Energy efficiency is the forgotten fuel in Texas
During the historic winter storm that nearly toppled the Texas grid, Texans were asked to conserve energy in the hope of avoiding blackouts. Quickly it became apparent that they were being asked to do the impossible. Indoor temperatures rapidly dropped into the 30s and 40s as outages hit, and during the periods in which heat was on, temperatures barely climbed into the 50s in many homes. Calls for residents to “conserve energy” proved to be paradoxical considering that many of the buildings lack sufficient insulation and other necessary features to do so.
Imagine if Texas homes and buildings were more energy efficient. Their demand on the system could have been reduced up to 50 percent, resulting in less severe outages. More weather-proof homes would be warmer during outages and there would have been fewer burst pipes and the resultant water shortages and contamination. With any luck a winter storm of this scale won’t be repeated in our lifetimes, but with climate change the risk of extreme weather is ever-present, so we must seize every opportunity to reduce our energy consumption.
Energy efficiency upgrades to homes and buildings reduce consumption by as much as one-third to one-half. Energy efficiency creates resilience while reducing greenhouse gas emissions, which is why it needs to be a public policy priority. Energy efficiency projects enhance home and building value, create decent jobs and help businesses reduce utility costs. That makes them more competitive, which is why countries from China to Mexico, India, Brazil and South Africa prioritize energy efficiency.
Residential and commercial buildings account for 40 percent of US energy demand — more than industries (32 percent) or transportation (28 percent), and for 74 percent of all electricity use. Energy gained through energy efficiency is also significantly cheaper than new power generation from any fuel source. Based on available technologies, energy efficiency could contribute 57 percent of CO2 reductions by 2030 in the U.S.
Texas leads among U.S. states in energy consumption, and is the fifth largest energy consumer in the world. While Texas introduced energy efficiency requirements in its codes during the past decade, those codes apply only to new buildings. This is true for the U.S. more generally; according to the Federation of American Scientists, current and proposed policies focus primarily on setting minimum standards for new homes through building codes.
As we emerge from the current crisis, Texas can look globally at more than 20 years of international experience for guidance in energy efficiency. For example, starting in 1998, I led a first-of-its-kind energy efficiency and renewable energy program at the International Finance Corporation, the private sector arm of the World Bank. The program initially focused on retrofitting buildings in Eastern Europe built during the Soviet era without sufficient insulation. As too often is the case, increasing energy prices represented a disproportionate burden on low- and middle-income families and small businesses, providing the impetus for IFC’s program. Implemented energy-efficiency measures not only reduced utility bills significantly, they also improved the comfort levels and square footage price of retrofitted homes.
Additionally, small businesses reduced their energy bills and improved their competitiveness. New jobs were created by the energy and other service companies implementing the energy efficiency measures. And banks financed these projects with the “invisible” collateral of savings rather than hard collateral, without a single default in the $330 million portfolio of close to one thousand projects financed during the course of the program.
At the Hunt Institute for Engineering & Humanity, we build on such international experiences and best practices, leverage technologies and convene stakeholders to foster such systemic sustainable solutions that improve both resilience and livelihoods. In our work we have found that there is great potential for economically viable energy-efficiency improvements in Texas. Although Texas currently ranks 29th among states in energy efficiency, it leads in the U.S. in potential for economical energy-efficiency improvements and residential energy-efficiency improvements.
With its “can-do” spirit, Texas can harness the momentum of the 2021 freeze and transform the markets for energy efficiency. Experience suggests that energy efficiency can be a driver of resilience and economic progress, but it takes a multifaceted, comprehensive approach supported by smart policies — policies that include both sticks and carrots — that go beyond building codes to empower stakeholders through information, training and education as well as incentivizing energy-efficiency improvements.
When done right, the rewards of energy-efficiency measures are significant, including reduced household utility bills, improved health and comfort, reduced energy poverty, more competitive small businesses, up to 30 decent jobs created for every million dollars invested, reduced greenhouse gas emissions and improved resilience in the face of climate events and price shocks. Texas has many of the puzzle pieces to lead the way so long as stakeholders can join forces towards a common goal that just took a very clear shape thanks to the storm of 2021.