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HARDBACK price:$99.95 add to cart Rights & Permissions Free PDF Access Sign in to download PDF book and chapters Free Resources Display this book on your site! Related Titles Advancing the Science of Climate Change Informing an Effective Response to Climate Change Other Related Titles Policy Implications of Greenhouse Warming: Mitigation, Adaptation, and the Science Base (1992) Committee on Science, Engineering, and Public Policy (COSEPUP) Citation Manager Export the bibliographic data for this book in your chosen format Web Search Builder Use this book's key terms to search within this book, across our collection, or across the Web. Skim This Chapter Skim this chapter and use this chapter's key terms to search within this book. Reference Finder Paste in your own text to find books that relate to your topic. Citation Manager . "21 Residential and Commercial Energy Management." Policy Implications of Greenhouse Warming: Mitigation, Adaptation, and the Science Base. Washington, DC: The National Academies Press, 1992. Please select a format: Page 201   E-mail Share on facebook Facebook Share on delicious Delicious Share on stumbleupon Stumble Share on twitter Twitter More Sharing ServicesMore The following HTML text is provided to enhance online readability. Many aspects of typography translate only awkwardly to HTML. Please use the page image as the authoritative form to ensure accuracy. Page 201 21 Residential and Commercial Energy Management The buildings sector—both residential and commercial—is the largest end-user of electricity in the United States, using more electricity than either the industrial or the transportation sectors. The buildings sector consumed a full 62 percent of the 2634 billion kilowatt hours (BkWh) generated by U.S. electric utilities in 1989 (Rosenfeld et al., 1991). The buildings sector also uses coal, oil, and natural gas for heating and appliances. In 1989 the buildings sector accounted for 36 percent of total U.S. primary energy consumption (U.S. Department of Energy, 1989b; Rosenfeld et al., 1991; see Figure 21.1). Recent Trends Energy use in the United States has not increased in a linear fashion. The 1973 OPEC oil embargo created a powerful incentive to conserve energy. Figure 21.2 compares primary energy use in all sectors to gross national product (GNP), noting that, in the 1960 to 1973 period, energy use and economic production were increasing at nearly the same rate. However, from 1973 to 1986, while GNP grew by 35 percent, total energy use remained nearly constant, and oil and gas use decreased 1.2 percent annually (Rosenfeld et al., forthcoming). As a result, 25 exajoules1 (EJ) of anticipated energy usage worth $165 billion was avoided annually. In 1989, GNP projected primary energy use was 118 EJ, but only 86 EJ was actually consumed, representing a savings of 33 EJ, or 38 percent of the actual amount consumed. The average net annual savings (cost of efficiency measures less energy cost saved) during this period (1973 to 1986) from efficiency amounted to $100 billion. Even greater savings were realized for electricity. Figure 21.3 compares Page 201 Front Matter (R1-R26) Part One: Synthesis (1-2) 1 Introduction (3-4) 2 Background (5-11) 3 The Greenhouse Gases and Their Effects (12-28) 4 Policy Framework (29-35) 5 Adaptation (36-47) 6 Mitigation (48-64) 7 International Considerations (65-67) 8 Findings and Conclusions (68-72) 9 Recommendations (73-83) Individual Statement by a Member Of The Synthesis Panel (84-86) Part Two: The Science Base (87-88) 10 Introduction (89-90) 11 Emission Rates and Concentrations Of Greenhouse Gases (91-99) 12 Radiative Forcing and Feedback (100-110) 13 Model Performance (111-116) 14 The Climate Record (117-134) 15 Hydrology (135-139) 16 Sea Level (140-144) 17 A Greenhouse Forcing and Temperature Rise Estimation Procedure (145-152) 18 Conclusions (153-154) Part Three: Mitigation (155-156) 19 Introduction (157-170) 20 Framework for Evaluating Mitigation Options (171-200) 21 Residential and Commercial Energy Management (201-247) 22 Industrial Energy Management (248-285) 23 Transportation Energy Management (286-329) 24 Energy Supply Systems (330-375) 25 Nonenergy Emission Reduction (376-413) 26 Population (414-423) 27 Deforestation (424-432) 28 Geoengineering (433-464) 29 Findings and Recommendations (465-498) Part Four: Adaptation (499-500) 30 Findings (501-507) 31 Recommendations (508-514) 32 Issues, Assumptions, and Values (515-524) 33 Methods and Tools (525-540) 34 Sesitivities, Impacts, and Adaptations (541-652) 35 Indices (653-656) 36 Final Words (657-658) Individual Statement by a Member of the Adaptation Panel (659-660) Appendixes (661-662) A Questions and Answers About Greenhouse Warming (663-691) B Thinking About Time in the Context of Global Climate Change (692-707) C Conservation Supply Curves for Buildings (708-716) D Conservation Supply Curves for Industrial Energy Use (717-726) E Conservation Supply Data for Three Transportation Sectors (727-758) F Transportation System Management (759-766) G Nuclear Energy (767-774) H A Solar Hydrogen System (775-778) I Biomass (779-785) J Cost-Effectiveness of Electrical Generation Technologies (786-791) K Cost-Effectiveness of Chlorofluorocarbon Phaseout—United States and Worldwide (792-797) L Agriculture (798-807) M Landfill Methane Reduction (808-808) N Population Growth and Greenhouse Gas Emissions (809-811) O Deforestation Prevention (812-813) P Reforestation (814-816) Q Geoengineering Options (817-835) R Description of Economic Estimates of the Cost of Reducing Greenhouse Emissions (836-839) S Glossary (840-846) T Conversion Tables (847-848) U Prefaces from the Individual Panel Reports (849-854) V Acknowledgments from the Individual Panel Reports (855-857) W Background Information on Panel Members and Professional Staff (858-868) Index (869-918)

