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7 crucial tools to accelerate energy efficiency

Meeting global climate challenges will require every tool we have. Energy efficiency is many packed into one.

Meeting extraordinary climate challenges head-on requires an all-hands-on-deck effort to transform our energy future and lower our dependence on fossil fuels. At the heart of this challenge lies an opportunity to improve the places where most people spend 90 percent of our time — buildings.  

In the United States, buildings consume more energy than most countries do as a whole. Powering, heating and cooling businesses and homes accounts for 40 percent (PDF) of all energy use and a similar percent of greenhouse gas emissions. In some cities, buildings account for over 70 percent of carbon emissions. These facts make it easy to see why the United Nations Sustainable Development Goals include an ambitious target of doubling the global rate of improvement in energy efficiency by 2030.

As executives of the Alliance to Save Energy and the Institute for Market Transformation, two organizations on the frontlines of today’s building efficiency movement, we know that energy efficiency is the Swiss Army knife of clean energy solutions. It can be a knife if you need a knife. But it can also be a screwdriver, a pair of scissors, a saw or even a toothpick.

This is particularly important when it comes to buildings. Energy efficiency is the one dynamic solutions-set that supports all the things we ask our buildings to be — climate-friendly, resilient, safe, smart, secure, healthy and grid-interactive. It’s also a huge economic engine. Today, energy efficiency supports 2.25 million U.S. jobs — more than any other clean energy sector. Moreover, it improves business profitability and makes owning or renting a home more affordable. It also enables other clean energy solutions by reducing overall energy demand.

And building efficiency has a strong link to health. High-performance buildings not only use less energy, but also improve indoor and outdoor air quality, as well as shield people from temperature extremes to keep us comfortable and safe. No matter what we ask, energy efficiency under-promises and over-delivers. 

And yet, even though our collective energy efficiency efforts in the U.S. are saving businesses and consumers hundreds of billions of dollars every year, we are only scratching the surface of its true potential.

With the growing adoption of smart energy efficiency policies and programs, alongside available state-of-the-art technology and new financing mechanisms, we can turn every leaky and wasteful building into one that is high-performing and improves our lives. And the business case for bold action on building efficiency never has been stronger. A recent study found that high-performance buildings have 17 percent lower operating expenses and 28 percent higher net operating income per square foot compared to average buildings.

Energy-saving technologies are becoming less expensive and more profitable. For instance, the price of LED lights have dropped an impressive 90 percent since 2008. More companies than ever before are also reporting their carbon emissions publicly. In 2011, only 20 percent of S&P 500 companies reported on their sustainability — skip forward five years and that number skyrocketed to 80 percent. The result is more transparency and added pressure on the private sector to decrease emissions and compete with other market leaders or be seen as laggards. Investing in greater efficiency has proven to be a smart and cost-effective way for landlords and other businesses to meet growing expectations from their  investors, tenant companies and customers. To further accelerate growth in efficiency and reap its wide range of benefits, businesses, governments and utilities must work together on seven key efforts.

1. Get smart about energy use

To save energy, we first need to better understand how we’re using it. Businesses are doing this by tracking energy use to individual tenants and pieces of equipment. Cities are doing this by passing energy benchmarking and building tune-up policies and launching programs that allow building owners, tenants and utilities to see in real time how their buildings use energy and how they compare to peers. Much like miles-per-gallon stickers or nutrition labels, this data ignites a virtuous cycle of competition, which helps drive continuous improvements that lower operating expenses, air pollutants and carbon emissions.

2. Commit to stronger baselines and use them as a launching pad for improvement

We need to ensure all buildings are built and refurbished to high-performance levels. States and cities need to adopt strong building energy codes, and those codes need to be properly supported and enforced. We also need strong incentives and programs to encourage deep retrofits of existing buildings that will be in use for decades to come; these improvements lock in energy savings as well as health and environmental benefits for generations.

3. Support and expand research & development for energy efficiency

Many key energy efficiency technologies today were developed thanks to research supported by the U.S. Department of Energy. Officials should be working to expand their investments in research on efficiency technology and solutions and making cost-effective investments to improve the performance of the government’s own buildings and equipment. These investments establish a critical foundation of knowledge, technical expertise, best practices and public-private partnerships that drive efficiency across the economy and inspire further innovation.

4. Improve equipment standards

Innovation makes more efficient products available; standards ensure that we are taking advantage of them. U.S. standards are an enormous success story, saving the average household nearly $500 each year on energy bills. Continued progress here is important because the U.S. is so influential across international markets. For example, an estimated 2.3 billion people (PDF) around the world are demanding access to air conditioning. While this presents an enormous challenge, once again efficiency represents the one opportunity that can ensure that this new demand for air conditioning doesn’t include a disastrous climate impact.

5. Make smarter business decisions

Businesses and individuals need to consider efficiency in everyday decisions from operations to leasing to valuation. The cheapest energy is the energy we don’t use. Everyone can save money by looking to efficiency first. One powerful example for how to make efficiency business-as-usual is through the lease. Leased space represents 50 percent (PDF) of all commercial building energy use in the U.S. Both owners and tenants can unlock win-win energy savings and sustainability benefits with smart lease clauses that align incentives and address efficiency and sustainability. We can save an estimated $3 billion per year in U.S. office buildings alone if all commercial offices adopted green leases.  

6. Drive competition

Public-private initiatives such as the EPA’s ENERGY STAR program gives businesses and consumers the information they need to make informed investments and favor efficient options. It also prompts manufacturers to compete to improve the efficiency of their products and owners to do the same for their buildings. Innovative financing mechanisms can all help businesses become more competitive and invest smarter. In the last few years, Fannie Mae, Freddie Mac and the Federal Housing Authority started offering better terms on mortgages for multifamily buildings that cut their energy or water use. The market responded enthusiastically, with green financing rocketing. Fannie Mae’s green financing program grew from $3.6 billion in 2016 to $27.6 billion in 2017.

7. Equitably share the benefits

In 2015, roughly one in five households reported reducing or forgoing basic necessities such as food and medicine to pay an energy bill. This energy insecurity disproportionately affects low-income communities, the elderly and people of color, all of whom experience significantly higher energy burdens than the average household. Bringing low-income housing up to the efficiency levels of the median American household would eliminate 35 percent of excess energy burden (PDF). We must double down on successful weatherization programs, and frontline communities must have a seat at the table to make sure utility programs, tax incentives, permitting and other tools equitably benefit them and help them save energy.

Energy efficiency is the greatest economic opportunity we have. It’s time to factor energy efficiency in everyday decisions and make building efficiency the norm and not the exception. The tools are available to achieve never-before seen savings and progress.

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