1. The Business Council for Sustainable Energy Business Council for Sustainable Energy Integrating Energy Efficiency into New Jersey’s Air Quality Programs Clean Air Council Public Hearing April 11, 2007

2. The Business Council for Sustainable Energy Outline Review of BCSE: Mission and Members Review of BCSE: Mission and Members The Importance of Energy Efficiency The Importance of Energy Efficiency Recommendations for Clean Air Council Recommendations for Clean Air Council

3. The Business Council for Sustainable Energy Who We Are Broad-based industry coalition of energy efficiency, natural gas and renewable energy interests Broad-based industry coalition of energy efficiency, natural gas and renewable energy interests The Council’s coalition includes power developers, equipment manufacturers, independent generators, green power marketers, and gas and electric utilities as well as several of the primary trade associations in these sectors The Council’s coalition includes power developers, equipment manufacturers, independent generators, green power marketers, and gas and electric utilities as well as several of the primary trade associations in these sectors New Jersey members, PSEG, First Environment, Inc., Sun Farm Network New Jersey members, PSEG, First Environment, Inc., Sun Farm Network

4. The Business Council for Sustainable Energy Sample of Council Members Energy Efficient Products Energy Efficient Products –Insulation – NAIMA and PIMA –HVAC – American Standard/Trane, York International Developers, Equipment & Service Providers Developers, Equipment & Service Providers –GE Wind, Sun Edison LLC, PPM Energy, Solar Turbines Gas & Electric Utilities Gas & Electric Utilities –Sempra Energy, NiSource, SMUD, PSEG, PG&E Industry Organizations Industry Organizations –Alliance to Save Energy, American Wind Energy Association, American Gas Association, Solar Energy Industries Association, Interstate Natural Gas Association of America, National Hydropower Association

5. The Business Council for Sustainable Energy Energy Efficiency Industry Members Energy Efficient Products Energy Efficient Products –PIMA –NAIMA Equipment Manufacturers Equipment Manufacturers –American Standard/Trane –York International –Caterpillar/Solar Turbines Industry Organizations Industry Organizations –Alliance to Save Energy Service Providers and ESCOs Service Providers and ESCOs –Johnson Controls –Honeywell

6. The Business Council for Sustainable Energy What we stand for: Expanded markets for clean energy generation, distribution and use Expanded markets for clean energy generation, distribution and use –Energy Efficiency –Renewable Energy –Natural Gas Market-based environmental programs that recognize and reward clean energy technologies Market-based environmental programs that recognize and reward clean energy technologies Quantification of the environmental attributes of clean energy technologies Quantification of the environmental attributes of clean energy technologies

7. The Business Council for Sustainable Energy What we do: Promote clean energy technologies as solutions Promote clean energy technologies as solutions Support policies that open markets for clean energy products and services Support policies that open markets for clean energy products and services Focus on strategic issues and emerging markets for clean energy industries Focus on strategic issues and emerging markets for clean energy industries –Environmental and emissions markets

8. The Business Council for Sustainable Energy General Comments Integrate energy and air quality policies Integrate energy and air quality policies –Maximize investments View design elements of market-based programs in holistic fashion View design elements of market-based programs in holistic fashion Market-based program very powerful, but will not provide all the energy efficiency improvements desired Market-based program very powerful, but will not provide all the energy efficiency improvements desired –Need complementary policies Public awareness important role of NJDEP and Clean Air Council Public awareness important role of NJDEP and Clean Air Council

9. The Business Council for Sustainable Energy Focus of Recommendations for the Clean Air Council Value and benefits of integrating air quality and energy programs Value and benefits of integrating air quality and energy programs Societal and economic efficiencies of market-based approaches Societal and economic efficiencies of market-based approaches Incorporating energy efficiency and clean generation into market-based programs Incorporating energy efficiency and clean generation into market-based programs Importance of complementary policies Importance of complementary policies

10. The Business Council for Sustainable Energy The Importance of Efficiency Energy efficiency is the quickest, cheapest and cleanest way to meet growth in energy demand and reduce air quality and greenhouse gas emissions Energy efficiency is the quickest, cheapest and cleanest way to meet growth in energy demand and reduce air quality and greenhouse gas emissions –Buildings account for 40% of total U.S. carbon emissions per year –Energy efficiency measures and products/technologies can reduce energy use in buildings by 25%, and emissions by 10%

