Earlier this morning, the Obama administration announced the first-ever guidelines for cutting carbon pollution from America's power plants. The proposed rule -- which was a year in the making -- involved input from thousands of key stakeholders in both the private and public sectors. Here are three key takeaways from the groundbreaking announcement.
The new rules are the first-ever to limit emissions from the electricity sector, which currently accounts for 32% of greenhouse gas emissions and 38% of carbon emissions in the US. Under the proposal, the EPA seeks a 25% reduction of CO2 emissions by 2020, and a 30% reduction by 2030 below 2005 levels. The EPA estimates that such targets will generate $90 billion in climate and health benefits. The emissions targets are ambitious, but as EPA Administrator Gina McCarthy said in her announcement: "This plan is all about flexibility." The proposal allows states and utilities to "develop plans to meet state-specific goals [...] and gives them the flexibility to design a program that makes the most sense for their unique situation."
Energy efficiency -- which is mentioned 227 times in the proposal -- is the centerpiece of the flexible compliance options. And it goes well beyond simple efficiency measures at power plants, by also including renewable energy standards (which 38 states already have in place) and demand-side energy efficiency programs (which utilities in 47 states already run). Why is efficiency so prominent in the proposal? Because of its vast cost-effectiveness. A recent study by the American Council for an Energy Efficient Economy (ACEEE) found that it costs utilities just 2.8 cents on average to reduce electricity consumption by 1 kilowatt-hour — which is two to three times less than it costs to generate the same amount of electricity at a power plant. A cross-sector analysis by Lawrence Berkeley National Laboratory published a similar finding: nationwide, it takes slightly more than 2 cents of investment to save a kilowatt-hour — and an average of just 1.8 cents for residential programs.
According to our own industry research, consumers universally look to their utility for insightful energy usage information and personalized savings advice. With energy efficiency at the core of this proposal, utilities have a tremendous opportunity to engage their customers like never before. With behavioral energy efficiency alone — which includes giving households personalized feedback on their usage, targeted incentives to conserve, and easy-to-understand savings advice — US households could save over 18 million megawatt-hours every year. That's $2.2 billion in cash savings for American consumers year after year -- and the equivalent of abating 10 million metric tons of CO2. For more on the proposed rule, check out the op-ed in The Hill penned by former EPA Administrator Carol Browner and Opower president Alex Laskey.
Header image credit: S. E. Brendel