sue libenson , libenson consulting , 907-766-2841, suelibenson@gmail
Post on 23-Feb-2016
45 Views
Preview:
DESCRIPTION
TRANSCRIPT
Beyonce Vs. Buffett: Why Conservative Energy Efficiency is More Cost-effective than “Sexier” Policy Options
Sue Libenson, Libenson Consulting, 907-766-2841, suelibenson@gmail.com
Steve Colt, University of Alaska, 907-786-1753, sgcolt@uaa.alaska.edu
Beyonce Vs. Buffett: Why Conservative Energy Efficiency is More Cost-effective than “Sexier”
Policy Options
Energy policy options
• Reducing the burden of energy cost: – Reduce the amount of fuel
used and/or the price of fuel
• Reducing the price of fuel:
– Reduce components of fuel prices
Evaluating Energy Policy Outcomes
• Amount of money saved• Amount of energy saved• Short term jobs created• Permanent jobs created• Timeliness of results
Energy efficiency is the most conservative and cost-effective energy policy option
But policy makers still focus on “sexier” energy projects
Efficiency projects are capital projects that create both short term and permanent jobs statewide
• Short term jobs are created while retrofitting buildings.
• 12 short term jobs are created for every $1 million in state spending
• Permanent jobs are created by new spending of money saved on fuel.
• 11 permanent jobs are created for every $1 million in new spending.
Residential Buildings and Energy Efficiency: Savings and Jobs Created
Avg. annual energy savings per household
Annual savings statewide
Energy savings statewide
Annual savings of natural gas
Annual savings of heating fuel
Jobs created through retrofit of residential buildings
Permanent jobs created through spending of savings elsewhere in economy
Home Energy Rebate Program
$1,297 $22 million
1.6 trillion BTU
1.1 Billion cu ft
2.5 million gallons
1,746 242
Weather-ization Assistance Program
$1,295 $7.8 million
371 billion BTU
87.3 million cu ft
1 million gallons
2,222 86
Combined $29.8 million
1.971 billion BTU
1.97 billion cu ft
3.5 million gallons
3,968 328
Savings and jobs created by retrofitting all of Alaska’s housing stock – putting billions
to workHomes retrofitted to date (approx. 10% of AK housing stock)
State funding spent to date
Annual savings statewide
Homes remaining to be retrofitted (approx. 70% of AK housing stock)
Estimated cost to retrofit entire AK housing stock
Projected annual energy savings
Projected jobs created through retrofit of residential buildings
Projected Permanent jobs created by spending of savings elsewhere in economy
Home Energy Rebate Program
17,500 $145 million (an additional $99 million was spent by homeowners)
$22 million $176 million/yr
Weatherization Assistance Program
8,400 $185.2 million $7.8 million $62.4million/yr
Combined 25,900 $330.2 million $29.8 million 180,600 +/-$3 billion $238.4 million/yr +/-36,000 2,600
Enormous savings and jobs creation remain to be realized through energy efficiency for public and commercial buildings.
Public Buildings – Potential savings and jobs creation
# of Public Buildings
Annual energy costs for public buildings
Projected annual savings
Projected annual public savings
Jobs created through retrofit of public buildings
Permanent jobs created through spending of savings elsewhere in economy
5,000 $641.2 million $25,000/building $125 million 7,568 1,375
Savings for public schools through energy efficiency
# of schools in Alaska
Total sq. footage Annual energy costs
Projected annual school savings (based on energy savings of 20%)
Jobs created by retrofit of schools
Permanent jobs created through spending of savings elsewhere in economy
479 26 million sq ft $90 million $18 million 1,090 198
Commercial Buildings – Potential savings and jobs creation- There are an estimated 15,700 commercial buildings with a total of 260 million square feet in Alaska.- Based on savings projected for public buildings, potential efficiency savings for commercial buildings could exceed $200 million per year.
