Energy Efficiency: Better Lightbulbs and Beyond

Mark Muro and Jonathan Rothwell

Not everyone likes the Obama administration’s newly announced lightbulb standards. Republicans in Congress have accused the president of focusing on trivial measures and intruding excessively into the private economy. The latter complaint is misguided: The Energy Department is only speeding up rulemaking on standards that were already required by the 2007 energy bill, which President Bush signed into law. But that aside, such standards are far from trivial. Improving the efficiency of our built environment is actually a crucial component of solving the nation’s energy quandary.

The rationale for having the government, rather than the market, set efficiency standards for lighting and other appliances is fairly straightforward. Building and real-estate markets are highly fragmented, and none of the many players—banks, mortgage companies, architects, landlords, contractors, decorators, renters, utilities—have a clear and consistent incentive to demand or install energy-saving innovations. Having the DOE speed up the adoption of bulbs that will be up to 80 percent more efficient than current models will help consumers save $4 billion per year on energy bills between 2012 and 2042, and will eliminate the need for two to seven gigawatts of electricity generation—as many as 14 coal-fired power plants.

Yet bulbs are just the beginning. As a recent Brookings Institution report on the carbon footprint of U.S. metropolitan areas shows, lighting is just one sliver of the massively inefficient energy system that is the nation’s built environment. The energy used by buildings accounts for 39 percent of U.S. carbon emissions. Transportation between those buildings, meanwhile, generates another third of the nation’s carbon output. In fact, we calculate that transportation accounts for 50 percent of the growth in U.S. carbon emissions since 1991, thanks, in part, to the super-suburbanization of America’s metro areas encouraged by federal policies, from disproportionate highway funding to lending and tax provisions that encourage single-family homeownership in low-density neighborhoods. No wonder vehicle miles traveled per household increased 50 percent between 1970 and 2005.

All of which underscores why the government should be going much further with “little stuff” like lightbulb rules. Plenty of good ideas are already floating around. To promote building efficiency, for instance, the Department of Housing and Urban Development (HUD) has proposed a $100 million energy-innovation fund to “catalyze a residential energy retrofit and new construction market in the United States,” which will support local initiatives and utility efforts, and expand the Federal Housing Administration’s Energy Efficient Mortgages program, which currently supports a mere 1,000 mortgages each year.

At the same time, federal agencies are moving to reform the fragmented and sprawl-promoting policies on transportation, energy, and buildings. The Department of Transportation, HUD, and the EPA recently announced “livability principles” that would boost energy efficiency by supporting walkable communities, mixed-use and transit-oriented development, and favor existing communities over new sprawling developments. HUD also wants to use $150 million in Community Block Grant Development money for a Sustainable Communities Initiative that will “integrate transportation and housing planning decisions in a way that maximizes choices for residents and businesses, lowers transportation costs and drives more sustainable development patterns.” Additional grants would be available for reforming local zoning codes and overhauling state building codes.

Other initiatives are in the works, too. Reform ideas are circulating around the massive transportation reauthorization bill, which typically invests disproportionately in highways (as opposed to rail and mass transit), and so drives up energy use in metro areas. And congressional committees have also heard testimony proposing the creation of new “sustainability challenge contracts” that would reward the localities and states that devised the boldest new development patterns that reduced carbon emissions. If all of that comes to pass, the overall effect will be far from trivial.