It may sound simple, but one way to significantly reduce greenhouse gas (GHG) emissions is through energy efficiency. Investing in energy efficiency could reduce GHG emissions by 1.1 gigatons a year, according to a report by McKinsey & Company titled, “Unlocking Energy Efficiency in the U.S. Economy.” It could also cause a 23 percent drop in energy use by 2020, and save the U.S. economy $1.2 trillion. A $520 billion investment would be required.
The report recommends strategies to increase energy efficiency, including recognizing it as an important energy resource. The other recommendations are as follows:
- Formulate and launch at both national and regional levels an integrated portfolio of proven, piloted, and emerging approaches to unlock the full potential of energy efficiency
- Identify methods to provide the significant upfront funding required by any plan to capture energy efficiency
- Forge greater alignment between utilities, regulators, government agencies, manufacturers, and energy consumers
- Foster innovation in the development and deployment of next generation energy efficiency technologies to ensure ongoing productivity gains
Ken Ostrowski, senior partner at McKinsey, said, “Energy efficiency, by its nature, is quite challenging to capture… Part of this is the heavy fragmentation of the opportunity. It comes in lots of small little bites. So the relative significance of any individual energy efficiency measure to a consumer or a business is small.”
A report by the American Council for an Energy-Efficient Economy (ACEEE), authored by Skip Laitner came to similar conclusions as the McKinsey report. Investing in energy efficiency could lead to one-half of the needed GHG emissions reductions by 2050, according to the report. Investing in energy efficient technologies could result in “substantial net energy bill savings” for both consumers and businesses. The report estimates that the savings could total $2 trillion by 2050 in 2007 constant dollars.
The report pointed out that non-energy expenditures in U.S. “tend to be more labor-intensive” and contribute a greater rate to GDP compared to expenditures on energy. However, investing in energy efficiency will not take away jobs, but provide a “small but net positive gain in the economy.” Shifting away from producing and consuming conventional energy resources to “more productive investments in energy-efficient technologies” can help the economy and create jobs.
“The evidence shows that productive investments in energy-efficient technologies can enable the U.S. economy to save money and to substantially reduce its greenhouse gas emissions – both immediately and by mid-century,” said Laitner, director of ACEEE’s Economic and Social Analysis Program.