Energy Efficiency Policy Challenges in the U.S.

Margaret Tan, Melissa Weeks, Valerie Virgona

Summary of Recommendations

Energy efficiency policy in the United States can be described as:

  • Predominantly local and State level; lacking in federal regulation
  • Mostly voluntary statutes and programs
  • Needing to overcome government roadblocks such as oil lobbyists
  • An opportunity to bridge the gap to clean energy and reduce green house gas emissions
  • An opportunity to create jobs and boost the economy

Energy efficiency has vast potential to benefit the United States. If practiced on a nationwide level, it could lower energy bills, stimulate the economy, reduce greenhouse gases and increase energy security. Government policy can be designed to establish targets for energy efficiency in industry along with residential establishments. There must be a unified federal standard for energy efficiency which is strictly regulated. In order to be successful, the program must be effective on a financial and environmental standard. In regards to energy efficiency policy in the United States, there are opportunities and challenges, along with some best practices already being implemented.


There are opportunities for energy efficiency policy today in the United States. There is a movement for legislation on this subject, in order to decrease fossil fuel dependence, benefit homeowners, and stimulate the economy. The first step in establishing energy efficiency nationwide is to create a comprehensive standard for buildings to be created to meet or retrofitted to meet. The International Energy Conservation Code (IECC) established by the International Codes Council (ICC) aspires to set this standard. The most recent version of this code, the 2012 IECC, aspires to improve residential home efficiency standard (as set by the 2006 IECC) by thirty percent. (“Government Officials Adopt Energy Codes”)

The agenda seeks to consolidate the International Residential Code on home energy efficiency to refer solely to the 2012 IECC standards. Another motive is to encourage efficiency over the life of a building rather than focusing on short-term effects. Another step of the 2012 IECC is to consider these conservation methods using a whole-house approach. The code sets up energy and construction standards for different climate zones in the United States. In order for the International Energy Conservation Code to meet the challenge of increasing energy efficiency by 30%, there are several expectations for residential buildings. One important factor is to build better thermal envelopes in these family size buildings. This includes better insulation and doors and windows that lock in heat or cold better. It also calls for more extensive duct leakage testing in HVAC (heat, ventilation and air conditioning) systems and improvement in standards. There are more stringent requirements for pipe insulation. In addition, 75% of lighting fixtures must be energy efficient, as opposed to 50% in the 2009 IECC. (“Government Officials Adopt Energy Codes”)

The International Energy Conservation Code strives to influence states to become more efficient and focused on their energy use. The 2012 IECC will be the most stringent and effective method to achieve this. While it may take states time to achieve these standards, it is important to have a model and standard by which states can mandate these energy efficiency practices and infrastructure.

There are already opportunities that are beginning to be explored on a statewide level. They could have an effect on energy efficiency in the home. If explored and implemented extensively, energy policy in the US could drastically reduce the consumption of fossil fuels through more efficient use.

One piece of legislation that is striving towards this goal is the Green Jobs, Green New York bill that passed in 2009. This initiative strives to save homeowners money, increase energy efficiency, boost New York’s economy and strengthen the related workforce. The Green Jobs Green New York program will allow residents to access free or reduced cost energy audits, access to certified contractors to install necessary features and low cost financing for these projects. (“Green Jobs- Green New York”)

This program is vital because it allows access to better energy efficiency to those who would otherwise not be able to afford it. This reduces energy cost for the homeowner and reduces the country’s dependence on fossil fuels as a whole. With the economy in the state it is in, this is an attractive choice for homeowners.

The Green Jobs Green New York program offers low interest loans to homeowners. The program is funded by revenue generated by the auction of carbon emission credits via the Regional Greenhouse Gas Initiative. The money will be used for private and federal investments. NYSERDA received $112 million from these carbon emission credit auctions. These auctions generate great revenue. The program then set up by NYSERDA is the revolving loan program. The loans range anywhere from a few thousand to 26,000 dollars. These loans make the program very attractive. Property owners repay the loans over time and their energy usage will typically be reduced by 30-40%. The payment on their energy bill for the loan must be less than what they saved that particular month. This entails that the owner will not be harmed financially by getting their home retrofitted. This program is aimed to give aid to the middle-income residents who are often left out by other programs. These households surpass the maximum income for the Weatherization Assistance Program but cannot afford to pay for these necessary retrofits on their own. (“Senate Passes ‘Green Jobs, Green New York’ Bill”)

