Are Energy Efficiency Programs Efficient?

Rex Hime
President and CEO of the California Business Properties Association

Most of the attention around SB 350 and SB 32 has focused on renewable energy and petroleum but there are also many questions that need to be answered about the feasibility and expense in reaching the “stretch” goals and policies related to energy efficiency.

California already has – by far – the most energy efficient building codes in the nation.  Title 24, as it is referred to, has over time kept our state’s overall use of energy stable while the population has exploded.  SB 350 now wants to arbitrarily DOUBLE energy efficiency in all buildings across the state.  This sounds like a great goal, but it has some Real World issues.  To wit:

A recent study by professors from UC Berkeley, University of Chicago, and the Massachusetts Institute of Technology reviewed more than 30,000 households in Michigan and found some surprising results. The study examined the Federal Weatherization Assistance Program, which provides low-income households weatherization upgrades.

First, the study found that consumers reduced energy consumption by an average of 10 to 20%, but that reduction amounted to only half the reduction that was expected. Second, the costs of energy efficiency were found to be double the benefits. Third, contrary to common belief, the study found that the program did not deliver a broader societal benefit since the cost per ton of carbon emission reduction was  $329 compared to the $38 per ton that the federal government estimates as the societal cost of carbon. Recognizing that one study does not provide conclusive evidence, the authors of the study called for more studies in other areas to validate the results. More importantly, they recommended that policy be developed based on facts — not “projected” energy savings that may not materialize.

For business property owners, the studies raise some very important issues that SB 32 and SB 350 fail to address. SB 350 calls for a comprehensive program to double the efficiency of existing residential and nonresidential buildings. How much will “doubling” cost the resident or property owner?  How did the state arrive at 50%?

SB 32 gives state agencies unprecedented authority to reach an emission reduction goal of 40% by 2030. If California energy efficiency programs under SB 32 generate only half the expected energy savings, will more mandates be imposed? Should state agencies be given complete authority to dictate how much homeowners and business owners need to invest in energy efficiency?  Shouldn’t our elected representatives remain involved in decisions affecting our homes and businesses?

The study also raised questions about the value of energy efficiency such as weatherization, concluding that the costs substantially outweigh the benefits. California residents and business property owners are entitled to know if the money that we are expending for energy efficiency will be fully recovered or whether the funds will only be partially recovered.

Finally, SB 32 would have the unanticipated result of complicating CEQA and making it even more unworkable to build the very energy efficient buildings these policies purport to enable. CEQA would kick in immediately despite goals being 35 years in the future. The inability to meet or mitigate these goals with today’s technology means every project fails to pass a CEQA challenge.

We believe that SB 32 and SB 350 are too broad and lack the detail for homeowners and business property owners to understand their responsibilities and financial commitment. We urge the Legislature to delay action on the legislation this year and take the time to evaluate the energy efficiency options and develop policy guidelines for the implementing agencies.  We need an efficient program — not a rushed one.

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