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Page 201 21 Residential and Commercial Energy Management The buildings sector—both residential and commercial—is the largest end-user of electricity in the United States, using more electricity than either the industrial or the transportation sectors. The buildings sector consumed a full 62 percent of the 2634 billion kilowatt hours (BkWh) generated by U.S. electric utilities in 1989 (Rosenfeld et al., 1991). The buildings sector also uses coal, oil, and natural gas for heating and appliances. In 1989 the buildings sector accounted for 36 percent of total U.S. primary energy consumption (U.S. Department of Energy, 1989b; Rosenfeld et al., 1991; see Figure 21.1). Recent Trends Energy use in the United States has not increased in a linear fashion. The 1973 OPEC oil embargo created a powerful incentive to conserve energy. Figure 21.2 compares primary energy use in all sectors to gross national product (GNP), noting that, in the 1960 to 1973 period, energy use and economic production were increasing at nearly the same rate. However, from 1973 to 1986, while GNP grew by 35 percent, total energy use remained nearly constant, and oil and gas use decreased 1.2 percent annually (Rosenfeld et al., forthcoming). As a result, 25 exajoules1 (EJ) of anticipated energy usage worth $165 billion was avoided annually. In 1989, GNP projected primary energy use was 118 EJ, but only 86 EJ was actually consumed, representing a savings of 33 EJ, or 38 percent of the actual amount consumed. The average net annual savings (cost of efficiency measures less energy cost saved) during this period (1973 to 1986) from efficiency amounted to $100 billion. Even greater savings were realized for electricity. Figure 21.3 compares

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Page 202 electricity use to GNP and shows that, like primary energy, electricity and economic production grew at the same rate during the 1960 to 1973 period. However, from 1973 to 1989 the growth in electricity did not keep pace with GNP. In 1989, GNP projected electricity use was 4300 BkWh, but only 2634 BkWh was actually consumed, representing a savings of 1666 BkWh, or 63 percent of the actual amount consumed. U.S. electricity revenues on sales of this 2634 BkWh were $175 billion in 1989, representing annual gross savings (i.e., avoided cost) of $100 billion and an electrical savings equivalent to the annual output of 320 base load power plants (Rosenfeld et al., 1991). Because electricity has consistently accounted for two-thirds of all primary energy consumed in buildings and three-quarters of building energy FIGURE 21.1 U.S. primary electricity and fuel use by economic sectors (1989). SOURCES: Energy data—U.S. Department of Energy (1989c).Residential and commercial buildings data, estimated based on shares of 1987 end use—U.S.Departmen of Energy (1989a). Price data—extrapolated from U.S. Department of Energy (1989d).

