Energy Efficiency

Energy efficiency -- the kilowatt-hours and gallons of gasoline that we do not use -- is the cheapest, cleanest and quickest energy resource to deploy. Good-paying jobs are created by designing and installing energy efficient insulation, lighting, building materials, appliances, vehicles, heating and cooling systems, effective transit systems and countless other technologies in homes, schools and businesses. Significantly increasing the speed and scope of investments in energy efficiency in homes, buildings and industry is a strategy to create jobs in the near-term while saving Oregonians, businesses and government significant money over the long-term that can be invested in more productive activities. It also reduces local air pollution and global greenhouse gas emissions.

Oregonians have long been leaders in energy efficiency. A recent report from the American Council for an Energy Efficiency Economy ranks Oregon as the 4th most energy efficient state in the nation thanks to our progressive utility programs and policies, transportation choices, building codes, appliance standards, use of combined heat and power and state government initiatives.

The Obama administration’s focus on energy efficiency through, the American Recovery and Reinvestment Act (ARRA) and the US Department of Energy (USDOE), provides a unique opportunity to accelerate Oregon’s efficiency activities. At the same time, although Oregon is a leader, significant barriers have prevented widespread adoption of energy efficiency and the jobs it creates. These barriers include the lack of upfront financing, ”disconnects” between costs and benefits (e.g. landlord owns the home and tenant pays the utility bills), misaligned incentives, and inadequate education/awareness.

This strategy of energy efficiency as a creator of family wage and permanent jobs is particularly well-suited to Oregon because of our strong “cluster” of companies and talent that perform energy audits, install energy efficient equipment, and consult with businesses on energy efficient practices and energy management strategies. The expertise that these companies and individuals develop here through our investments may ultimately be in demand in other regions and provide growth and export opportunities that further bolster Oregon’s economy.

Oregon has a real opportunity to dramatically increase the scope and speed of its energy efficiency investments without the need to spend significant state government resources. Strategies to move Oregon forward in this area include:

Protect and Refocus Existing Incentives.

The Residential Energy Tax Credit (RETC) and the Business Energy Tax Credit (BETC) provide homes and businesses, respectively, with a tax credit for investing in energy efficiency and renewable energy upgrades. The BETC has recently come under scrutiny as it relates to larger renewable energy projects. Adjustments to the BETC are necessary, but benefit reductions should focus on large projects that would happen anyway and available funds should concentrate on incentives for energy efficiency and other investments that create jobs more cost-effectively. Additionally, new mechanisms for transparency and accountability are critical so that Oregonians know what jobs and other benefits are being created from their investment in energy efficiency and renewable energy.

Expand Upfront Financing and Payback Options for Home and Commercial Efficiency Upgrades

Leverage federal dollars from the ARRA and the USDOE. The ARRA has allowed Oregon to launch innovative programs including the “Clean Energy Works” program in Portland where homeowners can access low-interest loans, paid back through their monthly utility bills to retrofit their homes. The program has a workforce component that trains currently unemployed workers in completing some of the home energy audits and upgrades. The program creates a “one-stop-shop” through the Energy Trust of Oregon to make the process easy for customers. The program is unique in the nation and the ARRA includes competitive grants to expand innovative energy efficiency projects. Oregon should aggressively pursue these funds, work with stakeholders to expand the program throughout the state and include commercial property. By leveraging federal dollars with private investments, it is estimated that the “Clean Energy Works” program could be expanded to reach thousands of homes and businesses and create thousands of new jobs quickly while saving Oregon consumers, businesses and government real money.

Work with local banks and investors to develop and market additional low-interest loans for efficiency upgrades beyond the “Clean Energy Works” program. The “Green Street Lending” program, a partnership between Umpqua Bank and the Energy Trust of Oregon, is a working example of providing additional leading capacity for efficiency upgrades. More banks should adopt similar programs and investors should begin looking into energy efficiency as an investment strategy.

Accelerate implementation of House Bill 2626, which passed the Oregon legislature in 2009 with bipartisan support. The bill directs the Oregon Department of Energy (ODOE) to administer energy efficiency and sustainable technology loan program for the purpose of encouraging investments in energy efficiency and authorizes the State Treasurer to issue revenue bonds to administer the program.

Improve Incentives for Both Customers and Utilities.

The Obama administration is considering a proposal to create tax credits for homeowners who retrofit their homes. These would complement Oregon’s existing tax credits and rebate programs; making energy efficiency upgrades a very attractive investment for customers.

Currently, many rebate programs only apply to customers of certain utilities. We should work to ensure that incentives are in place for every Oregonian to invest in efficiency projects.

Having the right incentives in place for utilities is also important. For investor-owned utilities, Oregon’s Integrated Resource Planning (IRP) process requires that energy efficiency be considered by utilities as the lowest cost generation resource and utilities work hard to keep prices low for customers. Through technical adjustments to rates and other factors like customer use, “decoupling” reduces the financial disincentive for utilities to support energy efficiency by separating utilities’ profits from their levels of sales. Northwest Natural Gas has implemented “decoupling” and PGE is exploring this concept with a pilot project. Oregon should continue working with its utilities on these efforts to determine the right approach to ensure that everyone is rewarded for efficiency.

Improve Education and Awareness.

Create an energy performance score for homes and buildings so that buyers will be able to factor efficiency into their purchase decisions. This will require investments in energy auditing and will encourage homeowners to complete efficiency improvements. A good place to start is with the homes involved in the “Clean Energy Works” program and with other customers who have already made the decision to pursue efficiency upgrades through the Energy Trust and other programs.

Improve Codes and Standards.

Oregon should consider adopting an energy efficiency resource standard to complement Oregon’s renewable energy standard.

Oregon should continue the process already underway to advance building codes that insure new homes and offices are built to more efficient standards, rather than requiring expensive retrofits later.

Retrofit Government Buildings and Infrastructure, Starting with Schools.

The Government should set the example by upgrading public buildings and infrastructure, creating work for both small and large construction contractors. ARRA dollars are available and can create hundreds of jobs; costs to the state will be repaid through savings on future energy bills.

Help Existing Industries Retain Workers by Reducing Energy Costs.

When companies spend less on energy, they can spend more on expanding their businesses and hiring employees. Oregon should make industrial energy efficiency a top priority for economic competitiveness. The NW Food Processors Association provides a great example. The group has committed to improving energy productivity by 25% in 10 years and 50% in 20 years. As a result, they are working with state officials to break down existing barriers to pursuing energy efficiency improvements and are accessing federal resources to help with upfront costs. These investments in turn will retain jobs as companies can lower their costs and compete better in the marketplace. State officials should work with the private sector on an “industry by industry” approach that systematically address barriers and provide needed support. This strategy should not overlook the fact that workers often have very effective ideas on how to save energy at worksites and should be consulted to help reduce energy costs.

Reduce Transportation Energy Use through Efficient Transportation Choices and Community Design.

When Oregon households spend less on vehicles and fuel, they have more dollars to spend locally and export fewer of those dollars to places that produce oil and vehicles. Oregon has been a leader in promoting such savings through compact community growth, but we can improve on those savings, as well as reduce harmful emissions, by providing more transportation choices and mixed-use development in our communities.