John A. “Skip” Laitner American Council for an Energy-Efficient Economy (ACEEE) Increasing Energy Efficiency Through Collaborative Strategies 2012 NASCSP Annual Conference and 2012 DOE Weatherization Assistance Program State Managers’ Meeting September 12, 2012 Buckhead - Atlanta, GA A Revitalized Efficiency Perspective: The Intersection of Behavior, Technology, and the Underserved Community

A Working Hypothesis in the Global Economy The complete economic recovery and robust development of our long-term global prosperity will not be possible without hefty increases in productive investment and greater levels of resource and energy efficiency – all enabled by a shift in our behaviors, our social institutions and our culture. Neither the market nor the public can get it done on their own. Only through a process of greater collaboration will we have the possibility of returning to prosperity.

And as we are reminded by my favorite American philosopher, Gary Larson, small differences in assumptions can lead to very big differences in outcomes!!

With Apologies to Gary Larson.... If we do make the wrong assumptions, and if we don’t get it right, we may have this... A smart ass cactus speaking to us on behalf of Mother Nature Herself!

With These Opening Observations  The past is consistent with many, many different futures – depending on the choices we have yet to make.  New research suggests the U.S. now converts only ~14% of all the energy it consumes into useful work, or into transforming matter into the goods and services needed to maintain our economy (Laitner 2012).  In short, we waste 86% of all energy used to power our economy, and that magnitude of waste imposes a huge array of costs that constrains our larger well-being.  If we are to ensure a robust and prosperous economy, we need to triple and quadruple our current level of energy efficiency.

 The recent ACEEE report, “The Long-Term Energy Efficiency Potential: What the Evidence Suggests,” shows how slashing energy use by 40 to 60% — through highly cost-effective efficiency investments — could generate up to 2 million jobs while saving residential and business consumers about $2,600 per household annually.  The really big insight? Instead of tiny increments, the U.S. will be better off “Thinking Big” about energy efficiency and energy productivity, rather than relying on the usual set of very costly and conventional energy resources.  The other critical insight? All of the members of our underserved communities absolutely need to be a part of the solution; or our combined efforts will fall short.... Jumping to the End of the Story Source: The Long-Term Energy Efficiency Potential: What the Evidence Suggests (2012). Washington, DC: ACEEE.

From Wikipedia: In economics, disintermediation is the removal of intermediaries in a supply chain, or "cutting out the middleman". Instead of going through traditional distribution channels, which had some type of intermediate (such as a distributor, wholesaler, broker, or agent), companies may now deal with every customer directly, for example via the Internet. One important factor is a drop in the cost of servicing customers directly. Disintermediation at Work

Comparing Different Outcomes Comparing Electricity Sales and Mail Delivery What if we substitute the word “kilowatt-hours” for “pieces of mail” as we examine the future? U.S. Electricity Sales U.S. Postal Service Mail Volume Source: US Energy Information Administration and US Postal Service.

What if we substitute the word “kilowatt- hours” for “records sold per person”? U.S. Electricity Sales Records Sold Per Person Source: US Energy Information Administration and Data on Record Sales Per Person. Napster Begins Comparing Different Outcomes Comparing Electricity Sales and Record Sales

What if we substitute the word “kilowatt-hours” for “local calls”? U.S. Electricity Sales Local Calls Originating Source: US Energy Information Administration and Data on Local Calls from U.S. Statistical Abstract. More than 100 Million Cell Phones Comparing Different Outcomes Comparing Electricity Sales and Local Phone Calls

Shifting Perceptions and Use Patterns  An October 2011 national poll of 3,400 consumers conducted by the University of Texas at Austin revealed deep discontent among U.S. consumers over the direction the country is headed on energy.  Oncor, CenterPoint Energy, IBM, Landis+Gyr, Itron, GE, San Diego Gas & Electric, and Tendril are founding partners of the Biggest Energy Saver Campaign – an online community to explore ways that might engage customers to learn how smart technology can help reduce their electricity bill.  Across all participants, the average savings was just under 8%. The top 10% of the participants achieved a whopping 26% savings.

