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Editor’s note: The following is an excerpt from “Environmentally beneficial electrification: The dawn of ‘emissions efficiency,’” written by NRECA’s Keith Dennis and Ken Colburn and Jim Lazar of the Regulatory Assistance Project, and published in The Electricity Journal


The nature of the electricity grid is changing dramatically, as are our nation’s environmental goals, so our policy thinking needs to change profoundly too. Mounting research suggests that aggressive electrification of energy end uses—such as space heating, water heating, and transportation—is needed if the United States and the world are to achieve ambitious emissions-reduction goals for carbon dioxide (CO2). This concept, the electrification of energy end uses that have been powered by fossil fuels (natural gas, propane, gasoline, diesel, or fuel oil) in order to reduce greenhouse gas emissions, is called “environmentally beneficial electrification.”

Achieving the greenhouse gas emissions reductions possible through environmentally beneficial electrification will require routinely revisiting and updating prevailing energy efficiency metrics and accounting methodologies in order to maximize gains. Specifically, it is timely to consider whether reduced electricity consumption (i.e., kilowatt-hours, or kWh) is the right path to a low-carbon future when, in fact, substitution of electricity for fossil fuels may in some cases increase electricity consumption.

Policy goals are shifting from the simple energy conservation focus of the past toward achieving greenhouse gas (GHG) reductions. Therefore, we need to assess the GHG emissions associated with various ways to power end uses as opposed to simply the number of kWh consumed. To that end, we submit that “emissions efficiency” may be as or more important than energy efficiency moving forward.

Beyond ensuring that our efficiency metrics and policies promote positive environmental outcomes and produce less CO2, it is also imperative that they not create disincentives to achieving GHG emissions reductions through the electrification of loads that are less carbon-intensive than existing practices. Replacing a fuel oil heating system in a single-family residence with electric heat pump technology, for example, would typically reduce emissions, improve comfort, and save the owner money. But such replacements may not be encouraged under the Clean Power Plan (CPP) due to the statutory constraints the U.S. Environmental Protection Agency (EPA) faces by implementing it under section 111(d) of the federal Clean Air Act.

Enter ‘Emiciency’

Whether as a matter of policy or strategy, maximizing GHG emissions reductions hinges on the development of easy-to-use metrics that capture the cross-sector emissions reductions associated with environmentally beneficial electrification.

Environmentally beneficial electrification is not only essential to meeting GHG reduction goals, it also provides a significant economic opportunity, and we need to consider pathways, policies, and actions to foster it. Of paramount importance initially is to identify how progress should be measured.

Consider the energy efficiency of an electric water heater in terms of gallons of hot water produced per kWh, or an electric vehicle in terms of miles driven per kWh. Typically their energy efficiency will not change significantly over their operating lifetimes: An electric vehicle produced today will operate with roughly the same miles-per-kWh in 10 years as it does now. Due to the declining carbon intensity of the grid, however, these devices will become more “emissions efficient” over time; the electric vehicle will emit less CO2 per mile in 10 years than it does today. Additionally, both electric vehicles and electric water heaters can be flexibly managed to charge when low-cost or renewable energy is available, providing additional opportunity to secure economic and environmental benefits.

Traditionally, state and federal energy efficiency efforts for electricity have focused on reducing kWh consumed by electricity end users and separately on reducing therms consumed by natural gas end users and gallons consumed by petroleum end users. Motivated largely by the oil shocks of the 1970s, early policies essentially sought to conserve primary energy, including shifting loads from electricity (typically produced from fossil fuels at less than 40 percent efficiency) to direct use of natural gas (at efficiencies of 60 percent to 80 percent). More recently, as climate threats have become evident, the goal of reducing GHG emissions has become as important as primary energy conservation. This change in focus—from seeking fewer kWh used to fewer tons of CO2 emitted—has also been paralleled by increased natural gas generation, which emits about half as much CO2 as coal, and greater penetration of renewable energy resources, which typically emit no greenhouse gases.

Despite this change in focus, kWh saved through energy efficiency is regularly applied as a proxy for GHG emissions reductions because it’s “the way we have always done it.” This is a case where conventional wisdom lacks wisdom: Energy efficiency is an inadequate metric to measure technology performance when it comes to GHG emissions.

Energy efficiency ratings of electrical products have been based on the amount of kWh used per unit of service, such as amount of heat or hot water produced per kWh consumed. This is important, of course, but an equally important—and often overlooked—driver of emissions is what generation source produced those kWh. Today, it matters less how much electricity is used than how that electricity is generated. Generation, in turn, depends heavily on when the electricity is used because grid operators often dispatch higher-emitting generation resources to meet higher system loads.

In short, a kWh of energy savings reported by an energy efficiency program or consumed by an electrical product might have been produced by a number of generation sources, be it wind, solar, nuclear, gas, hydro, or coal. These savings may be cost-effective and desirable because all electricity has a cost, but the direct economic cost is only a part of the emiciency picture. (“Emiciency” is shorthand for “emissions efficiency.”)

