President Biden has outlined a bold plan for improved energy efficiency. Now it’s time for the administration and Congress to execute.
By Paula Glover, Alliance to Save Energy President
Perhaps more than any president in history, President Biden has made improving energy efficiency in American homes and buildings a top priority in his economic and environmental platform. According to the American Jobs Plan summary, “President Biden’s plan will create good jobs building, rehabilitating, and retrofitting affordable, accessible, energy efficient, and resilient housing, commercial buildings, schools, and child care facilities all over the country.” And in the President’s remarks before Congress in April of this year, he stated that “the American Jobs Plan will put engineers and construction workers to work building more energy-efficient buildings and homes.”
Homes and buildings account for about 40% of U.S. energy consumption and a similar share of greenhouse gas emissions. Regardless of decarbonization progress through adding renewable energy resources to the power grid, we have little chance of meeting President Biden’s identified goal of reducing carbon emissions 50% by 2030 without sharply reducing energy demand through energy efficiency. In fact, the International Energy Agency anticipates energy efficiency to account for nearly half of the emissions reductions needed to meet Paris Agreement targets by 2050.
Getting there, however, will not be easy, and will require intentional and focused energy policy specifically connected to the built environment. In the American Jobs Plan and recent corresponding legislative proposals, the federal government has begun to target some priority areas:
- Affordable housing: Energy efficiency often does not reach those who need it most, with millions of low-income families paying more than 10% of their income on energy bills. We can address this by significantly expanding programs like the Department of Energy’s Weatherization Assistance Program, which provides funding to local communities to weatherize low-income homes. However, expansion of public funds is not enough: We must also dramatically improve coordination between the DOE and other agencies, including Housing and Urban Development, to ensure that varying energy efficiency initiatives are coordinated to achieve the highest possible adoption and saturation. Additionally, we must look to the private sector as a primary source for leveraging public investments.
- Improved tax incentives: Tax incentives are proven tools for encouraging energy efficiency upgrades, but the incentives we have now are woefully outdated. Fortunately, Congress is working on a refresh, and just as tax policy has helped drive growth in the renewables sector in recent years, it can draw investment and advance energy efficiency to achieve deeper carbon emission reductions. We need long-term, consistent tax incentives for improved energy efficiency in homes and buildings, and we need them to be strong enough to influence broad energy efficiency adoption. Bills like the Clean Energy for America Act, the bipartisan Home Energy Savings Act, and the GREEN Act all represent strong ideas for how the tax code can incentivize energy efficiency growth.
- Public buildings: There is a tremendous opportunity to use the energy savings from efficiency improvements to both reduce long-term costs and strengthen the health, safety, and resilience of our public buildings, whether it’s Veterans Affairs hospitals, public school buildings, or community centers. Beyond the obvious benefits of reducing carbon emissions, the taxpayer savings alone should be enough to achieve bipartisan unity. The federal government spends $6 billion annually on building energy costs, so even reducing energy consumption by 15% would save federal taxpayers almost $1 billion each year. Bills like the Open Back Better Act leverage these cost savings to draw private capital to retrofit thousands of buildings nationwide, combining efficiency improvements with other practical upgrades — such as placing a new high-efficiency HVAC system on the rooftop to improve resilience from flooding. Importantly, the Open Back Better Act also requires that 40% of relevant funding target low-income or environmental justice communities.
- Small Business: Energy costs can be one of the largest operating expenses for small business owners across the country. With the right incentives, we can reduce these costs by 30% while also reducing carbon emissions. A number of utilities currently provide demand side management (DSM) programs to assist in lowering small business energy costs, but these incentives only partially cover what is required to achieve substantive energy efficiency retrofits, creating a gap that many small businesses are unable to close. To address this issue, the Alliance to Save Energy has developed the Main Street Efficiency Act, which would match utility DSM program contributions, significantly lowering or eliminating the cost paid by small business owners. The legislation will be introduced by Senator Catherine Cortez Masto (D-Nev.) and Congressman Peter Welch (D-Vt.). The Main Street Efficiency Act is projected to create 44,000 jobs annually, avoid 40 million tons in carbon emissions, and save $6.2 billion for participating small businesses, putting money back into local communities.
Without question, policymakers are on the right track in prioritizing energy efficiency as a primary tool to create jobs, save energy costs, and reduce carbon emissions. We urge leaders of both parties to keep the momentum going and move quickly to ensure enactment of energy efficiency policy that will help us to build back better.