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State of Play: Obama’s Executive Order on CHP


May 1, 2013 - 10:05am
By Daniel Trombley, Senior Industrial Analyst

Last year, President Obama issued an Executive Order recognizing the importance of industrial energy efficiency and combined heat and power (CHP). Accelerating Investment in Industrial Energy, issued on August 30, 2012, calls for increased coordination of several federal agencies to promote the benefits of and help remove barriers to CHP deployment. It also set a nationwide goal of 40 GW of new CHP capacity by 2020 (in addition to the 80 GW of CHP capacity currently installed in the U.S.). The Executive Order, the result of years of discussion among the White House, industry, and the energy efficiency community, is notable for its focus on energy efficiency and CHP in the industrial sector (an area until recently often overlooked in federal energy policy), as well as for its recognition of the unique, state-specific barriers to CHP deployment.

While the Executive Order did not direct any new funding toward CHP, it does leverage existing federal activities and organize them to achieve the new 40 GW goal. Several existing activities, predominately at the Department of Energy (DOE) and Environmental Protection Agency (EPA), are actively supporting the Executive Order:

    SEE Action. The State and Local Energy Efficiency Action Network (SEE Action), which is supported by the DOE and EPA, works to promote energy efficiency at the regional, state, and local levels. The SEE Action on industrial energy efficiency and CHP has been very involved in promoting the Executive Order. The working group has organized a series of regional dialogues to bring together key stakeholders to discuss barriers to CHP (discussed below) and has recently published a to successful CHP implementation. Regional CHP Centers. Currently known as the Clean Energy Application Centers (CEACs), the DOE funds eight centers around the country that provide regional technical and policy support to organizations looking to install or promote CHP and other distributed energy technologies. Part of the technical assistance the CEACs provide is engaging states to help owners of large boilers comply with the new “” regulations (discussed below). DOE is currently the centers, which will be renamed CHP Technical Assistance Partnerships. 

In addition to the activities above, the DOE and EPA published a report that provides an overview of the CHP market, including savings potential and the impacts of meeting the 40 GW goal established by the Executive Order.

State Outreach

In order to have a more direct impact on CHP deployment, the Administration is working directly with stakeholders in key states to help overcome the regulatory and market barriers to CHP implementation. As a pilot project for its Boiler MACT Technical Assistance Program, the Administration, through the Department of Energy’s Midwest Clean Energy Application Center, has contracted with the Public Utilities Commission of Ohio to identify and assist owners of large boilers affected by the Clean Air Act’s new ICI “Boiler MACT” regulation. Boiler MACT, which was finalized in December 2012, limits the amount of air pollutants emitted by large boilers and offers flexible compliance options (including energy efficiency and CHP). (For more information on industrial energy efficiency and the Boiler MACT, click here)

In Ohio, the Administration has reached out to a broad array of stakeholders, including the state government (the governor’s office, the Ohio EPA, and the Public Utility Commission of Ohio), energy utilities, and business groups (the Ohio Manufacturers Association, the Ohio Energy Group, and the Ohio Chemistry Technology Council). The goal of the state outreach is to overcome technical barriers and advance policies and utility regulations that promote industrial energy efficiency as an energy resource and that overcome market barriers to CHP deployment. 

The Administration hopes to achieve success in a few key states in each region and have other states in the region emulate these leaders. There are several factors driving the selection of states: overall potential for CHP; amount of coal-fired electricity generation expected to retire due to changes in energy markets and environmental regulations; and the likelihood of useful collaboration with government and business stakeholders in the state. As the Ohio pilot project reaches its conclusion, the Administration has begun working closely with Oregon and New York, and has begun technical assistance in eight other states: Massachusetts, Connecticut, Pennsylvania, North Carolina, Wisconsin, Idaho, Iowa, and West Virginia.

Regional Stakeholder Meetings

In order to promote industrial energy efficiency and CHP more broadly, the Administration is convening a series of stakeholder engagement meetings in key regions, organized through the SEE Action Network.

The first meeting, targeting the Midwest, was held in Columbus, Ohio on June 21, 2012, in conjunction with the state outreach discussed above. After the Columbus meeting, SEE Action began planning a number of other regionally-focused dialogue meetings throughout the country described as  “in-person, one day dialogue meeting[s] that will focus on developing and implementing state best practice policies and investment models that address the multiple barriers to greater investment in industrial energy efficiency and combined heat and power (CHP).” The meetings have been bringing together regional stakeholders representing all aspects of CHP deployment: CHP developers, CHP installers, manufacturing and building owners, utilities, regulators, and state governments.

SEE Action targeted the Southeastern states with their second regional meeting held on January 24, 2013 in Little Rock, Arkansas. A third meeting was held in Baltimore, Maryland on March 13, 2013 to bring together stakeholders in the Northeast and Mid-Atlantic states. A meeting targeting the Western states is being planned for the early summer of 2013.

What’s Next?

CHP continues to be a hot topic, receiving vocal support from federal and state governments, manufacturing companies, energy efficiency advocates, and many energy utilities. As the Obama Administration continues its outreach to states described above, many other organizations continue their own work to address the various barriers to industrial energy efficiency and CHP.  ACEEE is one of many organizations that have created a host of information resources, including policy databases and technical reports, which are intended for public utility commissions, energy efficiency program managers, state agencies, and efficiency advocates. Other organizations with useful resources include ICF International, the EPA, and the Pew Charitable Trusts. Through these tools, stakeholders can identify opportunities in their own state and learn what has proven successful in others.

Although the Administration only has the resources to work with a handful of key states, all states need to consider how energy efficiency in their industrial sector can be encouraged and how barriers to more efficient electricity generation through CHP can be removed. Fundamentally, energy efficiency is an economic development tool that provides numerous benefits to all regions, including jobs, lower energy costs, improved air quality, better electric grid reliability, and improved manufacturing competitiveness.

While efforts to support CHP have been going on for decades, the Executive Order will help spur greater investment in CHP. Through the use of its convening power, technical assistance, and coordinated agency action, the Administration has initiated a process that has the potential to influence large segments of the economy to become more efficient through the adoption of superior technologies and practices.