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Delivering On Our Promise Sustainable Solutions to Achieve Our Climate and Economic Goals

Delivering On Our Promise Sustainable Solutions to Achieve Our Climate and Economic Goals. Agenda. Rethinking Our Approach Strategies for Carbon Reduction Disconnect Between Strategy and Policy Delivering Market Transformation From Theory to Practice Pathways to Success.

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Delivering On Our Promise Sustainable Solutions to Achieve Our Climate and Economic Goals

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  1. Delivering On Our PromiseSustainable Solutions to Achieve OurClimate and Economic Goals

  2. Agenda • Rethinking Our Approach • Strategies for Carbon Reduction • Disconnect Between Strategy and Policy • Delivering Market Transformation • From Theory to Practice • Pathways to Success

  3. Efficiency First, Washington DC • Representing America’s Home Performance Workforce • Non-Profit Trade Association • 400 Member Companies • Active at National and State Level • Supporting a performance based market for residential energy efficiency retrofitting. For More Information: www.efficiencyfirst.org

  4. Carbon Saved: The Metric that Matters • CARBON is the metric. • Focus on PERFORMANCE and measurable results. • The MARKET will innovate and deliver.

  5. What is America’s Largest Source of Carbon Emissions? Carbon Dioxide Emissions From Fossil Fuel Combustion Residential Buildings Industrial 21% Buildings Passenger Cars 11.5% Transportation • http://www.pewcenteronthestates.org/uploadedFiles/Climate%20Change%20101,%20Technological%20Solutions.pdf • http://www.pewclimate.org/docUploads/ustransp.pdf

  6. What Does Achieving our Goals Look Like? Growth Curve to Retrofit 128MM Homes By 2030 Retrofit 128MM Homes By 2030 250,000 Homes / yr. 10,000,000 Homes / yr. Home Performance – 5M Weatherization (WAP) – 3M Multifamily – 1.5M http://www.barackobama.com/pdf/factsheet_energy_speech_080308.pdf

  7. 2030 Goal:25% Reduction in Residential Energy • CLIMATE: • Equivalent to taking ½ of all passenger cars off the road • JOBS: • 1.25 million direct contracting jobs • ENERGY: • Save as much energy as US imports yearly from Saudi Arabia • COMMUNITY: • Keep energy dollars local and create an annuity

  8. State of the Contracting Industry • 146,600 jobs have been lost in the residential building construction industry between April 2008 and 2009. • Housing starts were down 12.8 percent last month from March [2009], to an annual pace of 458,000. “New home construction fell to its lowest pace on record in April” - New York Times, May 2009 http://www.businessexaminer.com/blog/8232nonresidential-construction-job-loss-slows/ http://www.nytimes.com/2009/05/20/business/economy/20econ.html?_r=1&scp=2&sq=housing%20starts&st=cse

  9. Home Performance Contracting A market-based* whole-house approach to retrofit existing homes for energy, health and comfort. • Sustainable: Jobs in Home Performance do not require endless subsidies. • Leveraged: Government subsidies stimulate private sector investment. • Market-Based: Leverage business as the engine to achieve rapid growth. *WAP or Low Income Weatherization serves the market up to 200% of poverty.

  10. Achieving Market-Based Success

  11. What Is Home Performance? • Audit • Solution • Retrofit • Commissioning • Quality Assurance

  12. Retrofitting Loading Order • Insulation • Air Sealing • Duct Sealing • Lighting • Appliances • Water Conservation • Plug Loads • Behavior • Heating • Air Conditioning • Ventilation • Water Heating • Solar PV • Solar Thermal • Wind • Water Catchment