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Page 203 FIGURE 21.2 Total U.S. primary energy use: actual versus gross national product projection (1960 to 1989). SOURCES: Rosenfeld et al. (1991) and Energy Information Administration (U.S.Department of Energy, 1989c). bills, reductions in this sector's electric demand have made an important contribution to total U.S. electricity savings. Figure 21.4 shows pre-1973annual growth rates of 4.5 percent and 5.4 percent for residential and commercialuse, respectively; during the 1973–1986 period, residential energy use remained level, whereas commercial use increased at only 1.6 percent per year. Space heating intensity in new commercial buildings also declined significantly after 1973, as illustrated by Figure 21.5 (Rosenfeld etal., 1991). In addition, efficiency measures during this period avoided an increase of approximately 50 percent in emissions of CO2,SO2, and NO2.Without these measures, coal use would have doubled (Rosenfeld et al.,1991). Nevertheless, the buildings sector's need for energy—particularly electricity—is expanding. The DOE base-case forecast projects that U.S. electricity demand for all sectors will grow by nearly 33 percent before the end of the century, an average annual increase of 2.3 percent (Edmonds et al., 1989).

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Page 204 FIGURE 21.3 Total U.S. electricity use: actual versus gross national product projection (1960 to 1989). The GNP-electricity curve as been adjusted by 3 percent per year to account for increasing electrification. SOURCES: Rosenfeld et al. (1991) and Energy Information Administration (U.S. Department of Energy, 1989c). Efficiency Potential Recent Studies A consensus is emerging in the engineering, utility, and regulatory communities that, even when past efficiency gains and projected population and economic expansion are considered, an additional, significant reduction can be made in U.S. residential and commercial electricity consumption. This reduction is not expected to sacrifice comfort levels and will cost less—in many cases, substantially less—than the purchase of new sources of power or of power at marginal production costs. Potential efficiency measures are varied; taken singly, each may realize only a relatively small gain. Nonetheless, their aggregate effect can be

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Page 205 FIGURE 21.4 Primary energy use in U.S. buildings (1960 to 1989). SOURCES: Data are from Energy Information Administration (U.S. Department of Energy, 1989c,f). substantial. Recently, various studies have estimated the aggregate impact of applying these technologies to both new and existing uses in the residential, commercial, and industrial sectors: • The Electric Power Research Institute (EPRI)—which is supported by the nation's electric industry—recently concluded that, by implementing existing efficiency technologies, total projected electricity use in the U.S. residential sector for the year 2000 could be reduced by 27.1 percent to 45.5 percent, with a similar reduction of 22.5 percent to 48.6 percent in the commercial sector (Electric Power Research Institute, 1990). • Lovins (1986) found cost-effective annual electric demand savings of 73 percent in the Austin, Texas, municipal utility service territory, at an average cost of 0.87 cent per kilowatt-hour (kWh) (against a conservatively derived 2.7 cents/kWh avoided cost of operating existing plants).2

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Page 206 FIGURE 21.5 Space heating intensity for new U.S. buildings. SOURCES: For new homes and new commercial buildings, U.S. Department of Energy (1989g); for new office buildings, Pacific Northwest Laboratory (1983). • Usibelli et al. (1983) and Miller et al. (1989), in studies commissioned by DOE and the New York State Energy Research and Development Authority, estimated potential electrical savings from efficiency at 37 percent for the Pacific Northwest and 34 percent for New York. • An American Council for an Energy-Efficient Economy (ACEEE) study in New York State found that more than one-third (34.3 percent) of projected residential sector growth in demand for electricity use, and nearly half (47.1 percent) of projected commercial sector growth in demand for electricity, could be eliminated (American Council for an Energy-Efficient Economy, 1989). The ACEEE study relied on several restrictive assumptions, taking into account only near-term technologies and basing its estimates only on existing buildings (generally, savings are greater when efficiency measures are implemented during the construction process).

