By: Andy Ray
In early August, the U.S. Green Building Council released a statement applauding the Obama administration for issuing the final rule of the Clean Power Plan that, for the first time, will place nationwide limits on emissions of carbon dioxide from power generation. This historic plan aims to reduce domestic carbon emissions 32% by 2030 and is centered around three “building blocks”: 1) improve efficiency of current power plants; 2) increase dispatch of natural gas combined cycle plants; and 3) significantly expand the amount of electricity generated from clean energy sources. Each of the three “building blocks” was assigned an applicable emission reduction value based on state and regional characteristics to establish state-specific emission limits for the electric generation sector. Collectively, these three blocks were determined to be the best system of capping carbon emissions generated by the electricity sector.
Careful observers within the green building industry will note that demand-side energy efficiency measures, an important and low-cost option to reduce emissions, were used as the fourth building block in the draft plan, but were conspicuously removed from the administration’s final rule. In the CPP draft version, the formula used to establish state-level emissions limits included an annual emissions reduction of 1.5% annually from energy efficiency measures. But following extensive comments from outside parties indicating that the energy efficiency block could become a legal vulnerability, the EPA selected not to incorporate it in the final rule.
So will eliminating the energy efficiency block affect sustainable building design and construction? It is easy to see why the initial reaction of many would be to assume that its elimination as a key block would negatively influence the green building industry and decrease the overall efficacy of the CPP—but numerous indications signal that this is unlikely to be the case.
The removal of the energy efficiency block by the EPA will simply alter the methodology used to determine the yearly emissions cap for the power sector. Even without the fourth energy efficiency block in place, EPA’s overall emissions reduction target in the final rule is actually two percent higher than what was announced in the draft phase. Secondly, despite its exclusion as the plan’s fourth building block, demand-side energy efficiency measures will continue to be allowed as a tool aiding states in achieving their prescribed emission reduction goals.
Energy efficiency mechanisms are widely considered the lowest-cost option for achieving emissions reduction targets, and in some modeling scenarios, they can facilitate meaningful savings for consumers. States will be able use various options that help reduce electricity consumption including: demand-response programs, energy-efficient construction and design, incentivizing high-efficiency lighting and appliances, and third party energy monitoring. Furthermore, within the pages of the administration’s plan, is the Clean Energy Incentive Program (CEIP), an optional provision that incentivizes early investment in energy efficiency and renewable energy projects located in low-income communities. States participating in this program will receive double Emissions Rate Credits that can be used toward compliance in subsequent years. It is probable that the CEIP will be attractive for states, likely spurring special financing mechanisms that encourage renewable energy systems and green building developments; such as schools, offices, and hospitals, in regions that are sorely missing green infrastructure.
Already, many states have policies that promote energy efficiency; and those with the most stringent and comprehensive measures – such as California and Oregon – will be distinctively ahead of the curve in meeting their carbon emission targets. The Clean Power Plan will transform the way America looks at energy production and indubitably usher in the next era of energy efficiency and renewable energy development. In the coming years, the green building industry is positioned to become a major beneficiary of the CPP as a growing number of states and communities adopt and expand energy efficiency and green building practices. But perhaps most importantly, is that just months before the United Nations Climate Change Conference, the United States has announced that we have finally recognized the need to become an international leader in developing solutions to reduce global carbon emissions.