ACEEE: 16 Efficiency Policies Could Save US $1 Trillion

The American Council for an Energy-Efficient Economy has released a report that highlights 16 policies that would remove market barriers across the economy to investments in energy efficiency, which, if enacted, could save the country approximately $1 trillion in energy bills and 19 quads in energy consumption.

Overcoming Market Barriers and Using Market Forces to Advance Energy Efficiency discusses several targeted policies that leverage market mechanisms and address specific market failures to energy efficiency, without requiring what ACEEE calls “substantial spending or government mandates.”

For example, the development of a comprehensive building labeling and benchmarking program could save about 1.6 quads of energy and $60 billion between 2014 and 2030. Even larger are the benefits gained from adjusting corporate tax legislation to encourage the replacement of inefficient equipment and from removing regulatory barriers to combined heat and power projects. These two policies alone could reduce national energy consumption by 7 quads and save the economy close to $300 billion, the report says.

A modest tax on emissions of greenhouse gas or other pollutants could save 5 quads in energy and  around $495 billion, the report says. Such a fee would be paid either by fuel producers or by consumers and businesses as they emit pollutants into the atmosphere. ACEEE describes the impact of using fossil fuel in the US as a market failure as the market itself has “failed to create a socially optimal outcome.” A fee would be an “economically efficient strategy” for addressing this market failure, the report says.

ACEEE says it wants to show policymakers that there are a number of cost-effective policies out there that could promote energy efficiency and kick start the economy at the same time. The report highlights a number of approaches that haven’t been made much use of to date.

In December, ACEEE chief Steve Nadel told the Senate Finance Subcommittee on Energy, Natural Resources, and Infrastructure that well-targeted energy efficiency tax incentives were good value for money. ACEEE analysis found that a five-year federal tax credit for several high-efficiency products and services cost the government less than one-tenth the cost of the energy resources saved over a 15-year period, Nadel told the committee.

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