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.

Areas of Focus: Energy Markets
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Energy Markets
Well-functioning markets are essential for providing access to reliable, affordable energy. EPIC research is uncovering the policies, prices and information needed to help energy markets work efficiently.
Energy Efficiency
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Energy Efficiency
Improving energy efficiency is lauded as a promising way reduce emissions and lower energy costs. Yet, a robust body of research demonstrates that not all efficiency investments deliver. EPIC faculty...
Climate Change
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Climate Change
Climate change is an urgent global challenge. EPIC research is helping to assess its impacts, quantify its costs, and identify an efficient set of policies to reduce emissions and adapt...
Climate Law & Policy
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Climate Law & Policy
As countries around the world implement policies to confront climate change, EPIC research is calculating which policies will have the most impact for the least cost.
Environment
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Environment
Producing and using energy damages people’s health and the environment. EPIC research is quantifying the social costs of energy choices and uncovering policies that help protect health while facilitating growth.
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Well-functioning markets are essential for providing access to reliable, affordable energy. EPIC research is uncovering the policies, prices and information needed to help energy markets work efficiently.