How to get more from state energy efficiency programs

The best energy efficiency programs reduce energy use, protect health, reduce climate pollution, improve safety and comfort, and save households money. And efficiency efforts of various kinds have made huge contributions to precisely these goals: for example, on its own the voluntary federal ENERGY STAR program has saved over 5,000 terawatt-hours of electricity (more than the entire U.S. generated in all of 2022), 4 billion metric tons of greenhouse gas emissions, and over $500 billion in customer energy costs since 1992. With new evidence emerging seemingly every day about the dangers of climate change, and after a year of high energy prices, the benefits of energy efficiency are more important than ever. 

But as America’s energy needs and priorities evolve, energy efficiency programs need to evolve as well. We recently wrote a report about improving the energy efficiency programs in Maryland, which are called “EmPOWER.” EmPOWER is, in many ways, a success story: Maryland ranked fourth according to the American Council for an Energy-Efficient Economy for its 2021 savings of electricity as a percentage of total electricity sales, and has been saving more and more energy over the past few years. And yet, in writing our report, we found that Maryland had a lot of room for improvement in two key areas that have been challenges for energy efficiency programs around the country: getting more climate bang for the energy efficiency buck, and delivering energy efficiency savings in limited-income households.

The problems we identified, and the solutions we recommended, aren’t just applicable to Maryland. They are potentially helpful for states around the country looking to get even more benefits from programs that already save money and energy.

Making energy efficiency programs more climate-friendly

Maryland’s energy efficiency programs include goals for improving the efficiency of methane (“natural”) gas use, and offer incentives to homeowners who want to improve the efficiency of gas-burning equipment like home furnaces. That sounds great, until you take a step back and recall all the problems caused by using methane gas, whether it is used efficiently or not. Burning methane gas in buildings poses threats to health, safety and the environment. To protect public health and the climate, we need to quit using methane gas entirely, not just use it more efficiently. 

Unfortunately, Maryland’s efficiency programs don’t prioritize (or, in the case of limited-income households, even allow the use of incentives for) switching from gas or other fossil fuel appliances (like stoves, water heaters, dryers and furnaces) to electric ones, which reduce energy use, air pollution and climate pollution.

Our recommendations for Maryland included:

• Ending efficiency incentives for all fossil fuel systems and appliances.
• Incentivizing and encouraging electrification, though only with efficient types of equipment (such as induction stoves or heat pumps) rather than inefficient electric resistance equipment.

Increase investment in efficiency for limited-income households

In Maryland, we found that energy efficiency improvements were not being adequately provided to households with the fewest resources. Maryland’s limited-income energy efficiency programs aren’t meeting their targets for the number of households they serve. At the historic rate of implementation, EmPOWER programs designed for limited-income households would take over 130 years to serve all qualifying Marylanders. And limited-income households receive less energy efficiency spending on average, and achieve less energy savings on average, than Maryland households as a whole. The result is that energy, emissions and cost savings are being left on the table, and limited-income Marylanders are left paying more than they might otherwise have to (or than they can afford) to keep the lights on and their homes warm.

There are many solutions to provide more of the benefits of energy efficiency to limited-income households that Maryland (and other states) could implement, including:

• Setting strong goals for the limited-income energy efficiency programs, such as a required level of energy savings for limited-income programs, a required level of spending for the programs, and/or a required number of households to help per year.
• Publicizing the programs on every utility bill; having program administrators work with community groups and leaders to spread awareness of the programs; making the programs more visible on utility websites; and making it as easy as possible to learn more about and apply for the programs over the phone, in person and online.
• Automatically alerting energy efficiency program applicants, and other relevant agencies, if an applicant is eligible for other energy efficiency or home improvement programs. This includes funding from other state programs and federal funding that can assist with efficiency upgrades, weatherization, and health and safety improvements. When the state-administered federal incentives for energy efficiency and electrification from the 2022 Inflation Reduction Act become available, they should be integrated with services provided through existing efficiency programs to increase benefits to participants.

The best limited-income efficiency programs around the country coordinate with other housing and health programs to provide comprehensive services (including health and safety improvements, weatherization, appliance replacement, and more) to as many households as possible, and those should be the goals for all such programs.

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Energy efficiency programs have already contributed huge benefits to health, comfort, safety and a clean environment. With good planning and implementation they can do even more to improve people’s lives and protect the climate.