What’s Driving Energy Efficiency in 2010?

Thomas Content

First, a disclaimer

How We Got Here…1990s: The Big Energy Drivers

• 1990s: It’s all about CHOICE:“Let’s deregulate.”

Utilities scaled back investment in energy efficiency.

• 1990s: It’s all about RELIABILITY:

“Let’s keep the lights on.” Projects launched to build more power plants and power lines.

FOCUS ON EXPANDING SUPPLY,not CUTTING DEMAND

Efficiency funds help balance Wis. budget

How We Got Here…2000s: The Big Energy Drivers

• 2000-2006: It’s all about PRICE:

-- Natural gas prices soar -- Oil prices top $100/B (vs. $14 in ’98) -- Electric rates surge

How We Got Here…2000s: The Big Energy Drivers

• More and More, the mantra became…

It’s All About

CARBON

Coal powers our economy,creates carbon challenge

McKinsey/Conference Board Report

Reducing U.S. Greenhouse Gas Emissions:How Much At What Cost?

Key findings:

40% of strategies that reduce emissions actually result in cost savings, not higher costs

“In simple terms, the savings outweigh the costs and significant GHG abatement can be achieved.”

The report:www.mckinsey.com/clientservice/ccsi/greenhousegas.aspCutting-Up-The-Carbon Pie into Wedges: www.princeton.edu/wedges

Buildings, Energy and Carbon

Source: Needham & Co., IBM

How We Got Here…2000s: The Big Energy Drivers

Times change fast: Enter….

THE GREAT RECESSION

Enter the Stimulus/ ARRA

2009: Stimulus Stalls Efficiency?

• Businesses apply for funds, delay purchases while finding out if they qualify

• Example: JCI -- Expecting a multi-billion-dollar pie to be divvied up among it and its competitors

“Show me the money”

All of 2009: $109 million

• JCI, continued

But now the stimulus dollars are coming, First 1/2 2010: $321 million

vs. $109M in 2009

Also Stalling Efficiency

Efficiency Hurdles Remain:

-- ROI: Payback Periods Too Long

-- Banks Aren’t Lending

-- Other Priorities For Investment

-- Political Gridlock

The Political Climate Was Bipartisan

November 2007: Midwestern Governors sign energy and climate accords

December 2007: Congress passes first increase in fuel economy standards for vehicles in decades

December 2007:

Bush administration announces pledge to support post-Kyoto global treaty to limit emissions

Energy/GHG Legislation: From Bipartisan to Partisan

2008: McCain and Obama supported cap-and-trade,

slashing GHG emissions by +70% by 2050

2006: Wis. Legislature nearly unanimous in passing 10% renewable mandate by 2015 – and preventing budget diversions of energy efficiency $$$$

2010: Energy and Climate are now Very Partisan

House passes cap-and-trade (barely). Senate No.State Legislature Adjourns without a Vote on Renewable Energy/Energy Efficiency bill (Clean Energy Jobs Act)

Gridlock hits business

2010 and Beyond: What’s Driving Energy Efficiency

• Energy Prices: A return to $100 oil as China’s Economy Rebounds and amid long-term concerns about global oil supplies

• Market Demand: Customers Want to Buy Green, Employees Want to Work for Green Firms

• OEM Sustainability Mandates Hitting Suppliers (Wal-Mart, Kohl’s re carbon/energy/water

“Follow the Money”

-- $55 million State Energy Program is now the Green to Gold Fund (low interest loans for energy efficiency/renewables etc)

-- $15 million in industrial energy efficiency projects (9 firms get DOE money with pledge to their industrial energy intensity by 25% over the next decade)

-- $20 million for Milwaukee/Madison/Racine for PACE program… but apparently that’s now in limbo (JS story soon…)

Preparing for Changes Ahead

• “Let me tell you, this train is coming. It’s not just regulators any more. Your customers are going to be asking you these tough questions.” Greg Bell, Partnerships for Sustainability.

• Targeting suppliers to Wal-Mart, launched in Waukesha County, now expanding to region

• Eligible: Companies with up to 300 employees• Conference/rebranding: Oct. 20 in Waukesha• Plan to launch online sustainability tool• Details: www.partnershipsforsustainability.org

Everyone wants to save money, many want to be greener

“You make probably hundreds of energy decisions every day that you don’t know you’re making. You haven’t thought of them in that way, but they are. If we start thinking of them as energy decisions, we might change how we make them."

Kitty Welch,co-founder The Atkinson

Diet

Some links

• Plugged In Energy & Clean-Tech blog:• www.jsonline.com/blogs/pluggedin

Our series on Global Warming and Wisconsin• www.jsonline.com/globalwarming

• Our Green Guide, tips for businesses and homeowners• www.jsonline.com/yourgreenguide

• Questions? Story ideas? Suggestions:– tcontent@journalsentinel.com– (414) 224-2098