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Page 207 Calculating Efficiency Potential on Supply Curves Figure 21.6 is a compilation of nine conservation supply curves that depict the technical potential for electricity savings in U.S. buildings by the year 2000. Supply curves describe, in a more rigorous manner, the way in which large-scale efficiency gains and consequent dollar and carbon emission savings are aggregated from individual energy efficiency measures. The curves relate energy savings achieved by implementing a given efficiency measure to that measure's ''cost of conserved energy" or CCE (Meier et al., 1983). Conservation supply curves are discussed in greater detail in Appendix C. FIGURE 21.6 Potential conservation supply curves for residential and commercial electricity. SOURCE: Rosenfeld et al. (1991).

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Page 208 TABLE 21.1 "Prices" of Electricity at the Meter   Price (cents/kWh) 1.  Residential price (seen by consumer) 7.5 2.  Industrial price 4.7 3.  All-sector average price 6.4 4.  Marginal cost of operating a coal plant and delivering 1 kWh to the meter 3.5 5.  Line 3 plus externality cost: 1 to 3 cents/kWh (New York has chosen 1.4 cents/kWh for the worst coal plant) 7.4–9.4 Conserved energy may be considered a resource and plotted on a supply curve because it is liberated to be "supply" for other energy demands. Each of the energy prices described in Table 21.1 can be drawn as a horizontal line across a supply curve. All steps located below a selected price line are cost-effective, and the rational investor should take each of these steps (which are additive in effect), stopping where the staircase crosses the line. Of course, different price assumptions drastically alter estimates of dollar savings. It should be noted that estimated savings (plotted on the x-axis) also present uncertainties. They are illustrated in Table 21.2, which compares the unit energy consumption of an average new 1990 refrigerator (1000 kWh/yr) on line 1 with the consumption of an optimal refrigerator (200 kWh/yr) on line 4. Although an engineer might assume potential savings to be 800 kWh/yr, to a utility forecaster or program manager, line 3 is more realistic and reflects a sales-weighted average of refrigerator efficiency that is below the optimum. The studies on which the supply curves are based were undertaken by diverse groups and compiled at Lawrence Berkeley Laboratory (Rosenfeld et al., 1991). Electricity savings for the nine conservation supply curves in Figure 21.6 are calculated based on "frozen efficiency" (Table 21.2). The individual studies assumed real discount rates of 3 to 5 percent to calculate the cost of conserved electricity, but all nine have been corrected to 6 percent. Because the EPRI curve represents the approximate midrange of these curves, it has been highlighted in Figure 21.6 and will be the focus of the discussion below. It is replotted in Figure 21.7 for four different discount rates. The EPRI curve is also consistent with a new National Research Council study (National Research Council, 1990); however, the analysis presented there is too coarse to compile as a supply curve. That study estimates a near-term retrofit potential savings of 30 percent and a long-term

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Page 209 retrofit potential of 50 percent (National Research Council, 1990, Table 4.12). These potential savings nicely bracket the EPRI potential savings of 45 percent. Figure 21.7 is a sensitivity analysis showing that investing up to 7.5 cents/kWh—the average U.S. price of electricity in the residential and commercial sectors—will produce aggregate electricity savings of 45 percent for all "social" discount rates: 3, 6, and 10 percent. Potential savings are insensitive to the differences among 3 percent, 6 percent, and 10 percent, but at a 30 percent discount rate, savings drop from 45 to 30 percent. At the short-term marginal cost of providing electricity from an existing base TABLE 21.2 Unit Energy Consumption for a New Refrigerator   Base (k Wh/yr) Target (k Wh/yr) 1.  Average new 1990 refrigerator consumption "frozen" until year 2000a 1000 — 2.  Anticipated efficiency resulting from the 1993 National Appliance Standards for refrigeratorsb 700 — 3.  Better efficiency in year 2000 achieved by 1980s-type utility efficiency programs — 600 4.  Most efficient refrigerator in year 2000, including all technical improvements with cost of conserved energy (CCE) less than 6 cents/k Whc — 200 aThe average refrigerator sold in 1990 must meet the National Appliance Standards of about 1000 kWh/yr as mandated by the National Appliance Energy Conservation Act of 1987 (P.L. 100-12). bThe 1993 appliance standards will require that the average refrigerator use no more than about 700 kWh/yr (refer to 10 CFR Part 430, Vol. 54, No. 221, 11/17/89, p. 47918). cTechnical potential of about 200 kWh/yr for an 18-ft3 adjusted volume) top-mounted, auto-defrost refrigerator-freezer, at an average CCE of less than 6 cents/kWh (based on estimated incremental cost of $720 (1990 dollars), compared to the 1990 standard of about 1000 kWh/yr, using a real discount rate of 3 percent and 20-year life). Earlier analysis by DOE gave a technical potential of only 490 kWh/yr for the same size and type refrigerator-freezer, and an average CCE of less than 5 cents/kWh (based on an estimated incremental cost of $400 (1990 dollars) and the same assumptions as above). (See U.S. Department of Energy, 1989e, p. 3–37, Table 3.17.) For discussion of why 200 kWh/yr is selected for the technical potential, as opposed to the proposed standard of 700 kWh/yr, see discussion household appliances in this chapter, American Council for an Energy-Efficient Economy (1986, p. 3–8, Table 1), and Rosenfeld et al. (1991).

