The energy outlook in the United States looks vastly different than it did just a few years ago. An ageing energy infrastructure facing imminent plant retirements, new fuel resource availability, and a host of energy and environmental regulations at the federal level have greatly impacted the short-  and long- term direction of U.S. energy. The Obama Administration has experienced some energy-related successes on a national level, but making any significant progress will continue to be a political challenge in spite of the Administration’s stated goals to reduce wasted energy. The established trend of policy and technology innovations in the energy and environmental sectors is driven more often by states and localities in the U.S., with the federal government following after a time.

Energy efficiency standards

Ohio is frequently watched as a bellwether state on a variety of issues including energy, U.S. politics and manufacturing. Ohio’s ability to be an energy powerhouse is growing, especially as it ventures into hydraulic fracturing. In 2010, Ohio was ranked the fourth largest CO2 emitting state in the U.S.
While Ohio’s natural resources have historically supported the predominance of coal in the provision of the state’s electricity, since 2008 electric utilities serving the state have been subject to Ohio’s landmark alternative energy portfolio standard, S.B. 221. (Ohio is in good company with the 20 states that have an energy efficiency resource standard and 29 states that have a renewable portfolio standard (RPS).) Ohio’s momentum on renewable and advanced energy technologies has benefitted from S.B. 221, market penetration has occurred, and many instate manufacturers have seen increased vendor sales nationwide.

Federal waxing and waning

In 2012, the federal “American Energy Manufacturing Technical Corrections Act” (H.R. 6582) became law, covering a range of energy efficiency measures, such as standards for certain technologies and equipment, R&D and best practices for industry. Yet it is not the broad policy some hoped would play out in the “Energy Savings and Industrial Competitiveness Act” (currently S. 1000, commonly referred to as “Shaheen-Portman”) that has been pending in Congress for a year. The bill would provide a mix of building codes, financing, voluntary labelling, technical assistance and rebates to promote energy efficiency across the U.S. economy. That may be too broad a policy for this year—piecemeal efforts on codes and standards, consumer protections or an emphasis on regional energy strategies are likely more palatable at both the state and federal levels. A focus on keeping existing energy policies intact supports this, especially in view of the funding cuts of sequestration and the distraction of debt ceiling increases in 2013.

The global impact

What does energy efficiency in Ohio and the U.S. mean then for the international context? Key variables to watch are:

1. The changing dynamic of U.S. energy imports and exports to Europe and Asia. This is driven by increasing volumes of shale oil, natural gas and liquids as the U.S. becomes a net exporter of energy after 2020.

2. U.S. climate change commitments and its larger energy strategy (e.g., Keystone XL Pipeline). The Administration’s new climate policy announced in June 2013 will alter fuel use, change power generation, and increase greenhouse gas limits on mobile sources.

3. The near-term prospects for smart grid and distributed generation to manage an ageing T&D infrastructure. This opens more value to combined heat and power, cogeneration, demand management and micro-grid strategies in the U.S.

4. The future of feed-in tariffs (FITs) in Europe influencing U.S. policy options. This may have an effect in some states, yet most of the U.S. favours other regulatory and tax incentives in its markets to FITs.

5. Policy and market signals influencing information transparency and access to capital and financing. Convenient and less complex access to cheaper capital will be critical to U.S. success.

(Triple) bottom line

Energy efficiency must play a bigger role in the near future to mitigate the tens of trillions of dollars that will be required to 1) reduce CO2 and other air emissions; 2) manage generation and grid assets to meet skyrocketing demand; and, 3) minimize other air and water resource challenges while at the same time addressing quality of life, economic growth and public health.

In the meantime, keep an eye on Ohio, a bellwether for energy efficiency efforts domestically and abroad. Advancing policies that send clear long-term market signals, reduce volatility and costs, and lead to long-term global prosperity will provide the clear energy strategy that U.S. manufacturers and industry need to succeed in this transformative period.

To read more, please visit CE3’s corresponding white paper, “Energy Efficiency in Ohio: The Deal of the Century”

Michael Zimmer is Executive in Residence at Consortium for Energy, Economics & the Environment at the Ohio University Voinovich School of Leadership and Public Affairs and the Russ College of Engineering

Elissa Welch is Project Manager at Consortium for Energy, Economics & the Environment at the Ohio University Voinovich School of Leadership and Public Affairs and the Russ College of Engineering