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The Case for Putting the EE in a GrEEn Recovery

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  • Dec 1, 2020
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By Raegan Bond, partner, Dunsky Energy Consulting

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I remember the exact day when COVID-19 really hit home for me – March 11, 2020.  I was on a quick trip to our company’s head office in Montreal and in a 24-hour period, we went from having high level executive team discussions about voluntary business travel restrictions, to enacting a mandatory work-from-home policy for our entire team.   By the end of March, nearly all businesses, schools and institutions across North American had shut down or transitioned to remote work where possible.  The impacts on the energy efficiency industry were felt immediately. Utilities were forced to shutter DSM programs that relied on on-premise delivery by auditors, installers, and evaluators, which in turn lead to DSM Program Implementers furloughing thousands of employees.

As quickly as the lockdown happened, so too did discussions about economic recovery arise. All major industries have been lobbying their governments for support – both near-term emergency relief as well as post-crisis stimulus for long-term economic recovery.  Among these efforts is a push for a Green Recovery which ties economic stimulus directly to climate change policies and objectives.  I have observed, however, that very little of this Green Recovery talk (and media coverage) has highlighted the role for energy efficiency (EE); instead, focusing mostly on renewables, electric vehicles and emerging clean technologies.  There are some notable exceptions, including Michael Liebreich’s recent article for BloombergNEF, the IEA’s Sustainable Recovery Report and of course the ongoing efforts of energy efficiency advocacy organizations such as The Alliance to Save Energy, Efficiency Canada and ACEEE.

 
Why isn’t energy efficiency center stage?
Those of us who have worked in the EE field for any length of time face the perennial challenges of communicating and convincing others of the benefits of energy efficiency. Foremost among the challenges is that energy efficiency is largely invisible. We undertake programs and policies that lead to the avoidance of something (energy use), rather than the creation.  Economic stimulus efforts are often geared towards large scale, ‘shovel ready’ infrastructure projects that not only create immediate job impacts but are also highly visible. 


While the economic benefits to utilities and ratepayers from DSM programs has been proven for decades through industry standard cost-benefit analyses, significant skepticism also remains within pockets of the sector as to the actual benefit of energy efficiency efforts. The current revenue losses that utilities are facing due to COVID-induced energy demand reductions may further reduce the perceived benefits and support for DSM programs.  

 
Why now is the time to double down on EE and its benefits


While there are challenges to ramping up energy efficiency efforts (both long-held and more recent as described above), the potential role for energy efficiency in driving a sustainable economic recovery is enormous.  Below, I present three arguments for why it’s the perfect time to double down on energy efficiency and make it the cornerstone of our post-COVID economic recovery strategies.


•    The EE industry is mature, but not outdated.  The energy efficiency industry – including utilities, government agencies, manufacturers, retailers, program implementers and others – has evolved over the past 3+ decades into a mature industry with a proven track record of delivering cost-effective and impactful programs and policies to drive improvements in energy productivity.  There are hundreds of existing ratepayer- and government-funded energy efficiency programs which could be enhanced through additional economic recovery funding.  In the words of a coalition of cleantech advocates in Canada, these projects are not only shovel ready, but shovel worthy.  While significant gains have been made in energy efficiency since the oil crisis of the 1970s, significant market potential remains – even with the rapid adoption of energy saving technologies such as LEDs that we are seeing today.   A stimulus investment in the energy efficiency sector is not a lifeline to a dying industry, but rather an acceleration of the clean energy transition underway globally.  

 

•    EE is labor intensive. Prior to COVID, an estimated 2.4 million Americans and 400,000 Canadians worked in the Energy Efficiency sector.  In their recent Sustainable Recovery Plan, the IEA estimates that retrofitting and constructing energy efficient buildings would create approximately 15 manufacturing and construction jobs per million dollars of capital investment – the highest job creation rate among sustainable recovery strategies considered. My own firm’s macroeconomic modelling found that EE returns roughly 30 person-years of employment for each $1 million of EE funding. In addition to being labor intensive, the energy efficiency sector draws employees from a wide range of fields including construction, trades, manufacturing and distribution, retail, data science, utilities, marketing, project management, and general business management. A stimulus investment in energy efficiency will create wide-spread job impacts, including the opportunity to transition workers from other energy sectors.

 

•    EE’s co-benefits create a win-win-win. The policy rationale for energy efficiency programs is driven by economics, where the avoided supply costs from saving energy exceed the cost of implementing DSM programs.  DSM programs provide an economic benefit not only to program participants (by reducing energy bills) but to all ratepayers by lowering the utility’s total cost for meeting demand. Additional benefits from EE programs which are generally not considered in regulatory forums, but which should be considered in the context of economic stimulus funding include:  environmental benefits (e.g. emission reductions from lower energy use), indirect economic benefits (e.g. job creation, improved businesses competitiveness), increased resiliency (weatherized homes withstand heat waves and flash storms better) and social benefits (e.g. reducing energy poverty). A stimulus investment in energy efficiency, supported by a equity policy lens, can create economic, environmental and broad societal benefits.

What role can AESP play?
As discussed above, energy efficiency is a labor-intensive industry. Our mission is to support this dynamic community of energy efficiency professionals through professional development, networking and advocating for a resilient, sustainable energy future. As we push for a green economic recovery, our investment in, and support of, our workforce is more important than ever.  We also know that the world has changed and that we must change as well to provide ongoing value to our members.  In the short term, we have ramped up our online training courses and webinar content, we are hosting our first virtual conference in September, and have offered discounts on paid trainings and job postings.  As the AESP Board develops our next 3-year Strategic Plan this summer, we will be exploring additional ways to support the growth and development of energy services professionals, like you! If you have any ideas for how AESP can provide more member value and better support the energy efficiency industry, please do not hesitate to reach out and let us know!

This article is republished from the July 2020 issue of Strategies, AESP’s exclusive magazine for members. To receive Strategies, please consider joining AESP.

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Matt Chester on Dec 1, 2020

 Foremost among the challenges is that energy efficiency is largely invisible. We undertake programs and policies that lead to the avoidance of something (energy use), rather than the creation.  Economic stimulus efforts are often geared towards large scale, ‘shovel ready’ infrastructure projects that not only create immediate job impacts but are also highly visible. 

Important point here-- EE investment doesn't allow the showing off of new shiny power plants or solar panels, but the impacts are so real and important, especially on an individual customer basis. 

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