Creating 625,000 jobs and saving $64 billion through energy efficiency

[one...two...tree 2,762]

by Joseph Romm, Grist

Energy efficiency is THE core climate solution. It's the biggest low-carbon resource by far. "Efficiency Works" [PDF], a major new report by Bracken Hendricks, Bill Campbell, and Pen Goodale, finds that a straightforward set of policies aimed at upgrading just 40 percent of the residential and commercial building stock in the United States would:

• Create 625,000 sustained full-time jobs over a decade.
• Spark $500 billion in new investments to upgrade 50 million homes and office buildings.
• Generate as much as $64 billion a year in cost savings for U.S. ratepayers, freeing consumers to spend their money in more productive ways.

What follows is a cross-post of the report summary:

The United States is mired in an urgent jobs crisis. Despite some early signs of a sustained economic recovery, in many parts of the country, the debilitating fallout from the Great Recession on employment remains a painful fact of daily life. Few industries have felt the economic downturn harder than the construction industry, which suffered the most from the consequences of a decade of gross mismanagement of our nation's mortgage markets and financial services industries.

The unemployment rate in the construction industry hovers at Depression-era levels, remaining near 25 percent for three straight months by March of this year. Between 2006 and early 2010, total payroll employment in construction fell by 2.1 million jobs, with residential construction declining by 38 percent, meaning that more than one in three construction workers lost their job as a result of this recession. And this collapse in construction cascades across other industries as well. Construction-related retail jobs fell by 14 percent, and manufacturing jobs in wood products by 30 percent over the same period.

Collapsing demand for labor in construction industries is devastating to American families and communities nationwide. To confront this crisis, the U.S. jobs market needs sustained new demand for the skills of construction workers that is grounded in providing real value to the economy through enhanced productivity, greater efficiency, and improved asset value for real estate. For that to happen, we need a sound strategy for investment in our nation's stock of residential and commercial buildings -- a strategy that will get banks lending again, put construction crews back on the job, and improve the long-term economic value of buildings for homeowners, businesses, and investors alike.

Such a solution is readily available. Our country needs a national program to retrofit America's homes, offices, and factories for energy efficiency -- a program that can provide an important answer to the jobs crisis facing our country. But it will take public policy leadership to mobilize the private sector investment that is needed to grow this emerging market. Fortunately, many states around the country are already demonstrating that with public sector leadership it is possible to jumpstart market demand for energy efficiency retrofits of our homes and businesses.

In the report, the Center for American Progress and Energy Resource Management look at state regulations and incentives for energy efficiency that are working today in leading states to accelerate demand for energy efficiency services, businesses, and ultimately jobs. As this market rapidly grows in coming years, states that have put in place strong policies for energy efficiency will be best positioned to capture these new employment opportunities for construction workers in clean energy. Despite the growing state leadership documented here, however, more must be done to capture the full potential of energy efficiency to serve as a national engine of reinvestment and job creation.

Choices in policy can have a tremendous impact on setting the market conditions that entice private sector investment and put skilled construction workers back on the job. The report identifies 10 policies that are effectively used in states and can have an especially large impact in shaping the market for energy efficiency. Using a state-by-state analysis of existing policies (including both regulations and investment incentives), as well as market conditions (including energy prices and building stock), the Center for American Progress and Energy Resource Management identified the leading states where smart policies are poised to set the stage for clean energy jobs and the homegrown businesses that will serve this new demand.

These leading states can be found in every region of the country, in states with high- and low-cost sources of energy, and in both heating and cooling intensive climates. The key driver of these markets for efficiency is the presence of policies and market prices that allow businesses to profitably recover the cost of their investments in productive, innovative, and cost-effective energy efficiency measures.

None of these states has put in place the entire suite of policies, and each is only now beginning to develop the potential of energy efficiency to create a robust market for clean energy jobs. But these states have developed important pieces of the puzzle. In the report, we detail how we chose the "Top 10 Energy Efficiency States" and identified an additional "Top 10 High Market Potential States" that also could be poised to assume leadership in building energy efficiency as a new industry and source of increased economic competitiveness.

