Energy Efficiency: Meeting the Challenge & Fueling A Better Built Environment

Presentation by

Kateri Callahan, President

to the

EnVisioneering Symposium Carlsbad, CA

November 14th, 2008

Overview A Few Words About the Alliance Energy Efficiency: America’s Greatest Resource Why Deploy Energy Efficiency – Meeting the

World’s Energy, Economic and Environmental Challenges

Policy: Tapping the Full Potential of Energy Efficiency

Forecast for the Future: Energy Efficiency as the “First Fuel” for America and the World

What is the Alliance to Save Energy?

A unique NGO formed and still led by Members of Congress

Guided by a 37-Member, Elected Board of Directors

- Led by Senator Mark Pryor (D-AR) and Jim Rogers, CEO of Duke Energy

- Includes 9 Members of Congress – Bi-Cameral; Bi-Partisan

- Also includes environmental, consumer, and trade associations heads, state and local policy makers, corporate executives

Forging Alliances: Business, Govt. & Public Interests

Sponsorship and participation of more than 150 organizations Involvement by businesses in all economic sectors Initiatives underway in research, policy advocacy, education, technology

deployment, and communications

Energy Efficiency: Faithful Friend

0.8

3

4

8

23

24

40

50

0 10 20 30 40 50 60

Geothermal, Solar and Wind

Conventional Hydroelectric

Wood, Waste, Alcohol

Nuclear Electric Power

Coal

Natural Gas

Petroleum

Energy Efficiency and Conservation

Quads

America's Greatest Energy Resource Energy Efficiency and Conservation Improvements Since 1973

Have Reduced Annual Energy Consumption by 50 Quads

2007 Domestic Production Net Imports

Alliance to Save EnergyAugust 2008

Energy Efficiency has been powering the U.S. economy for over 30 years!

Enormous Savings Energy Efficiency AVOIDING roughly 2.5

billion tons of CO2 annually

Saving roughly $400 billion annually

Why Do More?

Growing Energy Demand is Unsustainable

Global demand grows by more than half over the next quarter of a century, with coal use rising most in absolute terms

0

2

4

6

8

10

12

14

16

18

1980 1990 2000 2010 2020 2030

billio

n to

nnes

of o

il equ

ivale

nt

Other renewablesBiomassHydroNuclearGasOilCoal

0

2

4

6

8

10

12

14

16

18

1980 1990 2000 2010 2020 2030

billio

n to

nnes

of o

il equ

ivale

nt

Other renewablesBiomassHydroNuclearGasOilCoal

Why Do More? U.S. Growth in Energy Use Poses a National Security Threat

Why Do More?Energy Use is a Pocketbook Issue

Why Do More? Energy Use is a Global Climate Issue

Source: Energy Information Administration

Two Areas with Big Potential Savings: Buildings and Industry

Energy Information Administration (EIA)

The Building sectoraccounts for almost½ of the energy consumption in the U.S.

Buildings account forover 70% of total USelectricity consumptionand are responsible forover 40% of CO2 emissions.

Industry accounts for 32% of total U.S. energy consumption.

We Can Do More & Cost-Effectively!

Source: McKinsey Global Institute

Investing in energy efficiency can cut global energy demand growth from 2.2% to 0.7%

EE: The No-Cost Way to Reduce GHG Emissions

Energy Efficiency should be fully considered in GHG reductions. All items to the left of the arrow represent “negative marginal costs”

The Challenge? Market Distortions

Principal Agent or “Split Incentives”- Home builder versus buyer

- Utility versus customer

Transaction Costs- Lack of information on life-cycle cost for products and/or

paybacks for upgrades

Lack of Investment in RD&D and EE Programs Public Policies Essential Investment in EE Programs Essential

Work is Being Done to Overcome Challenges…

At the Federal Level - Tax Incentives- Federal Energy Management- Appliance and Equipment Standards- Weatherization Assistance Program

• At the National Level • Model Building Energy Codes

• At the Regional Level• Climate Initiatives (e.g.,RGGI)

• State/Local Level • Code Adoption & Enforcement• Utility Portfolio Standards & Efficiency Programs• Financial Incentives

• Public Education and Outreachtopbuild(regional & state initiatives; code adoption; local adoption & enforcement policy, with enforcement in some states; education)

Indirectly• Federal Programs aimed at emissions reductions

And the Government Responds….

