Rewarding What Matters in Energy Efficiency

The report examines the shift from traditional energy efficiency programs, which focus on raw energy savings, toward 'climate-forward efficiency' that prioritizes GHG reductions. It identifies two types of performance incentive mechanisms (PIMs): 'explicit GHG' PIMs, which directly reward carbon reductions, and 'policy intent' PIMs, which implicitly encourage GHG reductions through fuel switching or time-based savings. The document highlights early implementations in New York, Vermont, and Washington, D.C., and suggests that tracking metrics and scorecards can serve as a starting point for states not yet ready for full PIMs.

• Traditional utility energy efficiency programs in the United States, despite receiving roughly $7 billion in annual spending, rarely dedicate funds to programs explicitly designed for greenhouse gas (GHG) emissions reductions because utility business models typically prioritize capital investment and sales growth over demand management.
• Performance incentive mechanisms (PIMs) for energy efficiency exist in 32 states, but most are based on direct energy savings (kWh or therms) and fail to account for the time, location, or fuel-switching value of GHG reductions.
• RMI and ACEEE categorize climate-forward efficiency PIMs into two groups: 'explicit GHG' PIMs, which expressly reward utilities for GHG reductions, and 'policy intent' PIMs, which implicitly reward reductions via fuel-neutral savings, time-based savings, program-specific PIMs, or net benefits calculations.
• New York is the only state with explicit GHG PIMs established long enough to show results; these PIMs reward utilities for lifetime CO2 or CO2e emissions reductions from beneficial electrification, with half of the state's six utilities achieving maximum rewards in the last two years.
• Most climate-forward efficiency PIMs are reward-only; the only known symmetrical PIM (including both rewards and penalties) is the 'Reduce GHG Emissions Benchmark' for the D.C. Sustainable Energy Utility, which offers a $1 million reward or penalty.

APA

RMI (2022). Rewarding What Matters in Energy Efficiency. https://rmi.org/resources/rewarding-what-matters-in-energy-efficiency/

Chicago

RMI. Rewarding What Matters in Energy Efficiency. 2022. https://rmi.org/resources/rewarding-what-matters-in-energy-efficiency/.

Wikipedia

{{cite report |author=RMI |title=Rewarding What Matters in Energy Efficiency |date=16 September 2022 |url=https://rmi.org/resources/rewarding-what-matters-in-energy-efficiency/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2022rewarding, author = {{RMI}}, title = {{Rewarding What Matters in Energy Efficiency}}, institution = {RMI}, year = {2022}, month = sep, url = {https://rmi.org/resources/rewarding-what-matters-in-energy-efficiency/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }