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Yes, Carbon Matters, But...

Measuring what matters to drive change with the right policy is not a new challenge. No matter the industry, it’s always an iterative process of pulling a policy lever, tracking the outcomes, and incorporating learnings into the next version. There is no other way. However, tensions between measurability, impact, and unintended consequences must be acknowledged and held in sight as we move through those feedback loops. If we narrow our focus too much while we try to move the right numbers as quickly as possible, the results may be unsustainable or have negative impacts that even outweigh the good.  

Look to education, nutrition, public health, waste management, and car safety regulations for mixed examples of the cycle of policy measurement and iteration. We don’t and probably won’t ever have perfect solutions for how to evaluate schoolteachers, but we should not use imperfection as a reason not to try or failures as a reason not to iterate. We need to acknowledge situations where a narrow focus misses the mark as we discover them, for instance using test scores for teacher evaluations. In energy policy, we are running a risk of the downsides of too narrow a focus on carbon. 

The Policy Landscape

Carbon is the metric that matters. Yes. Clean energy plans focused on carbon and carbon-focused regulations are necessary. But decarbonizing while dramatically increasing costs to customers or and/or energy consumption would miss the mark. In the world of energy policy, decarbonization without energy efficiency should be a nonstarter. Eventually it will be. 

ACEEE’s recent report “As Grid Decarbonizes, Energy Efficiency More Critical than Ever to Reduce Costs” highlights the necessity of carbon reduction and efficiency working together. “Even in largely decarbonized grids, at times when electricity demand peaks, fossil fuel plants are brought online to meet the demand. Energy efficiency reduces that peak demand, reducing the need for additional fossil fuel generation. The report found that under a scenario with 95% decarbonized power in 2050, efficiency can cut fossil fuel generation during the electric grid’s most carbon-intensive hours by more than two-thirds in most regions.” 

Today we’re at a stage in policy evolution where early adopters are focusing on carbon, and their markets are reacting in kind. In New York City, for instance, Local Law 97 has commercial real estate owners and their vendors justifiably focused on carbon reduction. This is meaningful, forward progress. But we need to anticipate and ensure that productive iteration continues. The pendulum has swung from efficiency-only policies and metrics to carbon-only policies and metrics, and we need to incorporate both. 

The Need for Efficiency

Julia Eagles, Associate Director of Utility & Regulatory Strategy at the Institute for Market Transformation, noted in her recent Fortnightly article, “Building Performance, Behind the Meter” that utilities must consider the impact of Building Performance Standards in their resource and distribution planning. “The Urban Green Council’s Grid Ready report found that New York City’s BPS will cause electrification to increase peak demand, principally by increasing winter peaks. Affected utilities will need to account for the impacts of LL97 in their resource and distribution system planning and programming to ensure that they provide the most cost-effective service.” 

If a skyscraper is fully decarbonized via electrification, increasing its load while shifting its demand to overnight hours, some of the best examples of today’s policies would measure and reward that as a success. But if we scale that outcome across all buildings while electrifying other sectors like transportation, aggregate net demand will outpace what the grid can support. Even low or no carbon resources still require resources like land, capital, and kilowatt hours. That is not an argument against electrification and decarbonization. It’s an argument for balance and policy iteration. 

Today we’re focusing on load shifting and grid interactivity. As distributed energy resources and storage are scaled, net demand will become a priority again. We will need every lever of demand side management, including efficiency, when we’ve electrified everything. Carbon matters, but it’s not the only metric we need to measure and manage.


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