Energy Efficiency Means Business 2022

Agencies in Action Federal Programs That Deliver Climate Mitigation and Adaptation Benefits Every Day
Find out more about the briefings in this series below:
Part 1	Financing Inclusive Clean Energy Investments in Rural America
Part 2	Energy Efficiency Means Business
Part 3	Climate Adaptation Programs across Agencies
Part 4	Building a Durable National Framework for Large Landscape Conservation

The second briefing in the series covered federal energy efficiency programs administered by the U.S. Department of Energy that support millions of jobs and deliver direct, meaningful savings to homeowners, consumers, and businesses—all while reducing the stresses and strains on the U.S. energy system.

Energy efficiency also improves the sustainability and resilience of communities and contributes to near-term reductions in pollution and greenhouse gas emissions. Panelists discussed how all these benefits play out on the ground from the state, private sector, and federal agency perspectives.

Highlights

KEY TAKEAWAYS

The U.S. Department of Energy (DOE) and the National Labs are important partners for the energy management industry. For example, Eaton, a $60 billion power management company, has 20 engineers embedded in the National Renewable Energy Laboratory's (NREL’s) Colorado offices, giving the company access to world-class engineers, software, and demonstration technologies.
The Building Technologies Office (BTO) works to improve the energy performance of the 149 million buildings in the United States through the use of advanced building envelope technologies, advanced building construction technologies, appliance and equipment standards, and energy codes.
The Advanced Manufacturing Office (AMO) works with industry to support research, development, and deployment of energy efficiency and environmental performance in the industrial and manufacturing environment.
The Federal Energy Management Program (FEMP) helps every agency and every site within the federal government meet its energy, water, climate, resilience, and security goals. The Assisting Federal Facilities with Energy Conservation Technologies (AFFECT) program provides funding for big projects under the FEMP program.
The Weatherization Assistance Program (WAP) has been providing funding for weatherizing low-income homes for 40 years to improve energy efficiency around the country.
The State Energy Program (SEP) provides energy funding and technical assistance to states and territories to advance energy goals and create jobs.

Rep. Marcy Kaptur (D-Ohio)

Energy is foundational to every aspect of our daily lives. The challenge and opportunity we have before us is to produce and deliver it effectively, cleanly, affordably, and safely in the 21st century.
In 2022, the House Appropriations Subcommittee on Energy and Water Development and Related Agencies passed a $53 billion bill investing in everything from deployment of renewable technologies to energy efficiency programming.
The Infrastructure Investment and Jobs Act (P.L.117-58) invests in renewable energy, green infrastructure, and living wage jobs. This historic legislation and the resources it delivers will help tackle the most pressing environmental and energy issues of our time.

Michael Furze, Assistant Director, Energy Division, Washington State Department of Commerce

In order to hit emission reduction targets, every sector of the economy must do its part.
In its 2021 State Energy Strategy, Washington State outlined a plan to achieve net-zero emissions by 2050, through 100 percent clean electricity; clean, connected, energy-efficient buildings; flexible, low-carbon transportation; and clean energy innovation.
Partnerships with utilities, communities, the federal government, and other stakeholders are crucial to meeting emission reduction goals.
In 2019, Washington State passed the Clean Buildings Performance Standard (H.B.1257) and the Clean Energy Transformation Act (S.B.5116) to improve the electric grid and building and appliance efficiency. The partnership between the U.S. Department of Energy (DOE) and the Washington State Energy Office was key to this progress.
The Weatherization Assistance Program (WAP) has been providing funding for weatherizing low-income homes for 40 years to improve energy efficiency in Washington State. The program is now focused on home rehabilitation—readying homes for energy efficiency work and investment.
Washington State is focused on improving the health of people living in weatherized homes by investing in projects that will reduce asthma triggers and prevent slips, trips, and falls.
The Washington State Energy Office also partners with the Washington State University Energy Program to contribute to projects outside the scope of the low-income weatherization program.
Key focus areas for the State Energy Program (SEP) are the healthcare investments mentioned above, partnerships with tribal governments to create jobs in tribal communities, and weatherization work in highly-vulnerable households.
SEP reduces the energy burden—the proportion of income spent on energy compared to total household income—for households.
SEP contributes to the construction pipeline by training people in energy-efficient building practices that they can use for later careers. These jobs pay $20-$25 per hour, meaning they can support families and be long-term careers.
Washington State is collaborating with the Yakama Nation Housing Authority to promote the installation of ductless heat pumps, which aligns with building electrification goals.
State Energy Program funding creates jobs and reduces energy use in the building sector, which is about a quarter of the U.S. emissions profile.
Like the federal government, Washington State is collaborating with the state's Department of Transportation to plan for electrification of the transportation sector and emission reductions.
The Clean Energy Fund was created from SEP funding in 2006 and has since grown to become a $40 to $60 million investment.

