The Economic Case for Energy Efficiency by Ross Pumfrey Texas Commission on Environmental Quality Conference on the Economics of Energy Efficiency McAllen, Texas May 26, 2009

“Energy efficiency is generally the largest, least expensive, most benign, most quickly deployable, least visible, least understood, and most neglected way of providing energy services.” Amory Lovins, Rocky Mountain Institute

Energy and the U.S. Economy 35 years ago it was assumed that energy consumption and economic output moved in lockstep – a 10% increase in output required 10% more energy input From 1975 to 2000, energy intensity (primary energy consumption per dollar of real gross domestic product) dropped 39% in the U.S.

Transportation From 1975 to 1985, when U.S. GDP rose 27%, total U.S. oil imports declined 42% This was largely due to increasing productivity of oil use: – Most importantly, new American-made cars improved by 7 miles per gallon

We Can Do (Much) Better More efficient technologies are continually being developed (think about cars) Studies show a significant potential for efficiency improvements in specific industries, for specific end uses, and also for system synergies show dramatic possibilities These possibilities can result in net economic savings

Four Things to Remember 1.Are you Interested in on-site renewable energy systems on the supply side? Optimize your efficiency first. 2. In assessing efficiency, use a systems approach – look at energy use throughout your process

Four Things, cont. 3.Beyond energy savings, there may be other positive benefits (e.g., productivity) 4. Remember to use life-cycle costing

Buildings Numerous kinds of design features, upgrades, and retrofits have been shown to result in significant energy savings that lead to very attractive rates of return on investment Dr. Manteufel will give us examples of these Let’s look at some non-energy by-products of such improvement

Buildings: Efficiency and Productivity Gains Efficient buildings (light, less noise, less air pollution, more comfort) have been shown to increase productivity by 6-16 % If labor costs are 100 times energy costs (not unusual), then even a 1% increase in productivity will save money equal to the entire energy bill

Buildings Efficiency and Productivity: Case Study of a Post Office The Reno, Nevada post office was renovated to become a “minimum energy user” Architectural firm lowered the ceiling in the warehouse-type building, changed the lighting system, and made some other improvements Lighting was less harsh and used more efficient bulbs, and the building was easier to heat and cool

Reno Post Office, cont. Lowered ceiling also reduced maintenance costs Energy and maintenance savings indicated a six-year payback ( a decent ROI) Productivity gains – this post office became the most productive, and most error-free, post office in the western U.S. Productivity gains made the payback period less than a year

Buildings, Daylighting, and Increased Sales “Our data show that over a six-month period, stores in the same districts with daylighting, selling the same products, showed a 25% increase in sales.” Gregg Ander, chief architect for Southern California Edison

Case Study of Daylighting: Wal-Mart Wal-Mart experimented with daylighting on half the roof of a store in Kansas in 1993 As expected, they saved a significant amount of energy ALSO, they noticed that sales per square foot in the daylit departments were higher than in other departments and higher than the same departments in other Wal-Marts

Wal-Mart, cont. Store in Industry, California was built with 180 skylights, taking up 5% of total roof space Energy savings had a 3-year payback (Southern California Edison incentive shortened that to one year) Sales are better per square foot than other stores

Efficiency, including Daylighting, in Schools A school district in Johnson County, North Carolina hired a firm to install extensive daylighting in three schools, and other light- related innovations Reduced lighting loads, accompanied by reduced cooling need, resulted in a one-year payback ALSO, a multi-year comparison study of daylit and non-daylit schools indicated an average 14% better performance on standardized tests

Motors According to Romm: In the U.S., motors consume about half of all electricity and about 70% of all industrial electricity DOE audited 12 retrofits of motor systems around the country and found an average energy savings of one-third with a payback of a year and a half

Motors, cont. Many companies have never analyzed their use of motors; when they do, they find that many of them, if not most, are inefficient and oversized. The use of controls (such as variable speed drives) is very important It can be very important to do a systems analysis of the entire process of which the motors are a component

Motor-Driven Systems: Compressed Air 200,000 plants in the U.S. use compressed air A subsidiary of Boeing in Portland, Oregon, reduced air-compressor energy use by 50% -- two-year payback (not counting maintenance savings) Oregon State developed software tool for auditing compressor systems; audits of seven plants generated an average 49% saving – average payback period of a half year

Workshop on Compressed Air Systems May 28 With funding from EPA, the TCEQ is funding a workshop organized by UT Austin’s Texas Industries of the Future: “The Fundamentals of Compressed Air Systems” Thursday, May 28 UT Brownsville/TSC ITEC Center

Workshop on Compressed Air Systems Interested in attending? Website: Contact: Kathey Ferland at Texas Industries for the Future

Conclusion There are ample ways to increase energy efficiency in a cost-effective manner That means that a lot of emissions, including carbon dioxide, could be reduced at a net savings to the economy In any particular organization, it takes some dedicated attention, and that attention can be very rewarding

State Energy Conservation Office Assistance for Local Government and Schools Loan Programs Preliminary Energy Assessments Website: Contacts: Stephen Ross at Glenda Baldwin at

Texas Commision on Environmental Quality Site Assistance Visit Plus (SAV+) Program Facility owners or operators can get help generating innovative strategies; identifying performance issues; and getting site-specific, pollution prevention tips on air, water, and waste issues. Website:

Thank you! Ross Pumfrey Texas Commission on Environmental Quality