New Mexico Energy Efficiency Strategy: Policy Options 2020-02-03¢  New Mexico Energy...

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  • New Mexico Energy Efficiency Strategy:

    Policy Options

    Southwest Energy Efficiency Project

    American Council for an Energy-Efficient Economy

    ETC Group, LLC

  • New Mexico Energy Efficiency Strategy: Policy Options

    Howard Geller 1 - Project Director

    Patti Case 2 , Steve Dunn

    1 , Tammy Fiebelkorn

    1 ,

    Therese Langer 3 , and Shruti Vaidyanathan

    3

    1 Southwest Energy Efficiency Project

    2 ETC Group, LLC

    3 American Council for an Energy-Efficient Economy

    Prepared for the New Mexico Energy, Minerals

    and Natural Resources Department

    Ken Hughes, Project Coordinator

    November, 2008

  • i

    Table of Contents

    Preface and Acknowledgements……………………………………………………..……..ii Executive Summary…………………………………………………....................................iii Chapter I: Introduction……………………………………………………………………………………...1 Chapter II: Utility Demand-Side Management and Pricing Policies…………………………………5 Chapter III: Buildings and Appliances Policies………………………………………………………...27 Chapter IV: Industrial Policies………………………………………………………………………….….52 Chapter V: Public Sector Policies………………………………………………...………………….…..77 Chapter VI: Transportation Policies………………………………………………………………….…...91 Chapter VII: Cross-Cutting Policies………………………………………….…………………….….....125 Chapter VIII: Conclusion………………………………………………………………………………….…132 Appendix A: Primary Energy Savings by Option…………………………………………………….…141 Appendix B: What Would It Take to Achieve Governor Richardson’s Near-Term Energy Efficiency Goal?...............................…………………………………………………….…142 Appendix C: Improving the Efficiency of Heavy-Duty Trucks and the Goods Movement System…………………..…….....…………………………………………………………....144 Appendix D: Acronyms, Abbreviations and Definitions………….…..…………………………….…150

  • ii

    Preface and Acknowledgements

    The New Mexico Energy Efficiency Strategy was prepared by a team of researchers and

    analysts led by Howard Geller, Executive Director of the Southwest Energy Efficiency Project

    (SWEEP). Co-authors of the Strategy are Steve Dunn and Tammy Fiebelkorn of SWEEP,

    Therese Langer and Shruti Vaidyanathan of the American Council for an Energy-Efficient

    Economy, and Patti Case of ETC Group, LLC. Gene Dilworth of SWEEP provided skillful

    editing.

    Preparation of the New Mexico Energy Efficiency Strategy was overseen by Ken Hughes

    of the Energy Conservation and Management Division of the New Mexico Energy, Minerals and

    Natural Resources Department, with assistance provided by Craig O‘Hare. Primary funding for

    the preparation of this strategy was provided by the New Mexico Energy, Minerals and Natural

    Resources Department. Supplemental funding was provided by the U.S. Environmental

    Protection Agency, the U.S. Department of Energy through its support of the Intermountain

    Combined Heat and Power Application Center, and Xcel Energy.

    The authors would like to extend sincere thanks to those individuals and organizations

    that graciously contributed their time and expertise to the New Mexico Energy Efficiency

    Strategy. Numerous public sector officials, company representatives and private citizens attended

    two workshops that were conducted during the preparation of the Strategy. While the authors

    assume responsibility for the results and recommendations contained in this report, the

    comments and input provided by many individuals proved invaluable in helping to shape the

    policy options and analysis.

    Questions or comments on the New Mexico Energy Efficiency Strategy should be

    directed to Howard Geller, hgeller@swenergy.org and Ken Hughes, ken.hughes@state.nm.us.

    About the Southwest Energy Efficiency Project

    The Southwest Energy Efficiency Project (SWEEP) is a public interest organization

    promoting greater energy efficiency in Arizona, Colorado, Nevada, New Mexico, Utah, and

    Wyoming. For more information, visit SWEEP online at www.swenergy.org.

    mailto:hgeller@swenergy.org mailto:ken.hughes@state.nm.us http://www.swenergy.org/

  • iii

    Executive Summary

    On November 14, 2007, Governor Bill Richardson announced the goals of reducing

    energy use per capita in New Mexico 10 percent by 2012 and 20 percent by 2020, relative to

    energy use per capita in 2005. The goal applies to all forms of energy use in the state, including

    electricity, natural gas, gasoline, and other petroleum products. It is intended to make New

    Mexico one of the nation‘s most energy-efficient states, thereby lowering energy bills paid by

    consumers (including low-income households), enhancing energy security and reliability,

    improving business profitability and competitiveness, and reducing greenhouse gas emissions.

    In order to help the state examine options for achieving the energy efficiency goals, the

    Energy, Mineral, and Natural Resources Department (EMNRD) asked the Southwest Energy

    Efficiency Project (SWEEP) to prepare a state energy efficiency strategy. The primary objectives

    of the strategy are to explore what could be done to achieve the Governor‘s goals, examine the

    feasibility of achieving the goal for different types of energy, and estimate what the economic

    and environmental impacts of achieving the goals would be.

    The New Mexico Energy Efficiency Strategy contains 25 major policies, programs, or

    initiatives that could be implemented in order to accelerate energy efficiency improvements in

    the state and achieve the goals where possible. The policies save electricity, natural gas, or

    gasoline. These energy sources account for 77 percent of primary energy consumption in the

    state and 65 percent of energy consumption on a secondary (site) basis. We do not consider

    diesel fuel use in the main part of this study because a significant fraction of the diesel consumed

    in New Mexico is due to trucks passing through the state. However, we provide an appendix

    presenting an option for increasing the efficiency of heavy-duty trucks.

    Methodology

    The methodology involves developing baseline and high efficiency scenarios for 2008

    through 2025. The baseline scenario is a projection of energy use in the future given expected

    population and economic growth, but without new energy efficiency measures and initiatives

    taken into account. Our baseline assumptions, derived from utility forecasts and other sources,

    include growth in electricity consumption of 1.9 percent per year, growth in natural gas

    consumption of 1.2 percent per year, and growth in gasoline consumption of 0.8 percent per year

    during 2008-2025. Growth in gasoline consumption is relatively low in the baseline scenario due

    to the assumptions that vehicle use per capita remains constant while vehicle fuel economy

    increases modestly.

    We examine the potential of each option in the strategy, and the combination of options,

    to reduce this baseline energy demand projection. We include the effects of current policies and

    programs (for example, utility demand-side management programs and building energy codes) in

    estimating energy savings potential in order to give credit for ongoing energy efficiency

    initiatives. We also project energy use in the baseline scenario and the energy savings from each

    of our options through 2025. In some cases, the energy savings are moderate by 2020 but

    increase significantly between 2020 and 2025.

  • iv

    We have taken steps to avoid double counting of energy savings among the various

    options. This is done by reducing the savings potential attributed to certain options that are

    examined after other overlapping options have been assessed. For example, we reduce the

    savings associated with building energy codes and education and training options due to their

    overlapping with utility demand-side management (DSM) options. In some cases, such as in the

    transportation area, adjustments are made when summing energy savings in order to avoid

    double counting and overstating overall energy savings potential.

    For the economic analysis, all values are presented in 2007 dollars with costs and benefits

    after 2007 discounted using a five percent annual discount rate. Electricity prices are assumed to

    remain constant at their levels in 2007, other than increasing with inflation. This is a

    conservative assumption given that electricity prices are rising due to increasing fuel costs,

    incre