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Page 210 FIGURE 21.7 The EPRI curve for the buildings sector, sensitivity to real discount rate. Source: Rosenfeld et al. (1991). load power plant (3.5 cents/kWh), the 10 percent discount rate reduces energy savings to 30 percent, and at the 30 percent rate savings drop to 20 percent. However, for any price equal to or higher than the all-sector(residential, commercial, and industrial) average avoided cost of 6.4 cents/kWh (see Table 21.1), variations in discount rates below 10 percent have little effect. Aggregate Annual Savings: $10 Billion to $37 Billion Figure 21.8 displays the costs and technical potential of the 11-step EPRI conservation supply curve (which includes technologies that are commercially

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Page 211 FIGURE 21.8 Cost of conserved electricity for buildings. available or that have been developed and tested), with an additional first step for white surfaces/vegetation to save air conditioning. The 12 steps, identified in Table 21.3, encompass a cumulative savings of 734 BkWh (at 7.5 cents/kWh avoided cost), which is 45 percent of 1989 residential and commercial buildings sector use of 1627 BkWh. At 3.5 cents/ kWh avoided cost, savings decline to 667 BkWh, which is 41 percent of buildings sector use. Table 21.3 lists the cost per kilowatt hour of each of the EPRI measures (plus white surfaces/vegetation) and notes that each of these measures would save energy and atmospheric carbon at a net negative cost—that is, while saving money as well. Three cases representing different annual net savings in billions of dollars are shown in Figure 21.8.

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Page 237 for International Development, 1988); by contrast, in 1988, total installed generating capacity in the United States was 658 GW (Cambridge Energy Research Associates and Arthur Andersen and Company, 1989). A recent analysis of the developing world concluded that efficiency improvements could reduce total generating capacity needs by more than half, with annual savings of $15 billion to $50 billion (U.S. Agency for International Development, 1988). The buildings sector efficiency measures described in this chapter may be particularly important in view of the fact that, throughout the 1980s, electricity consumption in residential and commercial buildings significantly outpaced growth in total electricity consumption in many developing countries; this trend is expected to intensify (U.S. Agency for International Development, 1990). Two major efficiency opportunities are lighting, which accounts for 20 percent of U.S. electricity consumption and nearly that in many developing nations (e.g., 17 percent in India), and large commercial buildings, which consume large amounts of electricity and do not significantly vary in design worldwide. Despite the apparent existence of promising energy efficiency opportunities in the developing world, major sources of seed capital have yet to make a significant commitment to this potential. The World Bank, for example, continues to support major power supply projects at the expense of energy efficiency. In 1990, it was estimated that a mere 1 percent of the bank's energy loans were conservation-related. In one of the few practical attempts to apply the concepts described earlier in this chapter to conditions in a developing nation, the Conservation Law Foundation, Inc., a Boston-based environmental organization, is currently working with the Jamaica Public Service Company, that island nation's government-owned utility, to design and implement comprehensive energy efficiency measures of the type now in place in New England. A recent study performed in Jamaica reaches the following conclusions: 1.  For less than the avoided cost of producing power, Jamaica could save more than 20 percent of projected system load during the next 10 to 15 years; long-term savings could reach 40 percent of projected demand. The cost during the next 15 years would be about $80 million (1990 net present value dollars discounted at 10 percent). 2.  The project would reduce the cost of providing power by about $277 million, reduce imports by about $188 million, and avoid environmental damage valued at about $476 million (Conservation Law Foundation, Inc., 1990). Other Benefits and Costs Although not included in the cost-benefit calculations that appear in this report, other significant positive effects may result from the efficiency strategy

