Quantifying Energy Efficiency's Potential In Developed And Developing Countries


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Policy makers and business owners alike have promoted efficiency investments as a way to generate high returns while saving energy.

Anecdotal evidence presents a convincing case. Between 1991 and 2006 DuPont saved $3 billion by reducing its emissions 80 percent. The company cites efficiency gains in manufacturing, building, lighting, and air compression, as the source of their revenue. Pacific Gas and Electric's ACT2 project pursued efficiency by providing incentives for integrated design in commercial and residential buildings, for example, encouraging increases in window glazing and insulation in order to downsize HVAC systems. Savings averaged 40 to 50 percent of baseline energy consumption for retrofit projects and 50 to 65 percent of the projected energy consumption for new construction sites.

But what would happen if anecdotes like these became widespread?
This month, two new reports quantify countrywide economic opportunities for efficiency.

The first report, published by Rocky Mountain Institute, finds the United States could save 30 percent of its current electricity generation if states with lower energy productivity (a state's economic output per energy consumed) matched the performance of states with higher energy productivity. See this interactive map for state-by-state comparisons.

The second, published by McKinsey Global Institute (MGI), finds the developing world could save the equivalent of China's total energy consumption in just twelve years.

What will it take to capture these savings?
Efficient building codes and measures to make efficiency profitable for utilities, such as decoupling, have proven successful according to Rocky Mountain Institute. A follow-up report will document solutions for closing the electric productivity gap.

MGI finds efficiency gains are inhibited by a range of market failures and informational barriers, including capital constraints, a lack of information for consumers to make educated choices, and tight credit markets.

To overcome these hurdles, the research institute echoes Rocky Mountain Institute in emphasizing the need to finance efficient buildings and retrofits, and to provide incentives to utilities, encouraging them to improve their efficiency--and that of their customers.

MGI further recommends that governments reduce energy subsidies and enforce energy efficiency standards.

Already, developing countries have gone a far way toward crafting benchmarks. In fact, CAFÉ standards and Energy Star labels in the United States are beginning to look weak in comparison to Indonesia's adoption of UN auto energy efficiency regulations, for example, and Ghana's household appliance standards.

By: Rocky Mountain Institute, Maria Stamas


Additional, selected, RMI posts on TreeHugger,
34% Drop in US Electric Demand Possible Through Energy Efficiency ...
Climate Strategy: Every Dollar Counts
Profitable Climate Protection
Beating the Energy Efficiency Paradox (Part II)

Tags: Economics | Electricity | Energy Efficiency | Finances