Energy Policy Act of 2005 will by 2020:- Reduce U.S. energy use by 2%- Reduce electricity demand by 4%- Reduce oil use by 0%- Reduce CO2 emissions by 3%

Energy Independence and Security Act of 2007 will by 2020 (2030):- Reduce U.S. energy use by 4% (7%)- Reduce electricity demand by 4% (5%)- Reduce oil use by 5% (10%)- Reduce CO2 emissions by 5% (9%)

Estimates from ACEEE, ASE

270

290

310

330

350

370

390

410

430

450

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

FISCAL YEAR

kW

h (

fin

al

en

erg

y)

pe

r S

qu

are

Me

ter

10% Goal - 1995 (NECPA)

20% Goal - 2000 (EPACT)

30% Goal - 2005 (EO 12902)

35% Goal - 2010 (EO 13123)

25.6% Reduction, 2004 (Preliminary Data)

Actual Energy Use

At the Federal Level….Leadership by Example

Energy savings goals + report cards Public buildings Public procurement

Federal building energy/sq.ft. down 30% in 20 years

• The largest 4,000 plants use 58% of U.S. industrial energy.

• A large plant uses as much energy as 20,000 typical homes; A medium-sized plant consumes the same energy as 455 homes.

• For every U.S. plant, there are 320 homes and 685 motor vehicles.

Big bang for the “outreach buck:”

Resources to implement energy-saving measures are

available to help:

“Save Energy Now”

www.eere.energy.gov/industry/

Federal Programs: A Leg Up for Industry

DOE’s “Save Energy Now”: The Results

So far, 653 assessments completed. As of November 13, 2008, 527 plants

have reported the following:

Identified energy saving costs more than $852 million

Implemented energy savings nearly $121 million

Energy savings measures underway or scheduled:

more than $357 million

Identified natural gas savings 81 trillion Btu—the amount of natural gas consumed by more than 1 million single-family homes per year

Total potential carbon dioxide (CO2) emissions reduction:

7.2 million metric tons—the equivalent to taking nearly 1.2 million cars off the road

Our Government at Work:Extension of Tax Incentives

New Homes Builder tax credit - up to $2,000 if 50% more efficient compared to 2004 IECCC code; $1,000 for an Energy Star manufactured home. (Through 2009)

Existing HomesHomeowner tax credit – 10% of cost of installing building envelope components consistent with IECC 2000; capped at $500; $200 can apply to windows. (Through 2009)

Commercial Buildings Deduction up to $1.80/sq.ft. for buildings designed to use 50% less energy than ASHRAE-90.1 (Through 2013)

Public Buildings: Assignable deduction!

So…What Else Do We Need? Better Building Codes

Today’s building codes

affect ALL new buildings

By 2010By 2010: • Almost 5 million new housing units

• Over 233 billion sq feet commercial floor space

By 2020By 2020: • 23.4 million new housing units

• Over 1 trillion sq feet commercial floor space

By 2030By 2030: • Over 41 million new housing units

• Over 2 trillion sq feet commercial floor space

Source: EIA, Annual Energy Outlook 2008

At the State Level….A Slog???

