Buildings offer significant energy efficiency investment opportunities that can be combined with clean heating technologies to provide deep emissions reductions. Efficiency improvements—like home insulation and LED lighting—significantly reduce energy use, complement the adoption of advanced technologies, and make buildings more comfortable and affordable to heat and cool.
The Northeast is a national leader in investing in energy efficiency. Not only is efficiency the lowest cost and cleanest energy choice, it provides enormous economic gains, creates jobs, and saves consumers money. Increasing investments in efficiency have avoided nearly $500 million of expensive transmission line upgrades in New England. Efficiency investments have reduced the cost of doing business, lowered consumer energy bills by billions of dollars, and provided healthier, more comfortable spaces to live and work in. Energy efficiency works hand in hand with coordinated improvements in the energy system: by reducing overall demand for energy, energy efficiency allows renewable energy resources to ramp up and offsets the additional electricity that will be used by electric vehicles and heat pumps.
Many, but not all, states have strong efficiency plans in place, and states must continue to show a sustained commitment to electric efficiency in order to reduce energy consumption and minimize costs.
Leading states like Massachusetts and Rhode Island have achieved the highest electric savings rates in the country—approaching 3% annually—demonstrating the potential that exists for cost-effective efficiency investments. Acadia Center modeling shows that if on average all Northeast states achieved at least 2.5% annual efficiency goals, efficiency would reduce emissions from electricity generation and offset additional demand from new technologies. Some states in the region are meeting—and even exceeding— this level of efficiency cost-effectively, but all states need to make longer-term commitments to ensure this trend continues through 2030.
Efficiency opportunities are also plentiful for non-electric energy use. Weatherizing buildings, replacing outdated equipment, and improving industrial processes can also reduce the amount of fossil fuels consumed in buildings. Acadia Center analysis finds that natural gas and delivered fuel (fuel oil and propane) efficiency savings must increase to 1.4% and 1.2% per year, respectively, to help achieve the region’s emissions goals. Once again, leading states are already showing the way, with Massachusetts achieving over 1.25% natural gas savings per year. To achieve these targets, lagging states need to capture all cost-effective efficiency and leading states need to sustain and even improve their current efforts.
Efficient Electric Heat Pumps
Heat pumps are a form of efficient electric heating for residential and commercial buildings. Heat pumps transfer heat between the inside and outside of a building, either from the air or from the ground. An air conditioner is a type of heat pump that moves heat from inside a building to the outside to cool it; heat pumps reverse this process. Even in the coldest weather, a heat pump is far more efficient than traditional electric baseboard heating and can displace heating from oil and gas at very low temperatures.
Northeast states can convert 10% of oil, gas, and propane heating systems in homes and businesses to heat pumps by 2030 to put the region on track to meet its emissions goals. Maine, the coldest state in the region, has already shown this conversion rate is possible, converting 3% of its residential heating stock to heat pumps in just three years. To capture this potential in all states, heat pumps must be promoted through incentive programs, consumer education, workforce training, and smart electric rate design.
Homes and commercial facilities in the Northeast rely on electricity, oil, propane, or gas to generate heat for hot water. Just as with building heating, heat pumps can replace these existing hot water systems. These heat pump water heaters can simultaneously reduce emissions and lower annual costs. Conventional water heaters can also be replaced by solar thermal water heater systems that use energy from the sun to heat water, which is then stored until needed. Northeastern states need to replace 11% of fossil-fueled water heaters with heat pumps and 1% with solar thermal systems.