During his first week in office, President Trump withdrew from the Paris climate agreement, declared an energy emergency, renewed his vow to “drill, baby, drill,” and began dismantling American climate policy. That has left environmental advocates looking to states to lead the nation’s efforts to burn fewer fossil fuels — and a report released Wednesday shows there is much more they can do.
One of the most powerful tools at each state’s disposal is the ability to work with utilities to encourage energy efficiency. But, the report from the American Council for an Energy-Efficient Economy, or ACEEE, details how only 26 states, along with the District of Columbia, have established a so-called “energy efficiency resource standard,” or EERS. These targets, set by legislators or utility regulators, require utilities to implement programs — such as weatherization or rebates on appliances — that cut energy consumption by a certain amount each year.
“There is more work that needs to be done,” said Jasmine Mah, a senior research analyst at the Council and an author of the report. Since 2012, just three states have added such a standard, while New Hampshire, Ohio, and Iowa repealed theirs in favor of less ambitious or scaled back programing. Arizona is also pursuing a rollback. Mah says the report is aimed at state policymakers and regulators, who could shift that tide.
“We hope that highlighting the positive impacts of having an EERS in place would encourage states to pass a policy,” she said. An earlier ACEE report found that, as of 2017, states with an energy efficiency resource standard saw four times the electricity savings as states without one. In 2023, states with such a plan accounted for about 59 percent of the U.S. population but 82 percent of the savings.
“States aren’t doing this just because of climate change,” said Barry Rabe, a political scientist at the University of Michigan who studies energy and climate politics. “There is an economic advantage.”
Fossil-fuel friendly Texas, Rabe noted, was the first to adopt an EERS in 1999. But efficiency can become less of a priority when energy supplies are abundant and costs are stable. “The decline in interest,” Rabe said, “has in some degree coincided with the massive increase in natural gas use in the U.S.”
Still, the Council also found that many states have gone beyond baseline policies and implemented what the report dubs “next-generation” initiatives that aim to lower greenhouse gas emissions, spur electrification, serve lower-income populations, and reduce consumers’ financial energy burdens. All but four of the 27 states (including DC) with an energy efficiency resource standard have implemented at least one such effort, but only nine have adopted all of them, leaving plenty of room for growth.
“We found that low income targets are the most common complimentary goal related to efficiency standards,” said Mah. “[But] not many states had provisions for energy affordability.”
The report spotlights five states that have been particularly effective at employing these programs. Illinois has targeted using only clean energy by 2050. Massachusetts aims to install half a million heat pumps by 2030. Michigan mandates that utilities dedicate at least 25 to 35 of their energy efficiency funding to programs serving low-income customers. Utilities in New York and Minnesota have capped the portion of a customer’s income that can go toward utility costs at 6 and 4 percent, respectively.
President Trump’s push to repeal the 2022 Inflation Reduction Act, or IRA, likely won’t impact state EERSs because they are generally funded through fees added to utility bills. “We see that as probably the best way to bring significant funds,” said Justin Brant, the utility program director at the Southwest Energy Efficiency Project.
Critics of Arizona’s EERS, which was adopted in 2010, point to the $3 billion cost to customers. “Utilities should select the most cost-effective energy mix to provide reliable and affordable service, without being constrained by government-imposed mandates that make it more expensive for their customers,” said Arizona Corporation Commissioner Nick Myers, in a statement last year. But the state’s largest electric utility found that, in 2023, EERS investments reaped about twice as much in returns as was spent.
“We’re saving money for all customers, even those who aren’t participating,” said Brant.
The IRA does provide nearly $9 billion for energy efficiency and electrification programs, almost all of which is distributed via states and could be used on next-generation programs, like those serving low-income households. That money has already been awarded. But the Republican-controlled Congress could roll back federal tax credits for energy efficiency and electrification, which indirectly make it easier for states to achieve their energy efficiency resource standard and next-generation goals.
Brant says he would add another policy to the Council’s “next-generation” wishlist for states: programs that encourage customers to spread out the timing of their daily energy use. Lower peak demand means power plants don’t need to be as large and that, he said, will be especially critical as renewable energy becomes an increasing part of the country’s electricity mix.
“Time shift is not something that this report looked at,” he said. “I think that’s another piece that needs to be prioritized.”
