Make Energy Efficiency Cornerstone of Federal Budget

Guest blogger Leslie Malone of Environment Northeast makes the case that Energy Efficiency should be at the core of the upcoming federal budget

The Benefits of Action are Impressive

Advocates for energy efficiency should have one of the easiest jobs in the world.  Considering the direct and indirect economic benefits, this energy resource practically sells itself.  The abundant energy savings can also cost-effectively put a dent in our greenhouse gas emissions, making energy efficiency a choice policy target that everyone can get behind.

New Support for an Old Refrain

It is well established that energy efficiency is a low-cost and abundant energy resource.  It saves consumers and businesses money by reducing the amount of energy required for day-to-day activities.  On average, for every $1 that governments and utilities invest in efficiency programs, participants receive $3-$4 in direct savings.  Yet the actual benefits are significantly larger.

A new study by ENE entitled Energy Efficiency: Engine of Economic Growth looks at the broader, macroeconomic impacts of increased spending on efficiency measures and the spillover effects when consumers spend less of their income on energy.  The report shows that in the New England states, which have economies and climates similar to Eastern Canada, expanding efficiency programs to capture all cost-effective energy efficiency (i.e. efficiency that costs less than energy supply options) would increase Gross State Product (GSP) by $4 to $10 per program dollar invested.  Assuming total spending of $27.2-billion over 15 years on electric, natural gas, and unregulated fuel programs:

• GSP in the 6-state region would increase by $180-billion, of which $130-billion would be returned to workers through increased real household income.
• On average, nearly 38,000 jobs would be created per year.
• Peak annual GHG emissions savings of 32 million tons would be expected; equal to 15% of total regional emissions in 2005.  Lifetime emissions benefits total 536 million tons of CO₂.

Ramping-up Efficiency Spending in Canada

The possible boost to the economy as a whole and magnitude of energy and emissions savings are impressive and fortunately not unique to the New England states.  Cost-effective efficiency savings can be found in any energy system.

We say this resource “practically” sells itself because to capture the economic and environmental benefits from efficiency, funding for programs and incentives are needed to reduce up-front costs, shorten payback periods, and provide information and advice.  In 2007, Canada spent approximately 45 times more on electric supply then on electric efficiency, even though the cost to save a kilowatt-hour is on average 1 to 4 cents.

One way to create dedicated funding streams in Canada is to allocate future cap and trade allowance value to efficiency programs.  Auctioning allowances in the Regional Greenhouse Gas Initiative (RGGI) carbon cap and trade program, which began in 2009, has already raised over $318.9-million for energy efficiency in the U.S. Northeast.  Efficiency also has the added benefit of reducing the overall cost of cap and trade programs by driving down demand and thus the price of allowances.

Of course, support in federal and provincial budgets and policy is also essential.  A budget which includes measures to stimulate the economy while reducing carbon emissions at low cost would go nicely with the Ministers’ new pair of shoes.

Environment Northeast is a nonprofit research and advocacy organization focusing on the northeastern United States and eastern Canada.  Its mission is to address large-scale environmental challenges that threaten regional ecosystems, human health, or the management of significant natural resources.  ENE’s team of attorneys, policy analysts, economists, engineers, and environmental scientists use policy analysis, collaborative problem solving, and advocacy to advance the environmental and economic sustainability of the region (www.env-ne.org).

ENE has been recognized for its work in furthering effective and innovative energy efficiency policies in New England; was one of the official stakeholders in the development of the Regional Greenhouse Gas Initiative (RGGI) cap and trade program in the U.S. northeast; and more recently is working with policymakers in Washington on energy and climate legislation.  In November 2009, ENE appeared before the House of Commons Standing Committee on the Environment and Sustainable Development to present on U.S. federal and regional climate policy.