For other states that do not appear on the lists, policy innovations could rapidly create the structures for energy efficiency as a growth business sector. Our rankings looked specifically at the potential market for energy efficiency, especially for the underserved commercial building market segment. A significant factor in determining the market potential for energy efficiency is energy prices, and it is important to realize that some of the most successful market structure innovations undertaken have been in states that rank relatively far down on our list, or even out of the top 10, because their retail energy prices are below the norm, slowing the recovery of investments in energy-saving measures. For other states that do not appear on this list, following this path of policy innovation could rapidly create the structures for energy efficiency as a growth business sector.

We based our analysis on what we consider the 10 key energy efficiency policies that states are adopting or experimenting with to varying degrees. These policies are:

• Energy efficiency measures in Renewable Portfolio Standards -- policies that not only require utility companies to meet a set portion of demand from renewable energy but also include energy efficiency as a qualifying form of clean energy.
• Energy efficiency measures in Renewable Energy Credits -- policies that establish markets for tradable clean energy credits and include energy efficiency as a qualifying clean energy resource.
• Energy efficiency specific standards that require utilities to plan for meeting a percentage of future growth in demand through energy efficiency instead of increasing supply. These policy tools include Energy Efficiency Resource Standards and Energy Efficiency Portfolio Standards.
• Unbundled utility structures in which energy transmission and distribution utilities are separate from power generation companies that own power plants, encouraging least costs strategies for meeting energy demand through conservation.
• Decoupled utility rate structures, where utilities' rates are adjusted to compensate for changes in the volume of energy sold, removing the structural disincentive to conserve energy.
• Aligning efficiency with utility companies' shareholder benefits, such as bonus rates of return, reimbursing program costs, or other incentives that help transform efficiency from a special program into a core business practice.
• Penalties for noncompliance with energy efficiency standards, to ensure that well-intentioned programs are effectively implemented, monitored, and improved upon over time. Effective policies must have real consequences.
• Regulatory cost-benefit tests that focus on utilities' real costs, in order to isolate the specific value offered by energy efficiency investments.
• Property-assessed financing structures that link the benefits of installed efficiency to a building, rather than the owner of the building, allowing repayment of financed investments to transfer automatically to new owners.
• Service assessment delivery structures, which allow government jurisdictions to directly facilitate financing of upfront capital costs, assuring repayment through municipal or other service assessment mechanisms.

As we will demonstrate in the report, these policies enacted at the state level (in different mixes in different states) are already providing numerous real-world examples of how policy-driven energy efficiency markets can create a new industry to power job creation in the construction sector profitably and sustainably. These same policies help to combat global warming and lower our nation's reliance on foreign fossil fuels -- both important national goals. But make no mistake: No state has fully developed the potential of their energy efficiency market to create clean energy jobs, let alone the federal government.

As a country, the United States substantially lags behind our closest economic competitors in the energy efficiency of our economy. We believe the examples presented in this paper can set the stage for a powerful new national energy efficiency strategy, which fixes market barriers to unleash entrepreneurs, investment, and innovation. This is must reading for anyone interested in broad-based job creation and economic prosperity, enhanced national energy security, and a clean, sustainable environment powered by new ideas, new private capital and fresh policy prescriptions for the 21st century.

Energy efficiency retrofits: Fast facts

A national program to retrofit America's homes, offices, and factories for energy efficiency can provide an important answer to the jobs crisis facing our country. The Center for American Progress estimates that retrofitting just 40 percent of the residential and commercial building stock in the United States would:

• Create 625,000 sustained full-time jobs over a decade.
• Spark $500 billion in new investments to upgrade 50 million homes and office buildings.
• Generate as much as $64 billion a year in cost savings for U.S. ratepayers, freeing consumers to spend their money in more productive ways.

Whether we are motivated by economic, national security, or environmental concerns, a national commitment to energy efficiency will create substantial new demand for labor across the economy, and especially in construction and construction-related manufacturing jobs.

Investing in energy efficiency provides economic benefits in other ways as well. Increasingly efficiency means state-of-the-art buildings, enhanced comfort, better health, and improved economic value. Highly efficient "green" buildings use less energy, attract higher rents, spend less time vacant, and command higher prices at the time of sale. Energy cost savings and well-designed financing structures also reduce net building operating costs permanently.

Energy efficiency is driving innovation in business models as well. As entrepreneurs generate value and profit by mining current inefficiency and waste for new economic opportunities, they improve the competitiveness of the broader economy. And increased efficiency makes both homeowners and the economy as a whole less vulnerable to fluctuations in energy prices, while advanced building materials and cutting-edge information technology for better building management represent fast-growing markets for American manufactured products.

