State of the Union Address Missed the Boat on Energy Efficiency
President Obama delivered the 2012 State of the Union address last night. In a 7000 word speech, he devoted about 800 words to energy. The majority of those words were about oil, natural gas, and clean energy – the supply side. There was one little paragraph about energy efficiency, and it seems more of an afterthought than a substantive, well thought out part of an energy strategy:
President Obama delivered the 2012 State of the Union address last night. In a 7000 word speech, he devoted about 800 words to energy. The majority of those words were about oil, natural gas, and clean energy – the supply side. There was one little paragraph about energy efficiency, and it seems more of an afterthought than a substantive, well thought out part of an energy strategy:
Of course, the easiest way to save money is to waste less energy. So here’s another proposal: Help manufacturers eliminate energy waste in their factories and give businesses incentives to upgrade their buildings. Their energy bills will be $100 billion lower over the next decade, and America will have less pollution, more manufacturing, and more jobs for construction workers who need them. Send me a bill that creates these jobs.
I don’t believe we’re going to solve the energy challenges we face by focusing solely on the supply side. We’ve got to become more efficient in our use of energy, and the good news is that we still have a lot of opportunity to do that.
But the State of the Union address left me wondering:
Why didn’t the President mention homes, schools, and commercial buildings when he talked about wasting less energy?
Does he have a plan to build on all the weatherization training that came out of ARRA, the Stimulus Act?
Will that $3000 he wants to save homeowners on their mortgages be tied to energy efficiency to create long-term savings?
We can make energy efficiency work without throwing lots of money at it. We simply need to make it easy for people to pay for energy improvements over time in a way that the savings are equal to or greater than the cost. You know, the way an Energy Efficient Mortgage does. All we need is a little help making options like this widely available.
[Note to commenters: Play nice! Disagreeing on politics is OK. Personal attacks are not.]
Photo from White House photos, by Pete Souza.
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I agree it was unfortunate
I agree it was unfortunate that Obama didn’t push residential energy efficiency more in his State of the Union speech. A few sentences could have gone a long way.
However, when the President told Congress to send him a bill that gives business owners an incentive to upgrade their buildings, he may have been asking for a commercial counterpart to the proposed tax credit for residential energy efficiency upgrades as enumerated in the Cut Energy Bills at Home Act (section 25e of the Internal Revenue Code).
There is a Federal incentive
There is a Federal incentive that commercial/industrial users can use for energy efficiency called EPAct. It allows for a tax deduction on a portion of the efficiency project. It is nice, but a tax credit would be better! I sell these types of projects for a living, and incentives are tremendously helpful in getting them approved.
Alison
Alison,
How do I know, “the savings are greater than the cost?”
We are in agreement that we should not be throwing money at Energy Efficiency as we have been over the last several years. The industries need to move beyond charity, government handouts, and move into the mainstream. Are we waiting for President Obama for this? Do we need more Charity?
As you know there are currently many programs that allow consumers to pay over time and even pay on their utility bills. The biggest problem I am seeing is that we have lost credibility wrt savings estimates vs. savings reality. The reality is our consumer is saving much less than our predictions. All the incentives have been designed to encourage lying, and everyone quickly learns how to game the models to deliver the required lies. Programs requiring minimum SIR’s or ROI’s for rebates encourage lying, program managers crow about inflated savings, utilities take credit, politicians quote bogus numbers, and everyone takes a bow, but the nice lady only saved 20% of what she was told. Our customer does not believe us, for good reason. Let’s remove the incentives to lie and restore credibility. If I can count on your predictions I am much more likely to invest in your solutions.
We would all like to see the energy savings business become more mainstream, but currently we have this lying problem. Lets create a way to make incentives for truth in savings rather than lying. If every Auditor, Contactor, Utility, Program, and Lending Agent involved was given a BPI, BullSht to Performance Index,
BPI = Actual Savings/Predicted Savings
we could restore some credibility and create incentives for truth. Contractors could display and promote their index and customers could compare. I think this would help with our confidence problem and move things forward.
pj
PJ raises some valid concerns
PJ raises some valid concerns.
If the auditor is playing games with the numbers to get the savings where it was wanted – then the auditor is at fault.
The program should have better QA and QC.
If the general public doesn’t believe in the savings because auditors fudge the numbers, then those auditors that don’t fudge the numbers need to stand up and yell.
Good reason for RESNET to require the disclosure of interests. Good reason for any audit to provide one.
Better reason for the audit to be financially disconnected from the improvements.
It is also about follow up by the auditor. Keep in touch with your completed and verified projects. Get the Energy Data a year later and compare. Get the improved comfort feedback during the first few months. Nice to save money, but people want comfort.
I’m guessing that he focused
I’m guessing that he focused primarily on manufacturing efficiency just because so much of the speech was focused on american industry, no? I do wish there had been more about noncommercial efficiency, but I think the above snippet was just part of the larger theme, and they tied efficiency into it that way.