11. The Business Council for Sustainable Energy Benefits of Energy Efficiency Energy efficiency programs could save: 1/2 of the typical cost of new power sources and 1/2 of the typical cost of new power sources and 1/3 of the cost of natural gas supplies 1/3 of the cost of natural gas supplies (National Action Plan for Energy Efficiency, July 2006) (National Action Plan for Energy Efficiency, July 2006) Every federal $ spent on Energy Star saves: About $75 in consumer energy bills About $75 in consumer energy bills Reduces 3.7 tons of CO2 emissions, and Reduces 3.7 tons of CO2 emissions, and Contributes over $60 to the economy Contributes over $60 to the economy (Alliance to Save Energy) (Alliance to Save Energy)

12. The Business Council for Sustainable Energy What This Means for Energy Efficiency The environmental benefits of energy efficiency should be recognized and rewarded under climate change and other emissions programs

13. The Business Council for Sustainable Energy Energy Efficiency, Air Quality and Climate Change Lowest cost and easiest option to reduce emissions Lowest cost and easiest option to reduce emissions Supply- and demand-side efficiency options abound Supply- and demand-side efficiency options abound Challenging to incorporate into market-based air quality and climate change programs Challenging to incorporate into market-based air quality and climate change programs –Energy efficiency loves cap-and-trade, but cap-and- trade does not always reward energy efficiency Program design matters Program design matters Allocation policy; set-asides and offsets Allocation policy; set-asides and offsets

14. The Business Council for Sustainable Energy Implications for Energy Efficiency Emissions programs will make energy efficiency investments more attractive Emissions programs will make energy efficiency investments more attractive –Raise public awareness –Lower cost –Create new financing vehicles Emissions programs can drive higher building code standards and appliance standards Emissions programs can drive higher building code standards and appliance standards Expand consumer rebates Expand consumer rebates Create Energy Efficiency Resource Standard Create Energy Efficiency Resource Standard

15. The Business Council for Sustainable Energy Why Market-Based Programs Take advantage of economic efficiencies and provide flexibility that permits choice in compliance Take advantage of economic efficiencies and provide flexibility that permits choice in compliance Lowers the cost of compliance Lowers the cost of compliance Create financial incentives for over-performance and technology innovation Create financial incentives for over-performance and technology innovation Create new financing vehicles Create new financing vehicles Examples in NJ: NOx Budget Trading Program; RGGI, RPS Examples in NJ: NOx Budget Trading Program; RGGI, RPS

16. The Business Council for Sustainable Energy Incorporating Energy Efficiency into Market-Based Programs Supply-side efficiency can be addressed through emissions allocation policy Supply-side efficiency can be addressed through emissions allocation policy –Adopt updating, output-based allocation Values negawatts Values negawatts –Establish set-aside for small clean generation (CHP; renewables)

17. The Business Council for Sustainable Energy Incorporating Energy Efficiency into Market-Based Programs Demand-side management projects more challenging Demand-side management projects more challenging May receive auction revenue or be able to generate emissions offsets May receive auction revenue or be able to generate emissions offsets –Offsets Need Aggregation: Quantify the emissions benefits to provide alternative revenue streams to purchase energy efficient products and services Need Aggregation: Quantify the emissions benefits to provide alternative revenue streams to purchase energy efficient products and services MMV criteria and must demonstrate that they are beyond business as usual (prove “additionality”) MMV criteria and must demonstrate that they are beyond business as usual (prove “additionality”)

18. The Business Council for Sustainable Energy Complementary Policies Decoupling Decoupling –De-linking profits from sales of energy and natural gas Energy Efficiency Resource Standard Energy Efficiency Resource Standard –Separate tier to RPS -- do not dilute renewabls target –Consistent timeframe as RPS - 2021 Code and Beyond Code Programs Code and Beyond Code Programs

19. The Business Council for Sustainable Energy Please contact Lisa Jacobson, BCSE Executive Director, with questions 1620 Eye Street, NW Suite 501 Washington, DC 20006 USA Phone: 202.785.0507 Fax: 202.785.0514 www.bcse.org www.bcse.org