Another positive aspect of the Green Jobs Green New York Program is the workforce development involved. The opportunity to create a new workforce for this specific cause will create job opportunities. Local contractor jobs will be created to do this work. The contractors must be BPI certified in order for the homeowner to access the financing options provided. Contractors will have to hire larger local crews to perform retrofits. This will create new and permanent jobs in New York. Local business and manufacturing will receive a boom. This will expand the green jobs movement and will also be beneficial to the economy. (“Senate Passes ‘Green Jobs, Green New York’ Bill”)

These opportunities to increase energy efficiency are being explored today in the United States. There is promise in government legislation to meet energy efficiency goals. However, there are challenges that must be faced in order to increase this movement on a nationwide basis.


In the efforts to create policy that implements energy efficiency nationwide, there are challenges to be met. There are ongoing debates among politicians on what route to take towards an energy efficient future making it difficult to write an effective policy. One of the main debates is whether policy should focus on limiting mass consumption or funding research for alternative energy sources or using the resources we have more efficiently. It can be argued that the United States has had moments of instability (short supply of oil and high prices) but overall has maintained a stable source of energy. With no imminent crisis facing America, an energy policy favoring sustainability has not been a priority for legislators. An energy policy that would protect the United States from threats of short supply and high prices would exclude the public from taking advantage during times of high yield and cheap energy. Is this a trade off Americans are willing to take?

In the United States, energy consumption is at an all time high, and most people are unaware what a huge burden this places on the Earth. It is time for the Federal government to step in and take some initiative in solving these problems but it has failed to do so repeatedly. Some of the biggest challenges to energy efficiency in the United States can found at the Federal level. These challenges stem from large oil and coal companies’ large “donations” to elected officials, which lead to energy policies that are dramatically in favor of continued fossil fuel usage. While it would be incorrect to put the burden of energy efficiency on the Federal Government, there are many ways in which the government has failed aide the American citizens who would like to live more sustainably.

One of the crucial ways in which the government can promote and aid American citizens to go green is to subsidize and invest in renewable energy practices. However, in the fiscal years 2002-2008, the fossil fuel industry benefitted from government subsidies up to $72 billion, in comparison with renewable energy industries, which only received $29 billion (Environmental Law Institute). The government does not seem to be taking the environmental issues very seriously if it continues to invest more on fossil fuels than on renewable energy. It is indirectly choosing to promote fossil fuel usage by allowing the fossil fuel industry to grow economically larger than the renewable energy sector. Most Americans can and will continue to consume fossil fuels because government subsidies make it affordable to do so.

Some of the tax breaks that benefit the coal industry exclusively such as the “Credit for Production of Nonconventional Fuels,” which provides a tax credit for the production of certain fuels, such as oil from shale, or tar sands. Another tax break for the coal industry include listing income made the sale of coal as capital gain so that they are not subject to an income tax. There exists a $16.4 billion tax break to crude oil refineries as well. Energy policy these days are plainly written to benefit fossil fuel industry, and with the policies in place, it is nearly impossible to get a good piece of energy efficiency policy passed in the House or the Senate.

It is unclear whether these tax breaks are written into law because the American people are fixated on saving what is a dying industry, or if the gas and coal companies have somehow convinced the government to help them. This does reflect a shortcoming on the American government however and where the United States government stands on the future of energy usage in this country. They are not concerned that the continued investment into fossil fuels will only degrade the environment and cause future harm to its citizens because these energy resources will not last. Continuing to invest in new forms of fossil fuel extraction will only push back the inevitable future in which fossil fuel resources will run out.

Besides investing so heavily into the fossil fuel industry, the United States government has failed to pass bills that would benefit the renewable energy sector. This is a young industry that is still growing and would benefit from (and possibly need) government assistance in order to survive and prosper. Some of the largest tax breaks for renewable energy goes towards bio-fuels, especially corn ethanol-based fuels. Corn ethanol was originally thought to be safer and cleaner for the environment but after examining the process of producing corn ethanol, one comes to conclusion that it requires a large amount of energy input that negates the amount of energy one gets from corn ethanol.

