Promoting Nationwide Energy Efficiency Through Measurement and Performance-Based Rewards

2008 Performance Based State Efficiency Results

2008 Performance Based State Efficiency Results (Credit SERC)

Over the last two years, SERC has been engaged in energy efficiency policy analysis at the national scale. The National Resources Defense Council’s Center for Market Innovation contracted SERC to answer the question: Can progress in energy efficiency and energy conservation be tracked at the state level? If so, can a metric be developed to rank states and reward high performers? In short the answer is yes, but better data are needed before the government should begin to implement a program to reward states for energy performance.

Dr. Arne Jacobson and a team of SERC analysts (including Dr. Charles Chamberlin, Colin Sheppard, and Margaret Harper) took on the challenge. They developed a methodology for an aggregate, state-level metric of energy consumption intensity (ECI) in the residential sector and provided proof-of-concept simulations for each of the lower 48 states.

The methodology provides a tool for identifying changes in state energy consumption intensity (i.e. energy consumption per capita) after adjusting for changes due to year-to-year variations in weather. “Progress” is achieved by any state whose adjusted ECI is statistically decreasing over a given time period (5 years, for example). This measure of progress compares a state to its own baseline–rather than a national average–which gives all states an opportunity to compete on a level playing field.

SERC applied the method to the continental U.S. using historical data to see the metric in action. Between 1985 and 2007, progress (as defined above) was detected in California eleven times, the highest in the country. Seven progress years were detected in Washington, Nevada, and Michigan, and several states were close behind with six years of progress (see Figure).

We are continuing with our analysis work. In particular, a handful of states are being singled out for detailed research–a process we call “ground-truthing.” These include Washington, Texas, Vermont, Missouri, and California. Our goal is to identify specific events and policies within each state that help explain what we see in their overall trend. While these connections do not provide definitive proof of our methodology, they do increase our confidence that the metric is responsive to real changes in residential energy consumption.

Through this research and our ground-truthing efforts, we continue to build the case that it is possible to track trends in state energy consumption intensity, even with the imperfect data sets that are currently available. With improvements in data collection, the methodology could be a powerful tool for policymakers to identify and reward high performing states. We are in conversation with managers at the Energy Information Agency and elsewhere in the Department of Energy to develop specific recommendations for these improvements.

Detailed reports of the analysis and ground-truthing effort are available for download at www.schatzlab.org/projects/psep.