Smart policies for energy efficiency can be not only an engine of economic recovery but a catalyst for innovation as well.

Bracken Hendricks is a Senior Fellow at the Center for American Progress, Bill Campbell is chair of Energy RM, and Pen Goodale is the Director of Research for Equilibrium Capital Group.

http://www.grist.org...rgy-efficiency/

[Nagishkaw 510]

A week ago, I had installed an energy efficient furnace, hotwater tank, and central air system. The contractor said in my state if you submit a copy of the contract and permits to my energy provider, I get a rebate cheque for 500 dollars.

[one...two...tree 2,762]

A week ago, I had installed an energy efficient furnace, hotwater tank, and central air system. The contractor said in my state if you submit a copy of the contract and permits to my energy provider, I get a rebate cheque for 500 dollars.

Excellent!

[Nagishkaw 510]

And long overdue.

[I AM NOT THAT GUY 5,715]

OP article calls for policy changes, and therefore, should be moved to Politics and Religion Forum

ETA: Fixing forum title

Edited September 6, 2010 by ##########

[Danno 1,228]

OP article calls for policy changes, and therefore, should be moved to Politics and Religion Forum

ETA: Fixing forum title

I agree, this whole concept of "going Green" to restore the economy is based on the belief in miracles... which also bumps it to the Politics/ Religion section.

[Hilarious Clinton 452]

I agree, this whole concept of "going Green" to restore the economy is based on the belief in miracles... which also bumps it to the Politics/ Religion section.

Green is a religion.

[Darnell 8,478]

*** moving to 'Politics and Religion' forum ***

[Kathryn41 3,205]

A week ago, I had installed an energy efficient furnace, hotwater tank, and central air system. The contractor said in my state if you submit a copy of the contract and permits to my energy provider, I get a rebate cheque for 500 dollars.

Our contractor installed air conditioner died on us last May. It was a choice between replacing the system or replacing the condenser. After researching the situation and talking with the sales agent we decided to upgrade to a larger capacity air conditioner and install a heat pump at the same time. Even by going with the larger system, it is so much more efficient that we will actually be saving energy and money; by adding the heat pump the savings will extend into the Winter months as well. We qualified for State rebates as well as a local rebate offered by our Power company for a total of just under $1000. (If we had also upgraded our furnace we would have qualified for the Federal rebate but the Furnace is probably still good for another 5 to 8 years or so before we need to look at it). We like to open the windows at night to take advantage of the cooler temperatures and then just use the AC during the day. We have it set at 77 degrees in the winter (and the furnace at 64 in the winter). This summer we couldn't do that as the night time temperatures didn't go below 77 very often and from early June to late August we were consistently in the mid to high 90s every day. So far, even with the incredible heat wave, our cooling bill this summer is down from our cooling bill last summer with the older, smaller system and opening the windows at night so, we're pleased. The projected annual savings appear to be on track and the system will have paid for itself in about 4 to 5 years - and it has a 15 year warranty.

Edited September 7, 2010 by Kathryn41

[Texanadian 10]

I think it really depends on where you live/climate/cost of energy.

When I lived in the Vancouver area, a 2500 sq ft home costs about $1500/year for electricity. That's electric baseboard heat, electric hot water tank, normal insulation levels (20 year old house). To install a heat pump, you're looking at about $10,000. If you save $500/year, that takes 20 years to pay back the heat pump. In that time, it probably needs replacement due to age (more $$$) where as the baseboards would probably still work just as they did when new. A replacement baseboard is cheap. $50? The electricity was cheap (5 cents/kwh). And you heated for 7 months and did nothing for the other 5 months (heat off, variable cooling by opening or closing windows). Air conditioning really isn't needed.

As you go east in Canada (Alberta to the Maritimes) you get colder winter temperatures. This means a heat pump makes less sense than a high efficiency natural gas furnace or a high efficiency wood stove. That's because heat pumps don't work that well below freezing temps. They shift into auxiliary heating mode (electric furnace or nat gas heat) to supplement the heat pump. At temps far below freezing, it's better to shut the heat pump off and run completely on auxiliary heat. That's because running the heat pump would freeze the outdoor condenser. The result being it needs to run a defrost cycle. The defrost cycle consists of running the A/C (to send the house heat to the outdoor unit to thaw it out while at the same time running the auxiliary heat to keep the house warm). Hence why it's better to avoid the defrost cycle by turning off the heat pump. (Switching the thermostat to Emergency heat offs the heat pump and just runs the auxiliary.)

