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CFA to California Energy Commission: The Keys To Consumer-Friendly, Decarbonization are Renewables, Efficiency, & Smart Grid Management

Results: Least Cost; Low Carbon; Job Creation; Improved Public Health & Safety; Economic Growth; Climate Change Mitigation - CFA Explains Why Public Policy Boost is Critical

 |  Press Release

Washington, D.C. — In a presentation on Consumers and Decarbonization at the California Energy Commission’s workshop,[1] Dr. Mark Cooper, Director of Research at the Consumer Federation of America (CFA), explained why consumers benefit from and support the decarbonization of the economy, especially in the electricity sector.

“The technological revolution of the past quarter century has dramatically lowered the cost of four important resources that constitute a 21st century electricity system,” Cooper noted. “There are: two supply-side options, onshore wind and utility photovoltaics (PV), and two demand-side approaches, efficiency and intelligent management of the grid to match supply and demand by utilizing digital communications, computational capacity and advanced control technologies,” he specified.

The presentation, entitled Building a Least-Cost, Low-Carbon, Electricity System with Wind, Solar, Efficiency, & Intelligent Grid Management: Electricity is the Core Infrastructure of the 21st Century, Digital Economy, is based on three research reports published by CFA.[2] In addition to attendees to the workshop, CFA shared its view on the consumer benefits of decarbonization in a letter to key policy makers in the Administration and Congress.

The presentation identifies six advantages of the emerging electricity system:

  1. Least Cost
  2. Low Carbon
  3. Large Macroeconomic Expansion
  4. Millions of New Jobs, Dispersed Across the Nation
  5. Improvement of Public Health and Safety
  6. Greatest Decarbonization at the Least Cost

“Even if the public did not care one bit about climate change, the environment and decarbonization,” Cooper pointed out, “they should be fully supportive of the transformation of the electricity system and the technologies.  Moreover, according to recent public opinion polls, it turns out that they do care.[3]  They are quite concerned about the environment and climate change, perhaps because of the negative effects that have become obvious.  They strongly prefer efficiency and renewables as the solution over central station approaches.”

With all this going for the transformation of the electricity sector, the presentation asks and answers the question, “why it needs a boost from public policy.”

  1. The need for speed is urgent.  Alternatives will not be deployed fast enough on their own without a significant policy push.
  2. The rules that have been put in place over the past century favor central station approaches that are hostile to the alternative.
  3. The powerful interests that have grown up around the existing, 20th century approach, will resist and frustrate change that threatens to reduce their power.

The presentation also explains why the focus on buildings is so important.

  1. Buildings represent about two-fifths (40%) of the primary energy consumption in the U.S.
  2. Best practices could cut that in half and aggressive implementation of efficiency measures could increase the energy savings by another 10%.
  3. Efficiency is among the lowest cost approaches to decarbonization.
  4. Building efficiency relieves the pressure on supply-side sources.
  5. Commercial and industrial buildings are particularly important for the dynamic matching of supply and demand.
  6. Rooftop generation provides “behind-the-meter” benefits that are increasingly being recognized in utility regulation which must be carefully developed over the course of the next decade.

Yet, energy efficiency in buildings confronts numerous market barriers and imperfections that inhibit investment, research and deployment of efficiency enhancing technology – 30 specific imperfections were identified by McKinsey and Company over a decade ago.

CFA’s analyses over the past decade have shown that a “command-but-not-control” approach to implementing policies is best to accelerate efficiency and decarbonization.  This is a “pragmatic, progressive capitalist approach,” that relies on markets and innovation by adhering to six principles.  It must be:

  1. long-term,
  2. technology-neutral,
  3. product neutral,
  4. responsive to industry needs,
  5. responsive to consumer needs, and
  6. procompetitive.

“The result is to give consumers the maximum range of choices that comply with the standards,” Cooper concluded, “while capitalists are driven by consumer sovereignty to do what they do best, minimize cost.”

The presentation slides are available here.

[1] California Energy Commission, IEPR Workshop on Consumers, Financing, and Workforce, July 12.

[2] 2021: https://consumerfed.org/wp-content/uploads/2021/04/Building-a-21st-Century-Electricity-Sector-Report.pdf;    2017: https://consumerfed.org/wp-content/uploads/2017/12/two-trillion-dollar-mistake.pdf                                           2013: https://consumerfed.org/pdfs/Energy_Efficiency_Performance_Standards_Report.pdf

[3] Source: Gallop, Historical Trends: Energy. https://news.gallup.com/poll/2167/energy.aspx

Contact: Mark Cooper, 301-384-2204