Christopher Hess, Vice President of Public Affairs, Eaton

The Department of Energy (DOE) is an important partner for the energy management industry.
The energy transition has started, and DOE is at the center of U.S. competitiveness as the world shifts to a low-carbon economy.
Eaton supplies power management solutions and is invested in decarbonization and resilience.
Half of Eaton’s business is focused on power distribution and management systems. The other half is focused on transportation, including both passenger and heavy-duty vehicles. Eaton is taking the mechanical power that it has managed for over 100 years and migrating it to electrification platforms.
“Everything as a grid” is a concept at Eaton that expands the idea of the grid to include advanced digital intelligence and energy optimization techniques that contribute to decarbonization. These artificial intelligence programs can anticipate problems in a system and correct them ahead of time.
Eaton is working to make data centers run more efficiently, to ensure critical applications stay online, and to take stored power and put it back on the grid as needed.
Eaton is working to increase the range of electric vehicles.
The Infrastructure Investment and Jobs Act is a significant jumpstart to improving transmission infrastructure that is necessary for distributed energy resources. High- and medium-voltage distribution infrastructure must be upgraded to meet electric vehicle charging needs.
Eaton has an important partnership with the National Renewable Energy Laboratory (NREL). Eaton has 20 engineers embedded in NREL’s Colorado offices, giving Eaton access to world-class engineers, software, and demonstration technologies.
Eaton works on making energy technologies more cost-effective. Around 2010, battery technologies were too expensive. Now, heavy-duty vehicle fleets can implement hybrid systems, which pay for themselves within two to three years.

Vincent Barnes, Senior Vice President of Policy and Research, Alliance to Save Energy

The primary function of the Building Technologies Office (BTO) is to improve the energy performance of U.S. buildings. There are about 149 million buildings in the United States.
BTO advances the Biden-Harris Administration's priorities in the built environment. This includes improving energy efficiency in new and existing homes and commercial buildings. To improve energy efficiency, BTO uses advanced building envelope technologies, advanced building construction technologies, appliance and equipment standards, and energy codes.
The residential built environment accounts for about 20 percent of U.S. greenhouse gas emissions, while commercial buildings account for about 16 percent.
This represents an opportunity for energy efficiency technologies that reduce energy use and load, decrease carbon emissions, and increase energy reliability and affordability.
BTO develops minimum energy efficiency standards for appliances and building equipment.
Home appliances such as refrigerators and laundry machines are responsible for nearly 13 percent of home energy use. Current appliance standards save consumers approximately $320 annually on energy bills.
As a result of appliance efficiency standards, washers now use 75 percent less energy, dishwashers 52 percent less energy, and air conditioners 50 percent less energy than in 1990.
As ASHREA (formed at the American Society of Heating, Refrigerating, and Air-Conditioning Engineers) and the International Code Council develop commercial and residential model building codes, DOE provides feedback throughout the process.
BTO is subject to annual appropriations, which have increased over the last decade as demand increases for emission reduction strategies.
The Infrastructure Investment and Jobs Act includes $3 billion for smart grid investments (including smart building technologies), $225 million for energy code development and implementation, $40 million for workforce training in built-environment energy management, and $10 million for colleges and universities to facilitate energy efficiency design in the built environment (including research and development).
As passed by the House, the Build Back Better Act would provide an additional $300 million to further building code adoption. This includes $100 million to adopt the most recently published code for residential and commercial buildings, and $200 million to adopt zero-energy provisions.
The House-passed Build Back Better Act would extend and increase the value of energy efficiency tax incentives.
The Advanced Manufacturing Office (AMO) works with industry to support research, development, and deployment of energy efficiency and environmental performance in the industrial and manufacturing environment.
AMO research and development (R&D) investments use project diversity to spread risk, target nationally important innovations, and help quantify viable energy savings.
Similar to BTO, AMO is also subject to annual appropriations, but AMO has experienced a higher percentage of budget increase over time. This is arguably due to significant opportunity for improvement in the industrial and manufacturing space, which accounts for about 30 percent of U.S. greenhouse gas emissions.
Congress authorized $150 million for Industrial Assessment Centers (IAC) to optimize energy efficiency and environmental performance within industrial and manufacturing facilities.
Funds are also made available for grants to small- and medium-sized manufacturers for upgrades recommended by IACs or by Combined Heat and Power Technical Assistance Partnerships.