Another criticism about current Energy Efficiency Policy in the United States is the fact that most of the policies that benefit the renewable energy sector are time limited whereas the ones that benefit the oil and coal industry are permanently written into tax code. This highlights one of the biggest challenges to Energy Efficiency Policy. The importance of oil and coal are ensconced into U.S. policy, it would be difficult to change politicians’ minds. To move forward from oil and coal, would require a large amount of revisions, which few politicians would take on. This is partly the workload, and because most politicians would not want to upset such a large economic player in the U.S. economy. There must be something done about the current Energy policy that so heavily favors fossil fuels if the United States wants to seriously address sustainable living. The fact is, fossil fuels and renewable energy contradict each other so heavily, that the U.S. cannot continue to keep policies that favor fossil fuels and expect to pass bills that would also benefit renewable energy.

States can take matters into their own hands by enacting local environmental regulations but federal law can prevent states from creating laws stricter than federal law. This is called Federal ceiling Preemption. When California tried to pass a law to regular motor vehicle greenhouse gas emissions, the EPA initially rejects California’s petitions because they were stricter than the regulations found in the Clean Air Act. Part of the rationale for denying California the right to more stringent environmental regulations was the fact that California would impose higher costs to out-of-state consumers and the automobile industry. If California passed such strict regulations, they would have affected the country as a whole.

One example that may more sense to New York State residents concerns hydraulic fracturing. Individual counties have created zoning laws that will make it illegal for gas drilling companies to extract natural gas on their land. This was necessitated by the shortcomings of Federal and State regulation and the fact that people no longer believe that the government is on the side of the people, but rather the gas companies. The government has demonstrated that it is not interested in promoting sustainable living but rather on making quick easy money and continuing a life that is heavily entrenched in fossil fuel consumption. There was a special exemption made in the Safe Drinking Water Act for hydraulic fracturing most likely in relation to the reports that fracture fluid had contaminated large amounts of drinking water. This is not a government that is dedicated to creating Energy Efficiency Policy.

Best Practices

There are best practices already being implemented today. As far as federal policies regarding energy efficiency go, there are many government Act’s and regulations that strive to meet many of the challenges listed earlier; however, some fall short when it comes to the effectiveness of regulating. An example of a federal level policy that has enormous potential is the Environmental Protection Agency, or EPA’s, Energy Policy Act of 2005. Focusing specifically on provisions regarding building energy efficiency, this Federal Act not only offers tax incentive programs but also goes as far as offering funding for state and local weatherization programs similar to Green Jobs Green New York. (Dixon, 2010) With the Economy as it is, the most effective way to get homeowners to care about energy efficiency is to make it economically feasible. The term tax incentive is highly attractive to majority of residents in the United States, and the accessibility of funding is a must; families do not necessarily have the ability to write a check for thousands of dollars to improve the efficiency in their homes. There are also federal grants outlined in this Act that are addressing the issue of environmental justice; these are designed specifically for low income communities. (Dixon, 2010) These grants are part of the Low Income Community Energy Efficiency Pilot Program, section 126 of the Act, and offer financial assistance to aid in development of increasing building efficiency, along with other energy improvements such as renewable resources. (Environmental Protection Agency, 2005)

The Energy Policy Act of 2005 also addresses the challenge of voluntary regulations. If government regulations are voluntary, there may be little incentive for States and businesses to make their buildings greener. This act uses incentives to make these voluntary regulations, such as implementing energy efficient building codes, more attractive to other entities in hopes that they adopt and abide by them. (Dixon, 2010) Though in a perfectly efficient world, there would only be mandatory energy policies, this act seems to be a bridge to effective efficiency in buildings.

Updated energy goals and performance standards are also present in this policy. The authorization of metering, in order to verify and measure energy use is a goal for energy reduction in federal buildings. (Dixon, 2010) These meters are to be in action by October 2012, and will record advanced energy use measurements such as daily and even hourly use in all federal buildings. (Environmental Protection Agency, 2005) Building performance standards were revised to include up to thirty percent reductions in energy use in federal buildings. (Environmental Protection Agency, 2005) This can be seen as a step towards energy efficiency monitoring in privately owned buildings and even homes.

Many federal level policies regarding energy efficiency have been very similar to the Act presented above. There is one state, however, that goes above and beyond what any federal level policy has done; California. California has been a thriving leader in all environmental fields, including renewable energy and especially energy efficiency. Being that California is the most populous state, it would not be farfetched to enact some of its policies at the federal level. For example, they are striving for net zero energy construction in new homes. This policy can be found in the Long Term Energy Efficiency Strategic Plan of the California Public Utilities Commission (CPUC). The goal is to start net zero construction in 2020. (Mann, 2010) There is a supplementary legislation, Assembly Bill 212, which will require the California Energy Commission to abide by and implement standards directly related to achieving this goal. (Mann, 2010) California is continuously revising energy policies so that they may maintain their status as world environmental leaders. The following policy is the best example of effective energy efficiency policies in the United States.