Down here in Houston, we air condition for 11 months a year. Heat for 2 weeks. And get about 2 weeks where you don't do either. You "might" be able to open your windows at night for a month during the winter months when it's cool enough to be able to get away with it. But even when the temp is 60°, if the humidity is running at 90% at night (which it does), there is no point in opening your windows. You need the temps to drop down to about 55° or colder before you can open the windows and not have to deal with humidity.

Even with the 11 months of A/C use, you use less energy than you do in Vancouver. That's because it's all central air (heat pump efficiency) running only 20°F colder temps inside than outside during the peak of summertime use. No defrost or auxiliary cycles exist in cooling mode. Energy bills are higher though due to higher cost per kwh.

Unfortunately, to gain the benefits of high efficiency air conditioners and heat pumps in south Texas, you need to reverse them to become lower efficiency units. Only 5% of people in Houston have heat pumps. It's not worth it to spend more money on a heat pump compared to central A/C and traditional furnace heat for those 2 weeks of heater use. Traditionally heat pumps come with larger coils due to they're being heaters. But here's the real rub. Air conditioning efficiency is measured with a SEER number. A higher SEER number is more efficient. But to get the high SEER numbers (SEER 18-20 for example), you sacrifice humidity removal. You'd have to turn a SEER 18 into a SEER 15 in order to get it to work right in this climate (moderately hot, but extreme humidity)

Higher SEER numbers come mostly from larger coils and higher fan speeds. A larger coil is a warmer coil. A warmer coil removes less humidity. So somebody in Houston who buys a high SEER unit will have to set the thermostat lower to get the same comfort. Killing their savings. If you live in Arizona where you want maximum cooling while sacrificing humidity removal (since there is none), you want a high SEER unit with oversized coil and fastest fan speed (typically 450 cfm/ton)......But in the humid south and south east, it's better to undersize the coil and run at the slowest fan speed (typically 350 cfm/ton. Standard medium speed is 400 cfm/ton)

2 speed fans work well in most of the country. Not as much in the humid areas. That's because the coil is sized for 2nd speed. (maximum heat removal during hot days) But you spend most of the time running in 1st speed. As such, you have an oversized coil for the majority of the time. Again, this is great for non humid climates. But bad for here.

30 years ago, people in Texas often would have re-heat systems. SEER 4 were common. SEER 6 to 8 was considered high efficiency back then. Air conditioners ran their coils so cold that you'd need to add heat at the same time to get comfortable duct temperatures into the room. Obviously running the heater in the summertime is an expensive way to cool your home. Worked great for humidity removal though. In today's world a central dehumidifier does a similar thing. You pay to run it. It heats up your home while dehumidifying it. You then pay to air condition the home to get the temps back down. To me this is a band aid solution to an air conditioner that doesn't take out enough moisture. Central dehumidifiers are more for the north east states that get humidity but not hot enough temps to warrant running the A/C.

Longer run times achieve the best efficiency. If your A/C runs 24 hours a day to keep the temp at 75° (or whatever you have the thermostat set on), you'll have a low bill. If it's cycling on and off to maintain that temp, it's oversized and costing more money than it should. That's because when it first turns on, it's running full blast. The meter is spinning. But it's not getting full cold temps until about 20 minutes later. So the longer you spend in the post 20 minute time frame, the more time you're spending at peak efficiency. Thus why long run times with properly sized equipment achieve lower bills. The longer run times also remove more humidity which means you can get away with setting the thermostat higher.

To give an example of high vs low SEER units. A high SEER unit might blow air that's 12-15° colder than room temp. Say you set the thermostat at 75°. The air will be 58-60° coming out of the air conditioner. Add a few degrees to that for time spent in ducts running through the ceiling. For Arizona this works great. Long run times. It takes little energy to lower the temp by 12-15°. Humidity is nill, so the thermostat can be set high. A low SEER unit on the other hand might blow 22-25° colder than room temp. Even with the thermostat at 78°, you're still getting 53-56° temps at the coil. Takes out much more humidity this way. Sure it takes more energy to run the coils colder. But if you can set the thermostat higher and be dry, comfort will be increased.

House energy efficiency is mostly determined in windows, insulation, and air tightness.