The release of the 2023 Sustainable Energy in America Factbook earlier this month by BloombergNEF and the Business Council for Sustainable Energy (BCSE) highlighted the progress that has been made in the clean energy transition, including a 70% growth in investment over the last five years in clean energy assets and a 4.1% increase in power production from renewable sources.
All great news, yet the data also demonstrates that clean energy generation alone is not getting the job done when it comes to hitting our climate targets. U.S. emissions last year were only 13.8% lower than 2005 levels, well short of the Obama administration’s original goal under the 2015 Paris Climate Agreement of reducing emissions to 26-28% below 2005 levels by 2025.
With the Inflation Reduction Act (IRA) in its back pocket, the Biden administration is doubling down on clean energy generation but is missing a golden opportunity to spur climate action through energy efficiency, particularly in the energy-intensive commercial and industrial (C&I) sector.
Energy efficiency is our most potent, at-the-ready weapon in the fight against climate change and must be central to an effective climate action strategy. In the U.S., energy efficiency alone can save more than 50% of the GHG emissions needed to reach our national climate goals. Globally, energy efficiency can help the world reduce over 40% of the emissions needed to hit the targets of the Paris Agreement. Unlike many clean energy supply-side resources, energy efficiency is ready to deploy now. There are no complications with permitting or need to first build transmission lines. Energy efficiency should be the global answer to “where do we start?” It is also the cheapest energy resource on the planet: according to Lawrence Berkeley National Labs, energy efficiency is one-third the cost of solar PV + storage. Here are three steps we can take to change the narrative around energy efficiency:
Give energy efficiency equal airtime with other climate-positive solutions
Energy efficiency projects, which often involve hundreds of different pieces of equipment spread across numerous buildings, lack the glamour of a solar array or wind turbines. But they surpass renewables in terms of their ability to deliver energy security, GHG emissions reductions, equipment resiliency, healthy buildings, and improved operations. In our dangerously warming world, energy efficiency should be more vocally touted as the first step in the race to net zero.
Deploy, deploy, deploy
Secretary of Energy Jennifer Granholm is fond of saying, “deploy, deploy, deploy,” but we need a U.S. (and global) shift to prioritize the deployment of efficiency equipment and technology first. This is consistent with Ceres’ 2030 roadmap which says companies should reduce on-site emissions first before they look to mitigate their emissions off-site.
Financing solutions like Energy as a Service, or EaaS, can help. Through EaaS, decarbonization is accessible to all; it doesn’t have to come at a cost. EaaS can unlock the savings potential in the built environment and leverage it to upgrade to an energy-efficient infrastructure. EaaS can fund energy retrofits via energy savings with zero upfront, off-balance-sheet financing solutions, and still deliver savings to the bottom line. With EaaS providers handling the retrofit from soup to nuts, it’s tough to argue that doing nothing is easier than implementing an energy-efficient solution.
Drive legislation that incentivizes energy efficiency
The importance of energy efficiency retrofits often gets overlooked in federal legislation, particularly for large commercial and industrial buildings which, according to the U.S. Energy Information Administration, account for over 50% of total energy use in the U.S. For example, the $369 billion included in the IRA to combat climate change did not have any added funds earmarked for retrofits to C&I buildings outside of expanding the applicability of the already existing 179D tax deduction. This is a missed opportunity to have major legislation drive near-term actions that existing building owners can take to lower GHG emissions.
Cities are also increasingly requiring buildings to improve their energy efficiency and transition away from fossil fuels. Law 97 in New York City requires buildings larger than 25,000 square feet (which accounts for roughly half of the built square footage in the city) to reduce their emissions to 40% below 2005 levels by 2030 and 80% by 2050. Just like littering and polluting, we need more markets to follow in the footsteps of New York’s Local Law 97 and make energy waste unacceptable.
The time is now
Reports like the 2023 Sustainable Energy in America Factbook make it clear that meeting our near- and long-term climate goals won’t happen without more ambitious efforts around energy efficiency. The built environment is replete with opportunities to reduce energy waste, and with financial solutions like EaaS that are filling the policy void and providing much-needed project funding, the ability for corporations, schools, and hospitals to accelerate their sustainability goals and contribute to climate action has never been more accessible.