The Home Energy Rating System, or HERS, is yet another California state level policy that the federal government would be foolish not to adapt. Phase I of this program was adopted in 1999, and included basic operating principles such as training professional raters and collecting data; Phase II is meant to give whole house ratings to both existing and newly constructed residential buildings. (California Energy Commission, 2009) The primary purpose of the act is to create statewide, uniform assessments of energy efficiency in homes. These ratings will extend to those looking to purchase or rent homes, and will become a part of the entire real estate market. (California Energy Commission, 2009) If this kind of rating system for residential dwellings existed nationally, not only would the entire country know more about energy efficiency, but buyers and renters could make better decisions when choosing a home anywhere in the United States. With energy efficiency ratings affecting the appeal and value of a home, green house gas emissions could drastically decrease.

There are several aspects of the HERS regulations that make it successful. For starters, the ratings are based on data from numerous categories. The audits have to be performed by a building performance contractor; someone who is trained specifically in this field. (California Energy Commission, 2009) This kind of training and licensing has the potential to create thousands of jobs across the nation. The auditor analyzes everything from electrical appliances to space heating and cooling. This program even takes renewable energy sources into account, such as solar panels; if an American home has an increased value due to the presence of renewable energy resources, then it may be an incentive for more Americans to move towards clean energy. (California Energy Commission, 2009) The rating scale goes from 0 (being net zero energy) to 100, so there is room for individualism and a large range of efficiency levels to compare and contrast. Similar to the EPA Act of 2005 for federal buildings, audits will conduct hourly energy readings over a period of time to achieve the most accurate results possible. (California Energy Commission, 2009)

This program is actually very similar in procedure to Green Jobs Green New York; both provide highly trained professionals to perform audits, recommend a scope of work, and require contractors to provide truthful and satisfactory efficiency upgrades. The California regulations require each participating contractor to employ a quality assurance staff. (California Energy Commission, 2009) If taken to a federal level, there would need to be an agency, such as California’s Energy Commission, to annually review the policies and their performance.

It’s very possible for a system such as this to be adopted at the federal level. Interest has been shown by federal agencies; the United States Department of Energy provided the initial funding for the five-year Pilot program of HERS in California as well as six other states. (Plympton, 2000)

For Further Information

Green Jobs Green New York - A local, New York State program.

US Department of Energy - Here you can find past and present federal energy regulations.

California Energy Commission - California is a front runner in energy efficiency policy.

“Driving Demand” - Get a grasp on Policy barriers.

Works Cited

California Energy Commission. (2009). Home Energy Rating System Regulations. Retrieved from

Dixon, R. K., McGowan, E., Onysko, G., & Scheer, R. M. (2010). US energy conservation and efficiency policies: Challenges and opportunities. Energy Policy, 38(11), 6398-6408. Retrieved from EBSCOhost.

Environmental Protection Agency. (2005). Energy Policy Act of 2005. Washington, D.C. Retrieved from

“Estimating U.S. Government Subsidies to Energy Sources: 2002-2008” Environmental Law Institute. 2009.

Governmental Officials Adopt Historic Efficiency Boost to America’s Model Energy Code Governing Residential Construction and Renovation." Residential Energy Efficiency Savings from Improvements to 2012 IECC. Energy Efficiency Codes Coalition. Web. 7 Dec. 2011.

"Green Jobs - Green New York." New York State Energy Research and Development Authority. New York State. Web. 07 Dec. 2011.

Mann, S. (2010). California's Advanced Homes Program. Home Energy, 27(5), 6-8. Retrieved from EBSCOhost.

Plympton, Patricia. (2000). National Status Report Home Energy Rating Systems and Energy – Efficient Mortgages. Golden, Colorado. National Renewable Energy Laboratory. Retrieved December 8, 2011, from

"Senate Passes "Green Jobs/Green NY" Bill." New York State Senate. New York State Senate. Web. 06 Dec. 2011.

“Unlocking energy efficiency in the U.S. economy” McKinsey & Company. 2009. Hydraulic Fracturing and the Safe Drinking Water Act. EPA Website