  13. Section 1 Rethinking Our Approach

  14. Automobile Performance 1 ? Products 2 Performance 60 Miles Per Gallon

  15. Home Performance 1 ? Products 2 Home Energy Rating System Performance 85

  16. System Performance: Heating Building Load - Stop Energy Leaks - Improvement: 20% - 40% Equipment • - Efficiency / Size • - Improvement: 10% - 15% Behavior • - Set Your Stat • - Improvement: 5% - 10% Performance • - Efficiency • - Health • - Comfort Delivery • - Fix Leaky Ducts • - Improvement: 30% - 50% Whole House vs. Products Savings Whole House Solution: 30% - 50% (Ducts, Insulation, Behavior, 40K BTU 90% Furnace) High Efficiency Furnace: 10% - 15% (100K BTU 96% Furnace)

  17. 1990 Clean Air Act • Pre 1990, EPA required emission scrubbers on smoke stacks. • Clean Air Act (1990) sets emission performance standards and trading system. SO2 • Results: • Emissions reduction • Market innovation 1990

  18. Performance is Fiscal Responsibility “We should be getting the savings we’re paying for”

  19. Product Rebates Don’t Deliver • California’s Residential Energy Efficiency Portfolio • CFL subsidies account for > 80% of residential energy efficiency savings. • CFL subsidies will not be an allowable program after 2012. • 75MM rebated units, only 46MM verified installed. • Product Rebate Results: Screw-in CFLs Expected vs. Realized GWh Savings 46% Less Savings January 2006 – June 2008, California Public Utilities Commission

  20. Reduce Then Produce “What is all the fuss about retrofitting, why can’t we just put on solar panels?”

  21. “The Firepower of the Lowly Caulk Gun” Wall Street Journal Cost Per Ton of Carbon Abatement http://online.wsj.com/article/SB123629700922046051.html

  22. Cost Effective Hybrid Model The Moscone Center - San Francisco, CA Hybrid EE + RE Project • Lighting Retrofit • 40% Better Lighting Quality • Reduced Lighting Maintenance Costs • Improved Energy Management • Solar Electric • 675kW Solar System New Efficient T-5 Old Incandescent

  23. Moscone Center: Retrofit Summary Energy Reduction Savings / Yr Payback Period Cost Energy Efficiency Solar 6 Years 4,500,000 kWh $3.2 MM $540,000 825,000 kWh 42 Years $99,000 $4.2 MM Hybrid 12 Years $639,000 $7.4 MM 5,325,000 kWh • $639,000 Annual utility bill savings • $429,000 Annual debt service costs (20 year bond at 5.5%) • $210,000ANNUAL NET SAVINGS http://www.votesolar.org/moscone.html

  24. Reduce Then Produce http://globalghgcostcurve.bymckinsey.com/

  25. Technology Neutrality “Level the playing field and unleash the market.”

  26. Meet Our Homeowners City: Lafayette, CA Concerns: • High energy bills • Daughter has asthma • Drafty/cold in the winter Savings Health Comfort Climate

  27. Meet Their Home • Infiltration: 3405 CFM50 (.68 ACHnat) • Attic Insulation: R 6.4 Fiberglass Batt (low quality) • Wall Insulation: No Insulation • Floor Insulation: No Insulation • Duct Leakage: 25% • Age: 1958 • Size: 2,200 ft2 • Annual Electric: $1,115 • Annual Gas: $1,013 • Carbon Emissions: 8.6 Tons/Year 168

  28. Option 1: Efficiency Retrofit • Work Scope • Duct Sealing • Air Sealing • Attic Insulation • Wall Insulation • Lighting Retrofit • Energy Star Refrigerator • Energy Efficiency Retrofit • 25% Reduction in Electricity • 54% Reduction in Natural Gas • Improved Health and Comfort 40% Reduction in Energy Bills

  29. Option 2: Solar Electric • Work Scope • 3.5 kW Solar PV • Solar Electric System • 73% Reduction in Electricity • 0% Reduction in Natural Gas • No Health or Comfort Improvement • Peak Load Reduction 40% Reduction in Energy Bills

  30. What is the Real Cost? 3.5 kW Solar Electric Energy Efficiency Retrofit 60% Faster 60% Less Annual Savings: $825 $825 CO2 Reduction: 2.7 tons 3.6 tons Total Cost: $28,000 $10,800 Simple Payback: 33.9 yrs 13.6 yrs 33% More * Based on carbon abatement achieved over 20 years.