Shifting Perceptions and Use Patterns  Verizon announced home monitoring and control service that enables customers to remotely check on their homes, lights, thermostats, appliances and energy use.  A study released by Brattle Group economists and energy analysts reveals energy efficiency improvements could lower U.S. electricity consumption by 5-15%....  In short, utilities can no longer bank on ever-growing demand; a major shift is under way and an increasing number of businesses are finding ways to profit when people use less power. not the commodity we call energy, but value-added energy services.  The new market will be in providing not the commodity we call energy, but value-added energy services.

While the imperative and scale of the energy efficiency resource remains large, we might begin, first, by exploring possibilities through feedback mechanisms in our nation’s households, and especially in our underserved communities.... Energy Efficiency: Making the Invisible Visible

“Direct” Feedback (Provided Real Time) Enhanced Billing Household- specific info, advice Estimated Feedback Web-based energy audits with info on ongoing basis Daily/ Weekly Feedback Household- specific info, advise on daily or weekly basis Real-Time Feedback Real-time premise level info Real-Time Plus Feedback Real-time info down to the appliance level 3.8% 6.8% 8.4% 9.2% 12.0% Annual Percent Savings “Indirect” Feedback (Provided after Consumption Occurs) Residential Feedback Approaches Average Household Electricity Savings (4-12%) by Feedback Type* Plus Application of Smart Social Science Insights Potential Resource Savings: 20 to 35% Real-Time Plus Feedback w/ Smart Program Design Ehrhardt-Martinez, K., Donnelly, K.A., and Laitner, J.A A meta-review of 57 different feedback programs

Strategies to Catalyze Behaviors? Let’s Look to the TIME Model* Targeting: scale, people, and actions Informing: consumers, producers, policies, and programs Motivating: norms, networks, goals and commitments Empowering: dissolution of the financial and structural barriers to provide and enable significantly better services and choices *Source: Adapted from Karen Ehrhardt-Martinez

Empowering: Removing Barriers to Provide and Enable Better Choices The Example of Choice Architecture ̶ Choice architecture is about creating a context in which people are likely to make better decisions – decision that will make the choosers much better off, as judged by themselves. (Thaler and Sunstein 2008) ̶ Overcoming inertia and the status quo bias ̶ Hence, the BECC Low-Carbon Lunch Experiment undertaken by Karen Ehrhardt-Martinez in 2009 * * BECC is the Behavior, Energy, and Climate Change Conference (see this year taking place November 12-14, 2012 in Sacramento, CA.

The 2009 BECC Low-Carbon Lunch (a conference new default) ACEEE Conference Standard BECC 2007 BECC 2009 Meat-Based Lunch90-95%83%20% Vegetarian Lunch5-10%17%80% Hence, a Large Indirect Savings  Meat production is responsible for 18% of the global greenhouse gas emissions (Pew Commission 2008)  Omnivores contribute 7 times the GHG emissions than vegans

The Key Take-Aways  The energy efficiency resource is larger and more necessary to develop than is generally understood  Engaging, empowering and motivating consumers, especially among underserved communities, is a critical first step in building large-scale savings.  For deep, and lasting change, a layered approach to changing behavior is important – using multiple methods and means of reaching people, as individuals, but also as family members, neighbors, or co-workers!  The new utility business model shifts from the sale of commodities to providing value-added services, and does so in ways that save ratepayers money and generate positive returns for investors.

For further information and citations to the resources and references cited: John A. “Skip” Laitner c: (571) See our eBook on the behavior resource: Karen Ehrhardt-Martinez and John A. “Skip” Laitner, Editors People-Centered Initiatives for Increasing Energy Savings Washington, DC: American Council for an Energy-Efficient Economy See also my Desert Year Blog: $3 Trillion Thought Experiment for Rio