Policy Tracker: A Look Back at Energy Efficiency Plans in 2021

This past year, four states in the NEEP region released energy efficiency plans —Connecticut, Maine, Massachusetts, and New Hampshire. The results ran the gamut, from progressive new approaches in Massachusetts thanks to its Climate Act, to the New Hampshire PUC’s proposal of a new plan to wind down utility energy efficiency programs. Despite this wide range of outcomes, trends emerged as states took steps to align their energy efficiency portfolios with climate goals, center programs on equity, and invest in an energy efficiency workforce.

Metrics for State Climate Priorities

Creating metrics tied to state climate goals starts the important process of aligning energy efficiency programs - and eventually larger utility infrastructure investment - with state climate policy. These metrics drive program design by signaling to utilities, program administrators, and other parties how to align programs with policy. This past year, Massachusetts and Maine took steps to do this in their energy efficiency plans by aligning their goals and including carbon metrics in the cost-benefit analysis.

Setting Goals Aligned with State Policy

Energy efficiency program goals represent what programs aim to achieve. Traditionally, metrics focus on first year annual energy savings. This results in prioritizing programs that have immediate savings, such as lighting. Yet climate goals require deeper, longer-term program savings, such as savings from weatherization and heating electrification. In the past year, Maine and Massachusetts tackled this issue in different ways, but both increased their focus on heat pump and weatherization efforts.

• Aligning Goals with State Climate Benchmarks: In Maine, Efficiency Maine Trust (the Trust) is required by statute to design, coordinate, and integrate programs that advance the state’s benchmarks in weatherization, heat pumps, and electric vehicles. As a result, the Trust’s plans include an appendix that shows current results and how it plans to scale programs to achieve targets. Maine is the only state that uses tracking to create this form of alignment and accountability.
• Carbon Emissions as Goals: In Massachusetts, the Climate Act directs the Secretary of Energy and Environmental Affairs to set a yearly annual CO2e avoided (metric tons) goal for energy efficiency plans. A CO2e goal measures what is known as “carbon dioxide equivalent,” estimating the impacts from carbon dioxide and other greenhouse gases. This new goal directly resulted in 57.9 percent more estimated emissions reductions in the electricity sector from the April to the September draft plan.

Accounting for Carbon Emissions in Cost-Benefit Analysis

Similar to setting goals to align plans with climate policy, states can incorporate metrics into their cost-benefit analysis to account for carbon and other GHG emissions. Incorporating these metrics can hold programs that contribute to emissions accountable and encourage programs that reduce emissions. Maine and Massachusetts both included a cost for carbon emissions in their cost-benefit analysis for the first time, but approached it differently. Maine used an abatement cost at $125 per ton of carbon. Abatement cost is a geographic and sector-specific estimate of the marginal cost to reach a specific emissions goal. Massachusetts used the social cost of carbon, which estimates the value of economic, environmental, and health damages associated with carbon emissions. Massachusetts, due to state policy, also uses a one percent discount rate (a lower discount rate places a higher value on the long-term impact of these investments), resulting in a price of $393 per short ton of carbon. Massachusetts is the only state within the NEEP region with this type of carbon pricing mechanism, which resulted in significant changes to the energy efficiency plans.

Centering Equity

In recent years, energy efficiency plans have begun to more deeply address equity issues as the energy industry and policymakers better understand the importance of centering equity and undoing past injustices. Plans from this year show the investment states have made to improving equity in their programs.

• Equity Stakeholder Process and Program Design: Massachusetts and Connecticut formed equity advisory groups that provided recommendations to increase participation and reduce barriers to access for energy efficiency programs. The groups also identified the first-ever equity tracking metrics for programs to monitor

  

  success and ensure accountability. Finally, program administrators in both states have proposed new or redesigned community-focused programs that seek to collaborate with and empower existing community based programs to expand energy efficiency efforts.
• Equity Metrics: In 2017, Efficiency Maine Trust created the Low Income Advisory Group to help consider equity issues in program design and implementation and has focused efforts on ensuring geographic equity since 2018. Additionally, the Trust has equity metrics throughout its portfolio that range from spending targets for low-income and small business programs to targets for the number of weatherized homes and heat pumps installed. These metrics encourage and track progress in this space.

Training the New Clean Energy Workforce

Underpinning every energy efficiency program is a community of companies and workers who have numerous new opportunities as these programs grow. As energy efficiency programs expand and evolve, it is important to ensure there is a qualified, comprehensive, and inclusive workforce. Massachusetts, Maine, and Connecticut have already created workforce training programs and resources to find qualified contractors, and all three states have committed to putting more resources into growing the heat pump contractor workforce in their new plans. Additionally, Massachusetts has begun taking concrete steps to address inequities in workforce opportunities. Initiated by the Climate Act, which mandates $12 million a year be spent on creating an inclusive clean energy workforce, program administrators proposed a Clean Energy Equity Workforce and Market Development Program to train workers in underserved communities.

Cautiously Looking to 2022

As we look to 2022, it is important to remember that in order to implement the changes we need to combat climate change, all actors in the energy efficiency space will need to recognize the value of these programs and urgency of the moment. In 2022, NEEP looks forward to energy efficiency plans continuing to make progress in workforce, carbon, and equity.