Every year states invest more than $6 billion in energy efficiency programs, which also improve air quality. Yet, states rarely receive any credit for the resulting emissions reductions! The benefits don’t stop with air quality. Energy efficiency not only reduces multiple pollutants, but also generates additional economic and environmental benefits. For example, since 1992, Xcel Energy in Minnesota has avoided the construction of 10 new power plants, avoided emissions of over 11,000 tons of oxides of nitrogen (NO_X), and avoided ratepayer costs of nearly $2 billion. States across the country are making similar investments in efficiency resources, yet few have successfully connected the dots between efficiency savings and emissions avoided.

The challenge lies in how air regulators approach quantification of efficiency-related emissions reductions. Consistent with how they quantify traditional stationary source controls, such as scrubbers on a power plant, air regulators initially tried to tie the electricity saved by energy efficiency to a specific power plant based on the notion that the power plant’s output was reduced due to the efficiency measure(s). This approach, however, reflects an inadequate appreciation of how the electricity grid actually works. Because electrons are extremely difficult to track, it is impractical to try to link efficiency-related emissions reductions to specific power plants. This is compounded by the need to quantify efficiency-related emissions reductions with enough precision to be confident that the emissions reductions will be achieved, without being so onerous as to discourage the use of efficiency in air quality plans.

We think there’s an easier, more effective way to quantify efficiency-related emissions reductions—a way that allows states to use efficiency in their plans to meet the Clean Power Plan and sets the stage for efficiency to be used in state implementation plans (SIPS) for other pollutants such as NO_X. Instead of treating efficiency like we treat stationary source controls, why don’t we treat it like we treat mobile sources under the Clean Air Act?

Mobile sources of pollution—cars, trucks, and buses—are numerous, dispersed, and decentralized. Individual drivers decide when, where, and how to operate their vehicles. The same is true for energy efficiency. Lights and appliances are decentralized too, and homeowners decide how often to turn on their lights and when to run the dishwasher.

The U.S. Environmental Protection Agency (EPA) and state air regulators comfortably use assumptions, tests, projections, and statistics to quantify the emissions reductions of motor vehicle control measures. We believe energy efficiency measures should be afforded similar treatment.

A new RAP paper, Driving Energy Efficiency: Applying a Mobile Source Analogy to Quantify Avoided Emissions, suggests that energy efficiency programs can and should be assessed in the same manner in which mobile source control measures are treated in air quality planning and incorporated into SIPs. To overcome potential barriers that could impede regulatory acceptance of efficiency by air regulators, we suggest several methods to effectively quantify efficiency-related emissions reductions. These are simple enough to encourage efficiency, while maintaining the rigor and accountability necessary for air regulatory purposes (to be approvable by EPA when included in a criteria pollutant SIP or a Clean Power Plan compliance plan).

RAP recommends these three approaches:

• Deemed Emissions Reductions: EPA should develop and standardize default emissions reductions for a host of well-established efficiency measures, just as public utility commissions have done for deemed energy savings. This simple, low-cost, and effective approach may be the quickest and easiest way for regulators to advance efficiency as an air quality strategy.
• Emission Factors (AP-42): EPA could extend its well-known AP-42 approach for establishing acceptable emission factors to include acceptable emissions reductions from energy efficiency measures. This would provide a suite of acceptable emissions factors and algorithms for different types of efficiency measures that could be supplemented by state-specific and program-specific data from air quality and utility regulators.
• Modeling: More arduous than the other approaches, modeling would allow EPA and state air regulators to determine location-specific emissions reductions when important for meeting ambient air quality standards. States would be well served if EPA developed a model similar to its mobile sources model, Motor Vehicle Emission Simulator (MOVES), for assessing the emissions impacts of efficiency and renewable energy programs, the results of which could also be input into airshed models.

Studies consistently show that it is more cost effective to reduce emissions through energy efficiency than with traditional control measures. The proposed Clean Power Plan offers a unique opportunity to support new approaches to quantifying avoided emissions in a way that will help realize the full potential of energy efficiency to reduce multiple pollutants and encourage economic development. We think the mobile source analogy is a good place to start.