Within the Clean Power Plan laid out by President Obama yesterday, states are required to calculate the real-world impact of energy efficiency investments on carbon emissions, as opposed to using model projections that have been shown to overestimate the savings in some circumstances. Additionally, states may rely on a comprehensive guidance document—Evaluation Measurement and Verification (EM&V) Guidance for Demand-Side Energy Efficiency (EE)—that emphasizes the use of randomized-controlled trials (RCT) and quasi-experiments to measure true energy savings. The requirement to assess real-world savings as part of the program evaluation and the emphasis on randomized-controlled trials are both policy approaches that have been recommended by the Energy Policy Institute at the University of Chicago in recent months.
EPIC Director Michael Greenstone comments on these changes, saying:
“When the history books are written, the Clean Power Plan will mark the turning point when the United States decisively committed itself to confronting climate change. An important part of this is the focus on ensuring that promised greenhouse gas reductions are realized. With evidence that model projections too often overestimate the savings from energy efficiency investments, I applaud the Administration’s efforts to ensure that only the most cost-effective and successful energy efficiency upgrades are ultimately carried out.”
In June, Greenstone and colleagues from the University of California-Berkeley released a study that used a randomized control trial to study an energy efficiency program in the state of Michigan. The study found that the savings from the program were just 39 percent of the average savings predicted by engineering models. Based on these results, the authors recommended that future energy efficiency policies be coupled with retrospective examinations of the returns to these policies, based on randomized control trials and quasi-experiments.
Greenstone co-founded The E2e Project with Catherine Wolfram of the University of California at Berkeley and Christopher Knittel of the Massachusetts Institute of Technology. The Project seeks to uncover the causes and consequences of energy efficiency investment.