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Ring Out the Old, Ring in the New: Energy Efficiency Outlook for 2013

January 2, 2013 - 12:51pm
By Steven Nadel, Executive Director

2012 was a good year for energy efficiency, and 2013 portends to be even better.

In 2012, states, municipalities, and federal agencies largely completed their energy efficiency programs using funds from the 2009 federal stimulus. Notable milestones included weatherizing more than 1 million low-income homes and apartments and establishing energy efficiency loan programs in more than 30 states.

Utility-sector spending on energy efficiency continued to increase. While 2012 data are not yet available, ACEEE found that 2011 spending was $7 billion, an increase of $1.5 billion from the year before. A number of states established new energy efficiency policies including higher savings targets in Connecticut and Massachusetts, renewed (but level) targets in Pennsylvania, approval of efficiency programs for Ameren Missouri and “quick start” programs in Louisiana, and a variety of initiatives in Oklahoma. Attempts to roll back efficiency policies in Michigan and Ohio were beaten back by efficiency supporters. In addition, 13 states upgraded the energy efficiency requirements in their state building codes.

At the federal level, new fuel economy standards were finalized for cars and light trucks that will raise average fuel economy to nearly 50 miles per gallon by 2025. New efficiency standards for clothes washers and dishwashers were also finalized, implementing an agreement that ACEEE and other efficiency supporters negotiated with manufacturers. Unfortunately, other standards are backlogged at the Office of Management and Budget (OMB), which is sometimes now taking a year or more to review proposed standards. In December, Congress passed a modest energy efficiency bill, showing that energy efficiency is one of the few issues that enjoys bipartisan support. Also in December, the U.S. Environmental Protection Agency (EPA) finalized emissions standards for industrial boilers, which will require that some of the largest and oldest boilers be upgraded or replaced. These actions will provide good opportunities for new high-efficiency boilers and combined heat and power systems. And at year-end, the bill Congress passed to address the “fiscal cliff” included extensions of energy efficiency tax incentives for appliances, new homes, and retrofits to existing homes (further information on these tax incentives will be covered in a forthcoming ACEEE blog post by Rachel Young).

Looking ahead to the new year, many of these trends are likely to continue. Utility sector spending on energy efficiency will likely continue to increase as states implement commitments to energy efficiency made in earlier years. And additional states will be considering expanding their efficiency policies including Louisiana, Mississippi, and Georgia (more on the state outlook in a forthcoming ACEEE blog post by Ben Foster).

At the federal level, now that the craziness of the election is over, it may be possible to make forward progress in 2013, before the 2014 election season begins. House Energy and Commerce Committee staff have said that they will look at bipartisan energy efficiency legislation; discussions on tax reform are likely. The Senate Finance Committee recently held a hearing on "Tax Reform and Federal Energy Policy: Incentives to Promote Energy Efficiency." I testified advocating use of limited tax incentives targeted at transforming markets. Debate on a new Farm Bill is likely in 2013 and ACEEE will be working to improve on existing energy efficiency provisions.

On the regulatory front in 2013, the U.S. Department of Energy (DOE) is scheduled to release 11 new product efficiency standards (including ones that were not finalized in 2012), as well as new efficiency requirements for manufactured housing, assuming that OMB gets its act together in 2013. And EPA will be implementing several recent emissions standards as well as finalizing carbon dioxide emission standards for new power plants. Collectively, these environmental regulations, combined with the natural gas market changes, are likely to spur the retirement of a variety of old, dirty coal power plants. Energy efficiency is generally the cheapest electric resource—while researching a forthcoming update to our 2009 energy efficiency program cost study, ACEEE is finding that the cost has not changed significantly in the past four years as savings targets have increased. EPA will also start work on standards for existing power plants; we are hearing that the latter might emphasize credits for utilities that help their customers to improve their energy efficiency.

All in all, it looks like 2013 will be a promising and busy year.