Washington, DC -- An op-ed by Secretary Steven Chu appears
in a new report by the World Economic Forum and IHS Cambridge
Energy Research Associates entitled "Energy Vision 2010: Towards a
More Energy Efficient World." Read the full
report (pdf- 1,456kb).
The Secretary's piece is below and attached:
Energy Efficiency: Achieving the
Potential
By Steven Chu, U.S. Secretary of Energy
For the next few decades, energy efficiency is one of the lowest
cost options for reducing US carbon emissions.
Many studies have concluded that energy efficiency can save both
energy and money. For example, a recent McKinsey report calculated
the potential savings assuming a 7% discount rate, no price on
carbon and using only "net present value positive" investments. It
found the potential to reduce consumer demand by about 23% by 2020
and reduce GHG emissions by 1.1 gigatons each year – at a net
savings of US$ 680 billion.
Likewise, the National Academies found in 2009 that accelerated
deployment of cost-effective technologies in buildings could reduce
energy use by 25-30% in 2030. The report stated: "Many building
efficiency technologies represent attractive investment
opportunities with a payback period of two to three years."
Some economists, however, don't believe these analyses; they say
there aren't 20-dollar bills lying around waiting to be picked up.
If the savings were real, they argue, why didn't the free market
vacuum them up? The skeptics are asking a fair question: why do
potential energy efficiency savings often go unrealized?
I asked our team at the Department of Energy to review the
literature on savings from home energy retrofits. We are pursuing
energy efficiency in many areas – from toughening and
expanding appliance standards to investing in smart grid –
but improving the efficiency of buildings, which account for 40% of
US energy use, is truly low hanging fruit.
In this review, we looked only at studies that compared energy
bills before and after improvements and excluded studies that
relied on estimates of future savings. We found that retrofit
programs that were the most successful in achieving savings
targeted the least efficient houses and concentrated on the most
fundamental work: air-tight ducts, windows and doors, insulation
and caulking. When efficiency improvements were both properly
chosen and properly executed, the projected savings of energy and
money were indeed achieved. In science, we would call the
successful programs an "existence proof" that efficiency
investments save money. Too often, however, the savings went
unrealized, due to a number of reasons, including poor efficiency
investment decisions and shoddy workmanship.
There are other reasons why energy savings aren't fully
captured. Market failures include inertia, inconvenience,
ignorance, lack of financing and "principal agent" problems (e.g.,
landlords don't install energy efficient refrigerators because
tenants pay the energy bills). To persuade the skeptics and spark
the investments in efficiency we need, the Department of Energy is
now focused on overcoming these market failures.
First, the Department is working to develop a strong home
retrofit industry. We are creating a state-of-the-art tool that
home inspectors can use on a handheld device to assess energy
savings potential and identify the most effective investments to
drive down energy costs. We're also investing in training programs
to upgrade the skills of the current workforce and attract the next
generation. The Department is also focused on measuring results
– to both provide quality assurance to homeowners and promote
improvement. For example, we're pursuing new technologies such as
infrared viewers that will show if insulation and caulking were
done properly. Post-work inspections are a necessary antidote and
deterrent to poor workmanship.
To address inconvenience and to reduce costs, we're launching an
innovative effort called "Retrofit Ramp-Up" that will streamline
home retrofits by reaching whole neighborhoods at a time. If we can
audit and retrofit a significant fraction of the homes on any given
residential block, the cost, convenience and confidence of retrofit
work will be vastly improved. Another goal of this program is to
make energy efficiency a social norm.
To help pay for investments, we're working with the Department
of Housing and Urban Development to encourage new financing tools.
For example, homeowners might pay back energy improvement loans via
an assessment on their property tax bill. Out-of-pocket expenses
are eliminated and energy savings will exceed the increase in
property tax. Both the savings and the loan payments would stay
with the house if the owners decide to sell.
Another opportunity comes when a property changes hands. Banks
require a structural inspection and a termite inspection; they
should also ask for the last year's worth of utility bills, which
speaks directly to the home's affordability. If improvements are
needed, the costs could be seamlessly tacked onto the mortgage.
The greatest gains can be realized in new construction. By
developing building design software with embedded energy analysis
and building operating systems that constantly tune up a building
for optimal efficiency while maintaining comfort, extremely
cost-effective buildings with energy savings of 60-80% are
possible.
Regardless of what the skeptics may think, there are indeed
20-dollar bills lying on the ground all around us. We only need the
will – and the ways – to pick them up.
SOURCE