Jennifer Schafer-Soderman, Executive Director, Federal Performance Contracting Coalition

In an Energy Savings Performance Contract, energy service companies perform energy upgrades for the federal government.
The companies develop comprehensive projects that use energy and water savings to pay for themselves. The companies provide or attract financing and are paid back by the guaranteed energy savings.
It is a valuable program for the federal government to get infrastructure upgrades without upfront costs.
Performance contracting can be used to meet federal sustainability goals. President Biden’s Executive Order on Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability (E.O.14057) has bold goals such as 100 percent carbon reduction, 100 percent carbon-free electricity, and 100 percent net-zero carbon buildings.
Energy efficiency and demand reductions accelerate the transition to carbon-free electricity.
Performance contracting also facilitates electrification efforts, which is another big goal of the Biden-Harris Administration.
Over 40 percent of performance contract projects in 2020 were done in HUBZones, areas of historically underutilized business zones. About 40 percent of performance contract projects used minority-owned contractors for the work.
Performance contracts also address at-risk infrastructure. The federal government has $170 billion worth of backlog maintenance.
A key aspect of performance contracting is that it includes operations and maintenance. The government does not have a lot of maintenance employees, so this is an important element of the arrangement.
Project results are measured and verified every year during the performance period of a contract. If the guaranteed level of savings is not reached, then the performance contractor pays the difference.
Performance contracts are becoming more comprehensive. Deep energy retrofits, resiliency efforts, on-site renewables, and cybersecurity measures are becoming more common in performance contracts. Energy savings do not pay for all of these projects.
The Federal Energy Management Program (FEMP) helps every agency and every site within the federal government meet its energy, water, climate, resilience, and security goals. The Assisting Federal Facilities with Energy Conservation Technologies (AFFECT) provides funding for big projects under the FEMP program.
Performance contracting is a job creator. If the federal government spent $5 billion on projects directly, that would create almost 50,000 jobs. If instead it uses that money to leverage performance contracts, that can create 500,000 jobs.
Federal government carbon emissions can be reduced by 50 percent through energy efficiency alone by 2050 from baseline levels, as described in the American Council for an Energy-Efficient Economy (ACEEE) report Halfway There.

Q&A

Q: What do you consider the biggest opportunities for energy efficiency?

Furze:

In 2022, Washington State legislative sessions have focused on expanding the 2019 Clean Buildings Performance Standard law to include smaller buildings, requiring them to do energy assessments, sub metering, and energy efficiency upgrades.
There are 100,000 homes in Washington State that need to be weatherized, and many more that need upgrades before they can be weatherized.
There are opportunities for workforce expansion and work on health disparities across communities. Black, Indigenous, and people of color communities and businesses should be included in these opportunities.
Research and development (R&D) will be important to advance energy storage and connected buildings. State and national labs will play an important role in R&D.

Hess:

The American Rescue Plan Act (P.L.117-2) is helping states invest in clean water and wastewater facilities. Upgrades to power distribution equipment can make systems 30 to 40 percent more efficient than existing equipment. The Infrastructure Investment and Jobs Act will have similar effects.
Electric vehicle deployment will require power distribution equipment upgrades.

Barnes:

Carbon emission reductions from energy efficiency will come primarily from five sectors of the economy: transportation, electricity generation, industry, commercial and residential buildings, and agriculture.
Energy efficiency is currently a major workhorse in the carbon reduction strategy, but energy efficiency will play an even greater role in the future by decreasing load on the grid to keep electricity and energy reliable. Energy efficiency can reduce the need to build excess capacity.

In order to support a clean energy grid, the United States must make an investment in energy efficiency even greater than investments directly in clean energy.

Schafer-Soderman:

If the Federal Energy Management Program received $70 million from appropriations, it could address 10-15 percent of backlog maintenance or about $15 billion of maintenance costs.

Q: What is the state of workforce development and the next generation of energy efficiency workers?

Hess:

It is challenging to find talent. In the private sector, it is critical that we train current talent that, for example, has been focused on mechanical engineering to transition to electrical engineering to keep this talent in the industry. It is also important to recruit graduates with both engineering and construction backgrounds.

Schafer-Soderman:

The Build Back Better Act has programs for workforce development.
Workforce scarcity is a challenge for energy efficiency work.

Barnes:

Energy efficiency is the largest employment provider in the clean energy sector.
We have work to do in diversity and inclusion. The Infrastructure Investment and Jobs Act and Build Back Better Act have tried to address this. The Blue Collar to Green Collar Jobs Development Act (H.R.4061), introduced in 2019 by Rep. Bobby Rush (D-Ill.), could also make progress on this issue.

Furze: