A Market for Efficiency

One of the amazing things about markets is that they find and drive the most efficient change. If you want someone to meet a goal, the worst thing you can do is to prescribe exactly how they must do it. Too often the environmental "purists" focus on punishing industry rather than accomplishing an environmental good. On the other side, those who claim to be conservative but practice the wanton waste of resources on a scale never before seen should realize the importance of a market force that rewards conservative behavior.

The article below talks about just how far energy efficiency can take us in both cutting dependence on foreign sources of energy AND cutting greenhouse gas emissions. We have become so inefficient because until now, energy has been considered cheap. With the developing economies beginning to take more of a proportional share of energy, that will no longer be the case.

The sooner we have a market (i.e. cap-trade system on ghg emissions) that rewards smart decisions, the sooner our overall costs for energy can stabilize.

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ClimateWire - 7/15/08

ENERGY EFFICIENCY: The 'forgotten factor,' curbing energy use in homes and buildings

Christa Marshall, ClimateWire reporter

It accounts for as much as 40 percent of energy consumption in the United States and spews a chunk of greenhouse gas emissions, but gets little attention from many lawmakers.

The heating and cooling systems in homes, businesses and industries are gobbling up heating oil and natural gas at a time of surging demand, prompting some to call them the forgotten factor of climate policy.

"Adding more renewables to the heating and cooling mix is one of the most cost-effective things we can do to cut emissions," said Wilson Rickerson, an energy consultant who also spoke at a recent Boston event on the topic sponsored by the Heinrich Böll Foundation.

His remarks came during an unusual year for the heating oil industry, which provides the winter lifeblood for much of New England. Typically, demand for the fuel falls in the summer, but it has remained constant this year because of high need in Latin America and elsewhere.

Because of population pressure and economic shifts, that trend could continue, and it illustrates the importance of a renewable heating policy, said Sander Cohan, an analyst with Energy Security Analysis Inc.

As much as 50 percent of global energy demand stems from the need to control temperature in the industrial, commercial and domestic sectors, according to a recent analysis by the International Energy Agency, which said renewable heating and cooling could have "considerable mitigation potential" for greenhouse gases, at relatively low cost.

Heating appears to be a bigger energy sapper than cooling, with roughly 90 percent of residential temperature control going toward increasing the temperature of water and spaces, according to federal government data.

Renewable heating and cooling encompass a variety of technologies, including geothermal heat pumps, biomass-fired stoves and solar-powered devices to control temperature in homes, companies and swimming pools.

A woman stands on the rooftop of the Community Office for Resource Efficiency in Aspen, Colo. She is smiling because her organization promotes energy efficiency, and the solar panels cut the nonprofit's water heating bills by half. Photo courtesy of the U.S. National Renewable Energy Laboratory.

The ability of these mechanisms to cut greenhouse gas emissions varies. For example, biodiesel blends used in place of heating oil are of questionable benefit to carbon reduction and the environment, according to a recent report from the Heinrich Böll Foundation.

Huge source of emissions lost below the climate policy radar

Renewable mechanisms do have one common advantage: little reliance on the electrical grid. Solar water heating systems -- which the National Renewable Energy Laboratory recently estimated could reduce dependence on natural gas -- can collect energy from the sun directly to heat water, sending it to a storage unit for use in faucets and showers.

The electrical independence is a benefit but also provides an explanation why heating and cooling largely have hovered underneath the policy radar.

"The focus in this country has been on transportation and electricity when it comes to renewables," said Charlie Niebling, general manager at New England Wood Pellet. "Federal and state policy have chosen two technologies and ignored the third."

For Niebling, the disadvantage means his company must compete for the same wood waste to make pellets for pellet stoves and other heating systems, without the benefit of tax incentives that would come if the biomass were used to produce electricity.

Major climate legislation that stalled in the Senate this summer contained measures that could have supported renewable heating and cooling, including grants to local governments and incentives for the construction of efficient buildings. The federal government also sets standards for appliances via its Energy Star program and provides tax incentives for some technologies, including solar water heating systems.

Additionally, many states have renewable electricity standards requiring utilities to produce a percentage of their energy from alternative sources. In areas where air conditioners and heaters run off electricity, their emissions could be cut through such measures.

But advocates argue that efficiency and electricity mandates can only do so much, particularly at a time when the number and average size of homes are expected to grow. They argue that heating and cooling should be viewed in the same policy light as cutting the emissions of cars -- which policymakers are examining in terms of both efficient design and new fuels in the gas tank.

Solar water heaters nearing competition in markets

In 2007, the National Renewable Energy Laboratory reported that the expiration of generous federal tax credits after 1985 had "virtually eliminated" the U.S. market for solar water heating. High energy prices and 2005 federal legislation have since prompted a second look at this, which is among the simplest and cheapest forms of solar energy use. Israel now uses solar water heating extensively. According to the International Energy Agency, "well-designed" supporting policies in some countries have allowed solar water heater installations to compete with conventional heating fuels even in regions with little sun.

A new military barracks at Fort Huachuca, Ariz., deploys a ground-based array of solar water heaters for easier maintenance. Photo courtesy of the U.S. National Renewable Energy Laboratory.

A handful of states are tackling the topic, with at least 11 allowing heating and cooling to be eligible at some level for satisfying a renewable electricity standard.

In June, Hawaii became the first state to mandate installation of solar water heating systems in new single-family homes (Greenwire, June 30). In 2006, the Arizona Corporation Commission included technologies such as solar pool and biomass heating as eligible resources in its renewable energy standard.

Many obstacles remain, however. In addition to the challenges associated with alternative energy in general -- startup costs, the need for work force training and insufficient research and development funds -- renewable heating and cooling supporters point to a lack of an organized lobby, low public awareness and the fact that heat output is harder to measure and verify than renewable electricity production.

During the solar water heating boom of the 1970s, the quality of some units faltered because of rigid certification requirements, leaving a bad taste with some members of the public.

Additionally, about 45 percent of buildings in the commercial sector are leased, making installment of some systems difficult, according to NREL. Residentially, about 17 percent of water heating use occurs in apartment buildings.

And some in the heating and cooling industry are worried that any rapid change could force workers to bear the cost of installing new technology.

"We know that renewable heating and cooling is coming, and we support it," said Jessica Johnson Bennett, director of government relations at the Plumbing-Heating-Cooling Contractors Association. "But lawmakers need to keep in mind that a huge number of contractors are small or family-owned businesses."