  31. A Ton of Carbon is a Ton of Carbon Solar Retrofit Total Cost: $28,000 $10,800 Cost to Client: $13,300 $10,168 Rebates / Incentives: $14,700 $632 Annual Savings: $825 $825 CO2 Reduction: 2.7 tons 3.4 tons *Rebate / Ton of C0 2 $246 $9 http://www.spur.org/publications/library/report/critical_cooling

  32. Why Do We Value Carbon Abatement fromRenewables More than Efficiency? It’s the METER that MATTERS!

  33. Section 2 Strategies for Carbon Reduction

  34. California Energy Commission (CEC):Loading Order Priority Priority for use of Public Good Charges Energy Efficiency High Demand Response Renewable Resources Distributed Generation Low http://www.energy.ca.gov/2005publications/CEC-400-2005-043/CEC-400-2005-043.PDF

  35. California Solar Initiative “By January 1, 2008, the commission… shall require reasonable and cost‐effective energy efficiency improvements in existing buildings as a condition of providing incentives for eligible solar energy systems” - CEC Guidelines for CA Solar Incentive Programs http://www.cleanenergystates.org/library/Reports/CEC-300-2007-012-CMF_Guidelines_CA_Solar_Incentive_Programs_Dec2007.pdf

  36. California AB32: Global Warming Solutions Act • Establish a statewide GHG emissions cap for 2020, based on 1990 emission levels. • Local governments: • 15% reductions in GHG by 2020. http://www.arb.ca.gov/cc/factsheets/ab32factsheet.pdf

  37. California Air Resource Board (CARB): AB32 Implementation Plan Increased Building Efficiency and Appliance Standard 26.4 Million Metric Tons 12X California Solar Initiative 2.1 Million Metric Tons http://www.arb.ca.gov/cc/cc.htm

  38. California Public Utility Commission: Long Term EE Strategic Plan • CPUC Existing Home Retrofitting Goal • 40% energy reduction in existing homes energy use by 2020 • 1MM Homes Per Year • 125K Retrofitting Jobs • $13+ Billion / Year Source: California Public Utilities Commission http://docs.cpuc.ca.gov/efile/RULINGS/85173.htm

  39. Section 3 Disconnect Between Strategy and Policy

  40. Plans vs. Reality • Strategies get it right: • Set the end goal • Focus on performance not product • Policies get it wrong: • Focus on product incentives • Misaligned incentives when compared to results

  41. Stimulus Tax Credit Average Credit (Dollars) 30% Capped @ $1500 (No Labor Included) 30% Capped @ $1500 (Labor Included) 30% Uncapped (Labor Included) http://www.sustainablespaces.com/stimulus.pdf

  42. California State Rebates Average Rebate (Dollars) $0.15 / sqft $300 / unit $1.40 / W http://dsireusa.org/incentives/index.cfm?re=1&ee=1&spv=0&st=0&srp=1&state=CA

  43. Cost-Effectiveness Annual Rate of Return (%)

  44. Local Jobs Labor as % of Project Cost

  45. Misaligned Priorities? Incentives Effectiveness

  46. One Market ”Incentives favoring renewables disincentivizes energy efficiency.”

  47. Section 4 Delivering Market Transformation

  48. What it Takes to Scale Home Performance • Increase Consumer Demand • Financing • Incentives • Catalyze Market Transformation • Performance • Standards

  49. Achieving Market Transformation Financing Standards Incentives

  50. Incentives Financing Standards Performance-Based Incentives • Incentivize Results • Reward performance not products • Allow the market to make choices • Technology Neutrality • Stop picking winners • Inspire innovation

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