Given potential for savings and jobs creation, is efficiency “sexy” enough for policy makers ?
Reducing the burden of costs through financial assistance
Direct financial assistance from the state is another way to defray fuel costs.
Preliminary estimate of the cost of a broad-based heating fuel cost reduction program. The major assumptions are:
- 62,000 eligible households (about 50% of the estimated 125,000 Alaska
households who are not connected to natural gas)- 500 gallons per year limit eligible for assistance- $2.00/gallon average reimbursement level (this could vary depending on
differing actual prices of fuel in different areas)
The resulting cost of the program would be $62 million per year. An annual expenditure of this amount could be permanently endowed for approximately $1.2 billion, assuming a 5% rate of return.
Reducing the Price of Refined Fuels
Crude oil is the single largest component of fuel prices
Component of fuel prices that could possibly be affected by state policy
Components of average U.S. and Alaska gasoline prices for 2011 - dollars per gallon for regular grade
$/gal % $/gal %Retail price 3.52 3.93 Crude 2.43 69% 2.68 68%Refining 0.42 12% 0.66 17%Distribution & mkting 0.26 7% 0.33 8%Federal taxes 0.18 5% 0.18 5%State taxes 0.23 7% 0.08 2%
U.S. Alaska
Taxes
• Alaska has the lowest state taxes in the country at only 8 cents per gallon.
• The next lowest is Wyoming at 14 cents per gallon. New York residents pay the highest taxes of 49 cents per gallon. Federal excise taxes – which fund highway construction -- are currently 18.4¢ per gallon.
• Alaska temporarily suspended its gasoline tax from September 2008 through August 2009 under a bill championed by Governor Sarah Palin.
Regulating Alaska’s in-state refineries
Economies of scale and distance to markets
• Alaska’s relatively small refineries have a less favourable economy of scale which drives up the cost of each gallon of fuel produced.
• The distance to larger consumer markets also creates a disadvantage of additional transportation costs for exporting refined products from Alaska refineries.
• Because refined products are more expensive to transport
by tanker than crude oil, it has never been cost effective for Alaska’s refineries to produce products for export and achieve export volumes for to realize economies of scale.
Alaska refinery margins
0
20
40
60
80
100
120Ja
nuar
y 20
08Fe
brua
ryM
arch
April
May
June July
Augu
stSe
ptem
ber
Oct
ober
Nove
mbe
rDe
cem
ber
Janu
ary
2009
Febr
uary
Mar
chAp
rilM
ayJu
ne July
Augu
stSe
ptem
ber
Oct
ober
Nove
mbe
rDe
cem
ber
Janu
ary
2010
Febr
uary
Mar
chAp
rilM
ayJu
ne July
Augu
stSe
ptem
ber
Oct
ober
Nove
mbe
rDe
cem
ber
Janu
ary
2011
Febr
uary
Mar
chAp
rilM
ayJu
ne July
Augu
stSe
ptem
ber
Oct
ober
Nove
mbe
rDe
cem
ber
Janu
ary
2012
Febr
uary
Mar
chAp
rilM
ayJu
ne
cent
s per
gal
lon
Refinery Cash Operating MarginsAlaska Cash Operating Margins West Coast Cash Operating Margins
Fuel storage and transportation• Prices for jet fuel, which is bought and stored in large
quantities, are more stable in Alaska than prices for gasoline and heating fuel.
• Our analysis suggests that the state could promote competitive market conditions for gasoline and heating fuel by 1) increasing the storage capacity for these fuels, especially in urban areas, that is available to independent merchants; 2) encouraging the purchase of these fuels in higher volumes at lower wholesale prices; or some combination of these approaches.
There is some evidence that rural Alaska fuel prices can be decreased by improving transportation or fuel storage infrastructure in conjunction with bulk fuel buying.
Which approach is most cost-effective?
$300 Million $60 Billion
The real money is in conservative choices led by energy efficiency.
top related