Energy Efficiency: Engine of Economic Growth Daniel L Sosland Executive Director Delivering the Promise of Energy Efficiency: Strategies for Lowering Energy Costs and Creating Jobs August 17, 2010

ENE – About Us Environmental Policy, Research, and Advocacy  Non-profit NGO working at the state, regional and federal levels  Rockport, ME / Boston, MA / Providence, RI / Hartford, CT / Charlottetown, PEI, Canada  Funded by private foundations and individuals Program Areas  Climate Change and Air Quality  Energy  Transportation  Forest and Land Use

States Face Three Major Challenges: Efficiency Investments Address All Three  Jobs  National Unemployment Rate: 9.7%  U.S. Total Jobs lost over 13 months: 3,600,000  Economy  U.S. Consumer Credit Card Debt: $858,100,000,000  Lack of investment, drop 2008 to 2009: 31%  Climate  Hottest March on Record (since 1880): March 2010  Hottest Decade on Record (since 1880):  Northeastern States Have GHG Reduction Goals  Investments in Efficiency Programs are Proven to:  Spur Job Growth  Improve the Soundness of the Economy  And Reduce GHG emission  ….and yet….  We Continue to Massively Under Invest in Efficiency  EE Program Investment of only roughly $4 billion per year, with a 3- 4x opportunity left on the table  Several Policy Tools Hold the Potential to Correct this….  State: Buy All Cost Effective Efficiency; PACE and Financing  Regional: Use RGGI Proceeds  Federal: Support State Activities

ENE’s Energy Efficiency: Engine of Economic Growth What are the broad economic and job benefits of increasing efficiency investments?  Need to understand the positive impacts of EE to the broader economy  Encourage state leaders to consider the overall economic impacts of efficiency and other resource options when making energy policy decisions  Other assessments only look at the direct costs and savings of the program to participants and ratepayers ENE study of macroeconomic impacts of EE  Using the Regional Economic Models, Inc (REMI) – multi-state Policy Insight forecasting tool used for RGGI  Conservatively modeled all cost-effective EE investment in six New England States and Cumulatively for New England Region Impacts on Energy costs; Emissions; Gross State Product (GSP); Employment: forecasts for 70 different industries

Efficiency Investments Drive Job Growth, Help Consumers, and Raises GDP Energy savings, lead to increased spending in local economy Consumer $$ shift from being exported to pay from out of region oil, gas to being redirected into state economic activities

Efficiency Spending Modeled: All Cost Effective Levels for 15 Years for All Fuels

Results - Energy Cost Savings February 12, $29 billion in electric savings $15 billion in heating oil savings

Economy-Wide Job Impacts 8 February 12, ,000 more jobs in 2016 in 6 state study region as $$ saved enter economy

Dollars of GSP per Program Dollar

CO2 Emissions Reductions: Most Effective Way for States to Meet GHG Goals

Making Efficiency Happen: Policies and Funding Programs Are Needed to Correct market Failures and Assist Consumers:  Liquidity Constraints – inadequate access to capital  Split Incentives – EE investor does not receive savings benefits (landlord/tenant)  Information Problems – uncertainty of future savings of today’s investment  Behavioral Problems – complexity of decisions are beyond one’s ability Funding Efficiency: 2 Sides or Perspectives  Energy Resource Acquisition: Utility (Electric and Gas) and Unregulated Fuels (heating oil)  Consumer: Encourage Participation & Assist with Finance

Current Practice Has Been to Massively Under-Invest in Efficiency: How do We Achieve All-Cost Effective EE?

Funding Efficiency Utility Resource Funding and Acquisition Perspective  Mandate Purchase (procurement) of all cost-effective efficiency before buying more expensive power plant contracts: “Least Cost Procurement”, adopted in MA, CT, RI, VT, ME  Unregulated Fuels: Need to find a funding mechanism, such as charge on wholesale oil Consumer Participation and Funding Perspective  Facilitate Participation through rebates, incentives (proven to be effective): buy down incremental cost of efficient appliances, insulation, etc  Combine with Other New and Emerging Tools On-bill repayment, on-bill financing Property Assessed Clean Energy (PACE) Working Together: Coordinated Approaches Including Building Codes and Appliance Standards

Selected Northeastern States Advancing with Funding

Conclusions Experience shows that mandates and incentives are needed to overcome barriers to investing in efficiency ENE Engine study shows that the economic benefits of EE investments are much greater than typically calculated  Because these efficiency investments deliver cost-effective savings, the resulting economic stimulus is greater  Results should encourage states to expand programs to capture all cost-effective efficiency for all fuels Funding/Policy Approaches Should Be Mutually Supportive and Coordinated  Utility programs, financing, codes/enforcement and product standards

Contact Information ENE (Environment Northeast) Rockport, ME / Boston, MA /Providence, RI Hartford, CT / Charlottetown, PEI, Canada Daniel L Sosland, (207) Jamie Howland, (860)

Job Years per Million Program Dollars

Allocation of Employment Impacts

Allocation of Employment Impacts (cont.)

EE Scenario Economic Modeling Results

Components of Economic Impacts

Connecticut Results Summary

Connecticut Economic Impacts - Recap

How do we get Every State to MA Levels?