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Page 238 described in this chapter. These are in addition to the benefits realized from mitigation of greenhouse warming and may not be taken into account in the direct price of energy or its inputs. Nonetheless, they are real and should be considered during the process of designing an optimal policy "mix" directed at reducing carbon emissions. They include the following: • Power costs and reliability: The cost of stretching existing supplies by investing in efficiency averages half (or less than half) the cost of building new power plants. This means that an energy-efficient economy will produce more competitive products, increase disposable consumer income, and reduce capital outflows for expensive plant construction and imported fuel (an especially important advantage for developing countries). End-use efficiency also makes power systems more reliable by dampening the demand swings that can be caused by extreme weather and economic cycles, and it makes utility planning less volatile by allowing incremental investments rather than massive power additions. • Other environmental benefits: Greenhouse warming is far from the only major environmental threat posed by electricity production. Fossil fuel power plants in the United States account for about two-thirds of the major acid rain precursor—SO2; one-third of the major smog precursor—NO2; and a variety of toxic pollutants. Large-scale hydroelectric projects can destroy precious plant and animal habitat, displace native populations, and dramatically degrade water quality. Nuclear power plants generate substantial quantities of high-level radioactive waste, whose disposal to data has proved technically debatable and politically intractable. In addition, land use problems can be avoided because of the reduced need to site new energy generation and disposal facilities. All of these impacts are mitigated to the extent efficiency displaces supply. • Local economic development: Efficiency investments are highly labor intensive and typically employ labor that is available locally. The materials required for large-scale efficiency programs also can often be produced locally. • Energy independence: Recent events in the Persian Gulf have again emphasized the importance of this factor. In addition, energy independence would avoid the domestic economic cost of price shocks such as those that occurred during the 1973 OPEC embargo. Research and Development Needs Existing technology is capable of producing major efficiency gains. However, it is apparent that large additional savings could be obtained by perfecting and introducing experimental technologies, backed by further research. The government should consider substantially increasing research and development funding, particularly for research designed to overcome engineering

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Page 239 barriers that inhibit the commercial availability of promising new technologies. Specific research activities identified by the National Research Council's Alternative Energy Research and Development Committee (1990) include the following: • develop advanced insulation materials for building walls, windows, and roofs; • develop nongreenhouse-gas foams and evacuated-panel technology; • develop controls, expert systems, diagnostics, and feedback systems to minimize energy use in the construction, commissioning, and operation of buildings; and • implement existing technologies with carefully planned and monitored demonstrations and research on energy-related motivation and decision making. For most of the 1980s the federal government, through DOE, played only a limited role in supporting research and development of energy-efficient technologies and approaches. Of the $2.8 billion national energy technology research and development budget in 1988, 9 percent was devoted to energy efficiency, and 53 percent to more capital-intensive fossil fuel, fusion, and nuclear research (Hirst, 1989b). Between 1974 and 1988, DOE spent $4 billion on energy efficiency research and development, whereas between 1954 and 1968, the federal Atomic Energy Commission spent $22 billion on nuclear reactor research and development (Hirst, 1989b; Hirst and Brown, 1990). It is important to recognize, however, that different types of energy require different levels of capital investment. In addition, more information is needed on the effectiveness of different energy efficiency policy measures. Here, also, the federal government has greatly restricted its activities and support. Yet one of the major barriers to the implementation of comprehensive electricity efficiency programs is lack of knowledge about their design, implementation, and effectiveness. Conclusions Policies designed to substitute broad-based, comprehensive energy efficiency programs for large-scale central generation of power and use of fossil fuels serve two goals: reduction of greenhouse gases, particularly CO2, and economic efficiency. Overall, the means chosen to overcome the substantial market barriers that inhibit realization of these goals depend on considerations of policy and political reality. Nonetheless, one policy option holds considerable merit: regulatory reform designed to give utilities an incentive to conserve energy. Specific conclusions include the following:11 • If all technically feasible electricity efficiency measures were applied to building end uses in the commercial and residential sectors, U.S. carbon emissions from the generation of electricity could be reduced by nearly half, to about 500 Mt CO2/yr. This reduction could be achieved at an average cost of -$57/t CO2.

