The Need for Climate-Forward Efficiency: Early Experience and Principles for Evolution

The purpose of utility energy efficiency programs is evolving as modern policy expectations—such as environmental protection, equity, and economic development—assume new importance in many states. This report introduces a climate-forward efficiency approach that elevates equitable greenhouse gas (GHG) mitigation and adaptation as drivers to align energy savings with periods of high carbon intensity on the grid; unlock the benefits of electrification; better integrate efficiency with demand flexibility; maintain a reliable, secure, and low-cost electricity system; expand the equity and reach of efficiency programs; and animate local markets. The report highlights a variety of policy and programmatic approaches taken by leading states and utilities, including the adoption of “next-generation” energy efficiency resource standards and metrics, utility business model reforms, modifications to demand-side resources’ eligibility for public funding, changes to cost-effectiveness testing, and new approaches to resource planning and procurement. This report concludes with recommended principles that should guide the selection of GHG metrics for climate-forward efficiency.