The kWh generated from different sources have vastly different emissions profiles, ranging from as much as 2 lbs. of CO2 to as little as no CO2 at all. Because traditional energy efficiency metrics ignore this dramatic variability, it would seem that emissions efficiency is as relevant a metric as energy efficiency for managing GHG emissions.

If policies like energy efficiency resource standards, appliance efficiency standards, rebates, and other incentives are measured simply with kWh consumption metrics, we may miss out on many cost-effective GHG emissions-reduction opportunities from fuel conversions. We stand on the verge of massive opportunities for environmentally beneficial electrification, but recognizing and realizing those opportunities will not be achieved through an indiscriminate focus on reducing kWh consumption.

‘No Regrets’ Recommendations

The CPP has been criticized for potentially discouraging the pursuit of environmentally beneficial electrification. The U.S. Supreme Court’s stay of the CPP in February 2016 provided states and utilities with greater opportunity to identify, implement, and quantify GHG emissions reductions associated with environmentally beneficial electrification as part of an overall “no regrets” strategy. The following steps could be taken today to support implementation of environmentally beneficial electrification.

The U.S. Department of Energy and the EPA should consider updating the “source” energy factor.

The source energy metric employed by DOE and the EPA in energy efficiency policies and tools may warrant updating in light of the technology advancements and changing system mix characteristics. In joint comments responding to a DOE request for information on this topic, the Natural Resources Defense Council, NRECA, Edison Electric Institute, and the American Public Power Association offered one possible route, outlining an approach through which the U.S. Energy Information Administration (EIA) would annually develop and disclose a “fossil fuel source energy” metric and its calculation methodology. Whatever methodology is ultimately selected, its goal should be to provide an accurate and level playing field among all energy alternatives.

When accounting for emissions associated with the addition of new electric load, recognize that the emissions intensity of the grid is changing with time.

Current emissions accounting methods typically reflect existing generation, often with outdated data. Such static approaches do not reflect the impacts of the grid’s continuing fuel mix and technology improvements that reduce emissions over time. In calculating power sector emissions on a going-forward basis, state air quality agencies, energy efficiency program administrators, and other interested parties should apply emissions factors that reflect the changing nature of the generation fleet that will be serving the new electric loads.

As environmentally beneficial electrification is implemented, account for the emissions impacts that result from displaced direct combustion of fossil fuel.

Accounting for environmentally beneficial electrification should include the impact of the entire project. Overall emissions reductions can be quantified by comparing emissions of the “project” scenario (i.e., the emissions associated with the electricity used post-electrification) to a “baseline” scenario (i.e., the emissions that would have occurred with the use of the traditional fossil-fuel combustion alternative). Quantification should, of course, be mindful to balance the need for accuracy with the cost of measurement and verification. State air quality agencies, partnering with state energy offices, energy efficiency program administrators, and other interested parties should develop and apply “deemed emissions reductions” just as “deemed kWh savings” are often applied today in the evaluation, measurement, and verification of energy efficiency programs.

Move towards emissions efficiency in addition to energy efficiency (i.e., kWh saved) as a metric for projects targeting GHG emissions reductions.

As noted earlier, a heat pump water heater may reduce kWh by 50 percent compared to a resistance water heater, but a heat pump water heater controlled so as to have its load met by solar during the middle hours of the day may reduce emissions 75 percent or more. The energy efficiency of the former is good, but the emissions efficiency of the latter is far better. It is important, particularly to state air quality agencies, to capture this “emiciency” opportunity in future program and policy planning.

Metrics Matter

Significant progress in reducing GHG emissions from the power sector is already underway, but far greater progress is readily achievable—both economically and practically—by aligning public policies to reinforce this positive trend. Technological advances to reduce the number of kWh necessary to perform a service, for example, along with public outreach to increase uptake of such advances, are essential and certainly merit greater attention. The electricity thus freed up can be used to displace fossil energy use, further reducing GHG emissions.

Traditional energy efficiency metrics are increasingly obsolete, however. Staunch adherence to efficiency measured by energy savings alone, for instance, overlooks numerous opportunities to also reduce emissions through fuel conversions from fossil energy to efficient electric technologies powered by an increasing clean generation fleet, or from higher-emitting to lower-emitting fossil energy sources. The electric system is dynamic, and evaluating the impacts and benefits of electricity use is not a simple task. Metrics matter greatly, and it is important that they are effective and accurate. But no single metric can be pursued in isolation, whether it is energy efficiency, emissions efficiency, or any other individual metric. It is necessary to look at the system broadly, develop priorities—including safety, reliability, affordability, compliance with environmental regulations, and economic development—and optimize the integrated system accordingly.

Without promptly addressing the challenges of finding appropriate metrics to measure emissions efficiency and environmentally beneficial electrification, we risk diminishing progress toward the very goals we seek. In order to simultaneously maximize cost savings and GHG emissions reductions, new metrics must incorporate not only energy-saving technologies—increasing the performance-per-kWh of devices—but also the processes, procedures, and policies governing how and when those devices use electricity and which of them currently powered by fossil fuel combustion might instead be electrified. Our economy and our climate demand that we use both by pursuing optimal emissions efficiency strategies.

BTS-TechSurv

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