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Page 240 • Electricity efficiency measures applied to commercial and residential buildings in the United States currently have the potential to save about 50 percent of the electricity used by this sector. More than half of these savings can be achieved at a cost of 2.5 cents/kWh or less, and all of the savings can be obtained at negative "avoided" cost—that is, for less than 7.5 cents/kWh, which is the average price of U.S. electricity supplied to the buildings sector. The average net cost of these savings is -5 cents/kWh. • The technology to realize these reductions is either commercially available or has been developed and tested. However, market imperfections and in some cases consumer resistance greatly impede the implementation of efficiency measures and, consequently, the realization of more than a fraction of the potential monetary and environmental savings. Specifically, commercial and residential electricity users demand short-payback periods for their investments in efficiency measures—typically no more than 2 years. However, electric utilities accept payback periods that are considerably longer. • Through regulatory reform, particularly at the state level, government can provide utilities with a strong incentive to develop effective, broad-based energy efficiency programs. This can be done by ensuring, through the rate-making system, that purchase by a utility of all cost-effective energy efficiency from its customers represents the most financially attractive option. • Other policy options that attempt to overcome market barriers and realize available cost-effective savings include direct governmental programs, governmental subsidies for efficiency investment, appliance efficiency standards, more stringent building codes, and revenue-neutral tax measures such as variable hookup fees for buildings. • In addition to electricity savings of 500 Mt CO2, a combination of fossil fuel efficiency programs and fuel switching from electricity to natural gas or fuel oil could produce further savings of 374 Mt CO2/yr at a cost of -70/t CO2 equivalent for fuel savings and -$92/t CO2 equivalent for fuel switching. These savings, summarized on Table 21.7, could be brought about through the same policy options applicable to electric utilities. Additional research is necessary to realize the full scope of the savings that may be available. To summarize, the total potential savings from this combination of electricity and fuel efficiency measured in the commercial and residential sector is 890 Mt CO2/yr at an average cost of -$63/t CO2. This chapter has illustrated the policy options and research needed to achieve these savings.

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Page 241 Notes 1. One exajoule (1018 joules of primary energy) equals 1/1.054 quadrillion (1015) Btu which also equals 85 BkWh of electricity. One exajoule (EJ) or 1 quadrillion Btu is often referred to as 1 quad. 2. Avoided cost or avoided price of electricity is the cost (usually expressed as an average or marginal cost in cents per kilowatt-hour) of the electricity rendered unnecessary by implementation of one or more energy efficiency measures. 3. It should be noted that the base load capacity represented by this price is coal-fired, the most damaging from an environmental standpoint. If environmental externalities were to be internalized, the price could more than double. 4. Throughout this report, tons (t) are metric; 1 Mt = 1 megaton = 1 million tons; and 1 Gt = 1 gigaton = 1 billion tons. 5. A natural question is whether lighter surfaces are a significant disadvantage in winter. In fact, they make relatively little difference in the temperature because daily solar radiation is much reduced. Thus on a clear December day in New York, solar gain is only 25 percent of its June daily value, and cloudier average weather reduces this by one-fourth to one-eighth. There is indeed the inconvenience that on a clear winter day in New York, thin patches of ice melt more slowly on a lighter-colored roadway, but this is more than offset by the summer reduction of smog. Dark surfaces contribute about two-thirds of summer heat islands, which in turn cook smog faster. In Los Angeles, the heat island is responsible for about one-third of the smog episodes. 6. See Table 21.2 for similar data, developed by Rosenfeld et al. (1991). 7. This is based on the assumption that natural gas contains 14.5 kg C/MBtu and that oil contains 20.3 kg C/MBtu (Edmonds et al., 1989). 8. It is estimated that if 33 percent of its hot water heating customers and 80 percent of its space heating customers were to convert to alternative, on-site fuels (oil, natural gas, and propane), Central Vermont Public Service, Vermont's largest utility (410-MW total system capacity in 1989), would be required to generate 3,000,000 MWh fewer over a 20-year period, an annual savings of 150,000 MWh (5.2 percent of total generation) (A. Shapiro, Vermont Energy Investment Corporation, Burlington, Vermont, memorandum, September 12, 1990). 9. In New England, fuel switching measures tend to displace electricity generated by oil, so fuel security is an important consideration. 10. Such efforts must also include correction of major market imperfections and other barriers to efficiency. For example, in India, a compact fluorescent lamp subject to import fees would retail for $35; thus CFLs are virtually unavailable there. Nonetheless, CFL plants are about 100 times less expensive than the power plants they replace. Data developed as part of the BELLE (Bombay Efficiency Lighting Large-scale Experiment)—a collaboration between the U.S. Agency for International Development (AID), Lawrence Berkeley Laboratory, and the Bombay utility—show that an Indian CFL plant, which would cost $7.5 million to build, could be expected to produce about 2 million 16-W CFLs per year and after 6 years to save 1000 MW of capacity and avoid about 1 BkWh/yr—worth about $100 million per year (enough to purchase another CFL plant every month) (Gadgil and Rosenfeld, 1990).

