California’s AB 758: Pioneering Efficiency Retrofits
Faced with an ever-growing demand for energy, California had three options: it could do nothing, and face the same rolling “brown outs” that plagued the state in the past; it could build a series of expensive new power plants, and risk tying up scarce resources in red tape for years; or it could do something radical in its simplicity—use energy more efficiently.
Given these choices, in 2009 California dedicated itself to promoting energy efficiency initiatives and implemented the first statewide program in the country to increase the energy efficiency of existing buildings with Assembly Bill 758.
Though often overlooked in favor of more exotic energy solutions like wind and solar, with an average cost of $0.025 per kilowatt-hour, the cost of energy saved from efficiency programs amounts to a price of energy that is one third of the price of electricity from renewable or conventional sources.
Relatively small investments in energy efficiency are “low-hanging fruit” that address supply shortages with demand side interventions. In California, where the building stock is the second largest contributor to greenhouse gas emissions, the combined benefits of reduced energy demand and emissions, energy efficiency innovations made sense.
While energy efficiency initiatives for buildings don’t always steal the media spotlight, they aren’t exactly unheard of either. Numerous voluntary efficiency codes and ratings like Leadership in Energy and Environmental Design (LEED) and the International Energy Construction Code offer guidelines for maximizing energy efficiency in buildings. Additionally, California’s own Title 24 Part 6 Building Efficiency Standards program has helped the state to reduce about six medium sized power plants worth of demand since 1978.
The problem was that energy efficiency initiatives for buildings have traditionally been directed at new construction. According to the California Energy Commission, “55 percent of California’s 13 million residential units and just over 40 percent of California’s nonresidential buildings [were] built prior to any standards.”
California’s policy makers realized that this old building stock presented an enormous untapped potential for energy efficiency gains, but market forces have have traditionally stood in the way of a large-scale retrofitting program. For example, lack of low cost financing for homeowners, lack of coordination between existing energy efficiency initiatives, and lack of a standard home energy rating have made scaling up programs difficult.
California’s AB 758 addresses these market barriers through a three-phase process. In the first phase, scheduled to take place from the adoption of the bill until the year 2012, the California Energy Commission will develop infrastructure and an implementation plan in coordination with the California Public Utilities Commission. The Commissions will work together to leverage a combination of public and private funds to run pilot programs and train a clean energy work force.
The second phase, from 2012-2014, will center on market development and partnerships, especially the creation of energy efficiency financing products, as well as building ratings and regulations. Finally, the third phase will create statewide ratings and upgrades requirements from 2014 and beyond.
The California Energy Commission estimates that applying cost-effective energy efficiency measures to existing buildings would save 9% of statewide electricity consumption, 11% of peak demand and 5% of natural gas consumption, for a total of $4.5 billion savings in energy costs. As AB 758’s mandate is put into action, every state in the country should be paying close attention. Replicating AB 758 around the country could be just the jump-start that energy efficiency initiatives need to make a real difference for our environment and our wallets.