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Report: Energy Efficiency Standards Could Cut Demand by 5.5 Tcfe by 2020

Nationwide energy efficiency resource standards (EERS), consisting of energy savings targets set for utilities and a market-based energy efficiency trading system, could cut energy use by 5% in 2020 and save consumers $170 billion over the 2007-2020 period, according to a new report that was released in Washington, DC, Thursday by the American Council for an Energy-Efficient Economy (ACEEE).

"An EERS is perhaps the single most effective energy efficiency policy the federal government could adopt today," said ACEEE Executive Director Steven Nadel, lead author of the report. "To put these energy savings in perspective, they are about triple the energy efficiency savings of the Energy Policy Act of 2005 that was signed into law last summer."

The report, which profiles energy efficiency resource standard policies in 10 states and four European countries, estimates that such standards could save as much energy as improving U.S. vehicles' fuel economy to 40 miles per gallon.

EERS targets are achieved through end-user energy-saving improvements, aided and documented by utilities or other program operators. Distribution system efficiency improvements, combined heat and power (CHP) systems, and other high-efficiency distributed generation systems may be included as well.

With the trading provision, a utility that saves more than its target could sell savings credits to utilities that fall short of their savings targets, permitting the market to produce the lowest-cost savings.

To date, EERS programs or something similar are in operation in several states:

Illinois and New Jersey also are planning to implement EERS programs. The report also documents EERS-like programs in the United Kingdom and the Flemish region of Belgium. In addition, Italy has recently started a program, and another is about to start in France.

"Based on states and countries that have been implementing EERS policies for several years, it is clear that large, cost-effective savings are being realized," said Nadel. "States and countries are finding that these efficiency savings cost several times less than generating the same amount of power and many of the early adopters are increasing their savings goals."

ACEEE recommends that both state and the federal governments enact EERS policies covering both electric and gas utilities. Assuming savings targets start at modest levels (0.25% of sales annually) and ramp-up over several years (to 0.75% additional savings each year), by 2020 annual electricity and natural gas use in the covered region would be reduced by nearly 10% compared to a reference-case forecast, according to the report.

At the national level, EERS savings would amount to about one-quarter of the currently projected growth in electric sales over the 2007-2020 period and about one-half of projected growth in natural gas sales over this same period, the report estimated. A national EERS at this level would reduce forecasted U.S. energy use in 2020 by about 5.6 quadrillion Btus (1 quad is roughly equivalent to 1 Tcf), which represents about 4.6% of total projected U.S. energy use for that year.

The report is available for free download at http://aceee.org/pubs/e063.htm.

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