Federal Legislation Pending- Would Drive 30% Improvement in Residential and Commercial EE

Codes by 2010; 50% by 2020 2009 Model Energy Code (IECC) Improves New Home

Efficiency by approximately 13% over 2006 IECC- EECC Sought 30% Improvement

ASHRAE Goal (Commercial) is a 30% Improvement in Efficiency in the 2010 Code Cycle

Regulations Boost EE for New Federal Facilities by 30% EECC Building on Broad Support Base: the Alliance to Save

Energy and U.S. DOE, Utilities, Businesses, NGOs

At the National Level…..Improving Model Codes

What Else Can We Do? Improve Existing Stock

Appliance standards and labeling Weatherization Building labeling Consumer education (e.g. ENERGY STAR)

What Else Can We Do?...INVEST in the Future

Low investment in efficiency R&D- Little R&D in energy sector

- Fragmented buildings sector

What Else Can We DO? INVEST

Source: CRS Report: RS22858

What Else Can We Do? Fund Programs Authorized in EISA and

EPACT- Zero Net-Energy Commercial Building Initiative

- $450 Million Public Information & Outrech Program

Enact a Federal Energy Efficiency Resource Standard

Price Carbon (Cap’n’Trade or Tax)

Energy issues likely to be “front-and-center”- Deepening economic woes - Continuing increases in home and business

energy costs- Growing concern about national security- Urgent need to tackle climate change - Increasing support for “Green Jobs” and for using

clean energy and efficiency as an “economic engine”

Another Energy (and/or Stimulus) Bill BEFORE Climate Legislation

Federal Forecast: ACTION

Federal Forecast: ACTION

The Senate Debate on Climate Legislation (Lieberman-Warner) this past June- Fails cloture 48-36; proponents claim 54 supporters;

opponents claim less than 48 supporters- Calls for a carbon cap-and-trade program- Viewed as a “dress rehearsal” for 111th Congress

House Continues Work- Energy & Commerce Committee Issues Discussion Draft- Markey Introduces “iCAP” legislation

New President Supports Climate Legislation Global Negotiations – Copenhagen, 2009

Energy Efficiency in Climate Legislation

A Look at President-Elect Obama’s Platform…

On Energy Efficiency– Reduce Electricity Demand 15% by

2020– Net-Zero Energy Buildings by 2030– Overhaul Federal Appliance Standards– 45% Improvement in New Federal

Building Energy Use by 2014– 25% Improvement in Existing Federal

Building Energy Use by 2014– 15% Overall Reduction in Federal

Energy Use by 2015– Flip Incentives for Utilities– Invest in a “Smart Grid”– Weatherize 1 Million Homes Annually– Invest and Incent “Liveable Cities”

The Challenges Can Be Overcome: Others are Doing More with Less!

R etail E lec tric ity S ales per C apita

0

2

4

6

8

10

12

14

16

18

20

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

S ourc e : E IA Interna tiona l Net E nerg y C onsumption T a bles, 1980 - 2005; E IA Interna tiona l P opula tion T a bles, 1980-2005; Wa shing ton S ta te Da ta B ook; U.S . C ensus Da ta ; E IA E nerg y C onsumption E stima tes by E nd-Use S ec tor, 1960-2005, Wa shing ton a nd C a lifornia

Thou

sand

kilo

watt

hou

rs

C alifornia

United S tates

Was hington

J apan

Wes tern E urope

An Invitation…….. Join the Alliance to Save Energy in Paris April 27

through 29 for EE Global- Learn more about what other states, other countries, other

businesses are doing to deploy energy efficiency;

- See the latest technologies, products and services;

- Build partnerships for success;

- Share best practices; and,

- Meet the leaders in energy efficiency from every corner of the globe and every sector of the global economy!

EE GLOBAL 2009 April 27 -29, 2009 Paris, France at Palais des Congres de Paris Hosted by the Alliance to Save Energy Organized by an International Steering Committee

Chaired by Marc Bitzer, President, Whirlpool Europe; Jean-Pascal Tricoire, President and CEO, Schneider Electric; Nobuo Tanaka, Executive Director, International Energy Agency; Lena Ek, MEP; & Claude Turmes, MEP

Program created by an International Program Committee Chaired by Paolo Bertoldi, I.E.S. – Renewable Energies Unit, Directorate

General JRC, European Commission