Republicans and Democrats—recently sent an open letter to the next president and 111th Congress beseeching those in control of the nation’s agenda to recognize that the country “is facing a long-term energy crisis” and recommending 13 “fundamental pillars” of a long-term national energy policy. Notably, reflected in nearly every one of the 13 pillars is the imperative that each component of the nation’s energy strategy must achieve reductions in atmospheric greenhouse gases that are causing climate change. Not surprisingly, first among the elder statesmen’s pillars is to “aggressively promote” the invisible powerhouse of energy efficiency—negawatts.
A national energy policy that achieves long-term supply adequacy and sustained reductions in greenhouse gas emissions is a challenge that industry commentators have analogized to the Apollo space mission. The supply adequacy side of this equation is not the hard part—the nation has abundant fossil energy. The rub is that we cannot continue burning it with existing power technologies without risking potentially catastrophic climate change. As Eric Roston succinctly observed in his engaging new book, “The Carbon Age,” the solution to climate change is “to stop burning carbon minerals into atmospheric gas and removing forests. That is much easier said than done, as evidenced by our two-decade-long, still-sputtering start.”
Developing the technologies needed to stop burning carbon will require immediate investments, many of which are unlikely to produce big results for years—possibly many years—into the future, whether they are new nuclear generation fleets, new applications of hydrogen, or large-scale harvests of renewable energy sources. Likewise, the design issues that surround implementing a national program for reducing greenhouse gas emissions and reversing climate change, as I wrote about in my last column, are vexing and, even with the best of intentions, will require much research and work before a consensus approach emerges from the next Congress and administration. Getting the program “right,” moreover, will inevitably require some trial and error.
In contrast, energy efficiency can be expanded dramatically using only existing technologies and with only modest changes in energy policies and regulatory structures. This is why the elder statesmen rightfully made aggressive promotion of energy efficiency pillar number one. Energy efficiency is variously defined but commonly understood as a means of using less energy to provide the same or greater level of energy services. Since most of the energy that we as a nation currently use comes from combusting carbon minerals, any energy efficiency that displaces that combustion lessens emissions of climate-altering greenhouse gases. Because of this relationship, energy efficiency and climate-change are necessarily entwined and must be the combined focus of national policy.
The particular virtue of energy efficiency is the potential immediacy of its impact on energy and climate change. Cherif Youssef, technology development manager for Sempra Energy, said,”Efficiency is the least cost, most reliable, and most environmentally sensitive resource, and minimizes our contribution to climate change.”
For these reasons, as the next administration and Congress take up the challenges of energy supply adequacy and climate change, they should start with the aggressive promotion of energy efficiency. The American Council for an Energy-Efficient Economy (AEEE) describes an energy efficiency agenda that can be implemented immediately. It starts with setting energy efficiency resource standards that utilities would meet through customer investments in energy saving devices such as advanced (smart) metering, combined heat and power systems, and cycling of air conditioning and other appliances. In tandem with climate change programs, utilities or states could be rewarded with emission allowances or tax credits based on energy savings achieved from efficiency resource standards.
Other recommendations include strengthened building codes to address what is characterized by the AEEE as the principal-agent problem: The homebuilders, landlords and others that control the materials used in construction are not the ultimate consumer and energy bill payer. Assistance to low-income energy consumers in the form of weatherization and other assistance programs must be a component of strengthened building codes in recognition of the reality that those consumers spend much greater portions of their income on energy than do their more affluent fellow citizens. States adopting stringent energy efficiency building codes and widely available weatherization assistance could be rewarded with emission allowances or direct allocations of revenues from a climate change program.
In addition to the AEEE recommendations, those states that have yet to embrace demand management programs that aggressively shave peak loads and reduce reliance on peaking units that typically have the highest emissions of greenhouse gases and other pollution need to be encouraged to join the growing ranks of their sister states that have such programs in place. Equally importantly, those programs need to be integrated fully into the load flow studies that inform the planning of the electric transmission grid and generation capacity. Too often, load is over-projected because the realities and potential of demand management are not incorporated in planning projections, resulting in unneeded investments in both transmission and generating capacity.
The elder statesmen’s open letter and AEEE recommendations for tackling climate change through energy efficiency have not received the attention that they deserve. Once this exciting political season stabilizes after November, one hopes that the nation’s new leaders will take these wise recommendations to heart.
Dan Watkiss is a partner with Bracewell & Giuliani in Washington, D.C., representing power companies, exploration and production and mid-market companies, natural gas pipelines, power and liquefied natural gas project developers and lenders, as well as government agencies and regulators. You many contact him at Dan.Watkiss@bgllp.com.