I was likewise disappointed
I was likewise disappointed by President Obama’s glossing over of energy efficiency, and no real mention of conservation. On the other hand, what did we get from Mitch Daniel’s response? Why, the government-dictating-what-sort-of-light-bulb-you-should-burn-in-your-home meme (yet again!).
IMHO, neither side has the political will or wherewithal to effectively solve these issues. It’s only going to happen (if it ever does) by strong grass roots movements to get people better educated on these issues and convinced to do the right thing to save and conserve. I don’t believe you can really rely on government to ensure the public does right by energy efficiency.
I’m afraid that we all need
I’m afraid that we all need to reconcile ourselves to a reality of low natural gas prices.
My dream is to see our industry succeed based on the merits of our work and the positive results that clients derive from our efforts. This is inherently a long and arduous process that doesn’t necessarily have a “killer app” end game. That is, it’s building solid companies that deliver great customer service and thus value independent of mandates, rebates, tax credits, etc. Again, I said it’s a dream and not reality.
People are not rational consumers. People have cell phone plans and no health insurance. That’s not rational. People buy bad mpg vehicles, knowing full well they’ll be pained by the bill to fuel them.
The SOTU speech is political theater. Truth be told, I rarely watch them, though I did happen to watch this one. Why didn’t the Prez talk about buildings? For the same reasons that it’s difficult to get people to act rationally.
Last night as I listened to
Last night as I listened to the Prez’s brief remarks on improving energy efficiency I, too, was very disappointed that he did not address the substantial national savings possible by improving the energy efficiency of the 90% or more of residential housing that could benefit from upgrading. He seems to be trying very hard to appeal to the “middle class” voter and this was huge lost opportunity, both politically and nationally.
I work with homeowners as an totally independent Consultant. The question I get asked very often is “I really want to do what you recommend, but is there some way I can pay for this over time?” I tell them about EIMs and EEMs, but many times these simply aren’t appropriate, nor are they readily available if appropriate. I’ve talked with loan officers at a couple banks who don’t even know about them!
Yes, there are some local programs available throughout the country, but they are simply not as widespread as they could be. Paying for these energy efficiency improvements should be no more difficult than financing the everyday purchases of major appliances, automobiles, etc. It is likely that until there is some major leadership in this direction from the top – either statewide or national, or both – it is going to be a tough slog for the both our industry and the average homeowner.
Yes, there is a problem with over- selling savings as well as the way to achieve those savings. But, with those selling products or services to homeowners, this sort of thing has always been so. While not universally so, most of the time if someone who sells a product or service in asked to do an evaluation for the need for that product or service, the need will be found. I find pj’s remarks, as usual, overly pessimistic, but in this matter I do agree with him.
I think we all need to apply pressure to our representatives, both in-state and national, emphasizing the benefits to them if they get behind a program(s) that provide a very positive benefit, at no or minimal cost to the government, to not only the vast majority of their constituents, but to the national economy as well.
All great points. One more
All great points. One more think to consider. A lot of Americans live paycheck to paycheck. Most just don’t have the money to improve there homes. There just worried about surviving.
The market for energy effiency is really for the folks with higher incomes who are environmentally conscience and have the money to pay for it.
I agree with your sentiments.
I agree with your sentiments. We need to start treating energy efficiency as if it’s a fuel. It’s our cheapest, most readily available fuel & needs no additional infrastructure.
PJ while this “BPI”
PJ while this “BPI” issue is big in the Resi market, it really isn’t to much of one in the commercial & industrial arena.
The biggest issue in this market is there limiting themselves mainly to items that will give them payback in 2 years or less and rarely consider longer term items even when doing refurbs unless it is tied into LEED or a similar system.
Hi Allison,
Hi Allison,
“Does he have a plan to build on all the weatherization training that came out of ARRA, the Stimulus Act?”
Fantastic question which, unfortunately, I think we already know the answer. Speaking from my own professional experience, my colleagues and I trained hundreds of crew members and auditors over the past four years (many who are possibly now gone or will be soon) on how to use infrared for weatherization. Not to mention all of those infrared cameras that were purchased with ARRA money which soon will be sitting idle on equipment shelves at agencies across the country (or perhaps found on eBay or Craigslist?).
I think of all that money that was allocated to buy equipment and train personnel but was devoid of any sustainable long-term plan. Certainly a lot of good was done, but, okay, what’s next? Such a waste of a trained and equipped workforce.
As you suggested, “make it easy for people to pay for energy improvements”…completely agree. That’s just one idea that could help provide a longer term solution than simply throwing a whole bunch of money at a temporary program which will soon be a shell of its former self.
A couple of ways i find to
A couple of ways i find to get homeowners interested is selling comfort and practical energy efficiency. Here in Chicago most houses that have a second floor have poor airflow and insulation. By focusing on making the living space more comfortable people are more interested because there is a tangible outcome. Also i encourage them to do things piecemeal,this way the cost can be gradual. You don’t have to shell out alot of money in one big lump sum.