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COVID-19 pains and the future of EE in America

image credit: ID 179929529 © Andres Jacobi | Dreamstime.com

What does the future hold for America’s energy efficiency industry? Nobody really knows, but there are some worrisome trends that have only been compounded by the COVID-19 pandemic. 

In December, The energy community was rocked by the Energy Efficiency Impact Report. Authored by the Alliance to Save Energy (ASE), the American Council for an Energy-Efficient Economy (ACEEE) and the Business Council for Sustainable Energy, the report came to some disturbing conclusions regarding the state of energy efficiency in the U.S.A. There was no single statistic that underlined our nation’s regression on energy efficiency in late 2019, rather there were a number of findings that together painted a picture of significantly decelerated progress. The authors warned that a failure to get back on track will have dire consequences for the environment and the country’s economic competitiveness. 

There were too many takeaways in the report to go over all of them, but a few stood out above the rest. Property Assessed Clean Energy investment, which is an instrument used to finance energy efficiency upgrades on private property, was beginning to slow after seeing a rapid rise from 2012 to 2017. On a similar note, ESCOs investments in energy efficiency had leveled off at around $5 billion. According to the report, that figure represented just a fragment of the ESCO market potential, which they estimated to be between $92 billion and $201 billion in 2016 dollars. 

So, what’s happened since the Energy Efficiency Impact report? COVID-19 is what’s happened. The virus has thrown the global economy and the vast majority of industries into turmoil, and the energy efficiency sector has not been spared.  According to the most recent Clean Jobs America report, close to 70,000 energy efficiency workers filed for unemployment in March alone. What’s more, some states are now rolling back energy efficiency initiatives in the name of fiscal responsibility. In Ohio, for example, where efficiency programs had already eroded before the virus hit, there’s been talk of EE funds being diverted into bill payment programs. Missouri’s Office of Public Counsel has moved in the same direction, recommending that regulators remove the charge on customers’ bills that pays for EE programs. 

I, and I’m sure many others on this forum, worry these moves will prove myopic. Cutting energy efficiency budgets will save money in the very near term, but possibly at the cost of significant savings in the medium and long terms. It’s hard to quantify how much EE has done for our economy, but most studies show that it’s been a great positive:  According to that same 2019 report from the Alliance to Save Energy, energy efficiency policies have allowed the U.S. to avoid a 60% increase in energy consumption since 1980.

Despite these setbacks, there could be hope yet for the country’s EE industry. Some states, like Michigan, are determined to keep their energy savings programs up and running. However, beyond mere public initiatives, I hope the economy will organically move towards greater efficiency. Contrary to what many eco-blowhards would have you believe, that’s actually been the general trend in the developed world since the 1960’s. Moving forward, I’m hopeful that smart homes and changing behavioral patterns (robust public transit as opposed to everyone having their own electric car) will reduce per-capita energy consumption.

Henry Craver's picture

Thank Henry for the Post!

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Discussions

Dudley McFadden's picture
Dudley McFadden on May 27, 2020 4:08 pm GMT

Thanks for the insightful post.  Governments are indeed myopic.  Moreover, how is shaving a small surcharge off their bill really helping customers even in the short term?  People out of work need a lot more assistance than a few bucks a month. I agree that the best outcome would be a continuation of the more organic EE trends since the 1960s.  Sad to see that for some policymakers, action on climate change is such a low priority when push comes to shove.

Mike Cassity's picture
Mike Cassity on May 27, 2020 5:08 pm GMT

Thanks for this post Henry. 

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