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Page 242 A second example involves coal in China, which (like electricity in many less-developed countries) is heavily subsidized by the government. However, building insulation is not. As a result, new homes in Peking—a city with a mean temperature lower than Boston's—are not insulated. Nonetheless, insulation measures with a payback period of 6 years could be installed at a cost of conserved coal of 50 cents/MBtu, 66 percent lower than the $1.50/MBtu price of coal on international markets (Huang et al., 1984). 11. All calculations use a 6 percent discount rate. References A&C Enercom, Association of California Water Agencies, California Department of General Services, California Energy Coalition, California Energy Commission, California Large Energy Consumers Association, California/Nevada Community Action Association, California Public Utilities Commission Division of Ratepayer Advocates, Independent Energy Producers Association, Natural Resources Defense Council, Pacific Gas and Electric Company, San Diego Gas and electric Company, Southern California Edison Company, Southern California Gas Company, and Toward Utility Rate Normalization. 1990. An Energy Efficiency Blueprint for California: Report of the Statewide Collaborative Process. Available from California Public Utilities Commission, San Francisco, Calif. Akbari, H., J. Huang, P. Martien, L. Rainer, A. Rosenfeld, and H. Taha. 1988. The impact of summer heat islands on cooling energy consumption and global CO2 concentration. In Proceedings of the ACEEE 1988 Summer Study on Energy Efficiency in Buildings, 5:11023. Washington, D.C.: American Council for an Energy-Efficient Economy. Akbari, H., K. Garbesi, and P. Martien. 1989. Controlling Summer Heat Islands: Proceedings of the Workshop on Saving Energy and Reducing Atmospheric Pollution by Controlling Summer Heat Islands. Berkeley, Calif.: Lawrence Berkeley Laboratory. Akbari, H., A. Rosenfeld, and H. Taha. 1990. Summer heat islands, urban trees, and white surfaces. ASHRAE Transactions: 90-24-1: January. American Council for an Energy-Efficient Economy (ACEEE). 1986. Residential Conservation Power Plant Study, Phase I, Technical Potential. Report prepared for Pacific Gas and Electric. Washington, D.C.: American Council for an Energy-Efficient Economy. American Council for an Energy-Efficient Economy (ACEEE). 1989. The Potential for Electricity Conservation in New York State. Final Report prepared for New York State Energy Research and Development Authority et al. Energy Authority Report No. 89-12. Washington, D.C.: American Council for an Energy-Efficient Economy. Anderson, K., N. Benner, and E. Copeland. 1988. The energy edge project: Energy efficiency in new commercial buildings. Paper presented at Solar Energy Division Conference, American Society of Mechanical Engineers, Denver, April 10–14, 1988. Banwell, P., C. Wake, and R. Harris. 1990. Trace Gas Emissions from Electric Utilities in New England: Potential Effects of Demand-Side Management. May

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Representative terms from entire chapter:

efficiency measures