Policy changes could free $1 trillion in energy savings

Policymakers could free up $1 trillion in energy savings for consumers by modifying policies that would change consumer behavior, the American Council for an Energy-Efficient Economy said in a report released Monday.

Providing consumers with more information about the energy efficiency of appliances and other products is especially important, the Washington D.C.-based think tank concluded. Currently available energy efficient technologies could lower projected U.S. energy use by 20 percent by 2020, the report said, citing research by the National Academy of Sciences.

“Imperfect information may be the most widespread barrier to energy efficiency,” the report said. “Energy savings are difficult to measure, future energy prices are unknown, and the energy use of individual devices is often hard to separate, since most customers get all their residential or commercial energy use information rolled into monthly utility bills.”

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Another key policy change suggested by the group is to ensure incentives for energy efficient property and equipment are shared by builders, owners and renters.

“The landlord-tenant relationship, in which the property owner purchases equipment but the tenant generally pays the utility bills, is the most commonly cited split incentive for energy efficiency,” the report said. “Another example is how homebuyers pay energy bills, providing limited incentive to builders to improve the efficiency of new homes.”

The report also recommends improved appliance labeling, providing more transparent energy-use data for consumers. It advocates for better interconnection standards and clearer information about backup power rates for industrial consumers.

Restructuring the corporate income tax to remove barriers to energy efficiency investments also would help, the report said.

“Corporate income taxes are structured in ways that encourage energy waste and discourage investments in energy efficiency,” the report said. “Businesses are taxed on their profits, and virtually all expenses are deductible, including energy costs.”

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Efficiency improvements in American cars over the last 20 years illustrate how policy changes can inspire market-driven energy-saving changes, the report said.

These efficiency gains were largely driven by uniform vehicle testing and labeling, fuel economy standards and tax incentives, which gave the auto industry the needed encouragement to build cars capable of driving more than twice the distance on the same amount of fuel.

The policy changes that encourage smart grids and improved industrial processes have also increased energy efficiency in these areas, the report noted.

“Eliminating barriers that keep us from reducing waste is an approach both sides of the aisle can support,” said ACEEE Executive Director Steven Nadel in a written statement. “By removing these barriers, Congress and state policymakers have an opportunity to let smart investments help strengthen the economy while saving the nation billions.”