September 10, 2003—New investments in energy efficiency and renewable energy generation could begin lowering natural gas prices immediately and help retain manufacturing jobs, a study prepared by the American Council for an Energy-Efficient Economy (ACEEE) shows.
The Energy Foundation (EF) commissioned ACEEE to prepare the study, Impacts of Energy Efficiency and Renewable Energy on Natural Gas Markets, to determine whether efficiency and renewables would produce significant price reductions and cost savings by reducing demand for natural gas.
“This study shows that we can quickly reduce wholesale natural gas prices 10-20 percent and save consumers over $75 billion in the next five years,” stated David Wooley, Vice President of the Energy Foundation. “The fastest, surest way to give gas and electricity consumers relief from spiking energy prices is to enact state and federal policies to expand renewable power generation and to help consumers install more efficient electric and gas appliances, heating and cooling systems.”
Specific policy solutions outlined in the study include: update state and federal appliance efficiency standards; require electric utilities to use more renewable power generation; expand rebates and grants to consumers to improve equipment efficiency and install clean on-site power generation; expand federal research and development support for emerging efficiency and renewable generation technologies; and establish tax credits for efficiency and renewable energy investments.
An increasing share of the electricity generated in the U.S., particularly in the Northeast, South, and on the West Coast, comes from natural gas-fired power plants. The analysis shows that natural gas expenditures by electric power generators would decrease by $6.2 billion in 2004 and by as much as $10.4 billion by 2008. This reduction in natural gas expenditures would reduce electricity rates in these regions, an additional benefit for electric power consumers.
ACEEE’s Elliott noted that rapidly rising gas prices are forcing industries to close or move production to other countries. The study shows that higher levels of energy efficiency and renewable energy would stem this decline.
In the wake of the northeastern blackout in August, Wooley of the Energy Foundation said that the policies that help reduce energy prices are consistent with steps needed to avoid future electric system failures.
A copy of the summary report can be downloaded from ACEEE.
