Energy Sources

Conservation and Energy Efficiency


Energy efficiency represents about 40% of the potential reduction in greenhouse gases that can be achieved globally at a cost of less than €60 ($81) per tonne of carbon dioxide (CO2) equivalent. The U.S. alone could realize more than $1 trillion in energy savings by 2020 if a comprehensive effort is made to reduce barriers and implement programmes across the economy.

Source: McKinsey & Company, Energy efficiency: A compelling global resource, 2010 (


Conservation and Energy Efficiency has been broken into Residential, Commercial, Industrial and Transportation


In the U.S., 114 million households and more than 4.7 million commercial buildings account for 40% of total energy use, more than either the transport sector or the industry sector. Buildings account for 76% of the electricity and 36% of the natural gas consumed in the U.S.

Source: U.S. Department of Energy, Energy Efficiency Trends in Residential and Commercial Buildings (

Since 1980 U.S. residential energy consumption has decreased by 11% per unit of floor space, and by 41% in relation to gross domestic product (GDP). Nonetheless, there is potential to improve efficiency considerably further.

Source: McKinsey & Company, Energy efficiency: A compelling global resource, 2010 (

In the Energy Information Administration’s "reference case" scenario, the average amount of energy used annually by every U.S. household (its "energy intensity") will decline by 19.8% by 2035. But the decline in energy intensity could be much greater with continued improvements in energy-saving technologies for both buildings and appliances, such as televisions, personal computers and lighting.

Source: Energy Information Administration, Annual Energy Outlook 2012 (

Just by using existing energy-saving technologies, consumers and businesses in developing countries could save $600 billion a year by 2020. They could slow energy demand growth by more than half, leaving demand about 25% below the level it might otherwise reach by 2020, accounting for an energy-saving equivalent to the total current energy consumption of China.

Source: McKinsey & Company, Energy efficiency: A compelling global resource, 2010 (

In the U.S., federal energy efficiency standards for household appliances issued since 2009 will save consumers an estimated $350 billion on their energy bills through 2030.

Source: US Department of Energy (

The growing number of domestic appliances, especially in fast-developing countries, will drive increased energy consumption in the household sector. Uptake of energy-efficient appliances could help to temper growth in households' electricity consumption.

Source: McKinsey & Company, Energy efficiency: A compelling global resource, 2010 (


Germany has the potential to reduce the energy used in its buildings to 75% of 2008 levels by 2020, saving €21 billion ($28.4 billion) per year. Commercial and public buildings account for about one-third of total energy used in German buildings (380 terawatt hours in 2008).

Source: McKinsey & Company, Energy efficiency: A compelling global resource, 2010 (

Realistically, the achievable savings from energy efficiency in U.S. buildings will amount to between 7% and 8% by 2020. Upgrading commercial lighting equipment and other savings measures in this area offer the greatest scope for savings, with efficiencies in cooling systems also a major contributor.

Source: American Council for an Energy-Efficient Economy (ACEEE), "Assessment of Achievable Potential for Energy Efficiency and Demand Response in the U.S. (2010 – 2030)" (

Data centres represent one of the most significant areas of potential energy savings for the U.S. commercial sector. For some information-intensive businesses, data centers account for one-half of their carbon footprint. The number of servers in data centers in the U.S. is growing by 10% per year, with costs rising at a rate of 20% per year, or more than three times the rate of overall information technology (IT) budgets. The world’s 44 million servers have the carbon emissions equivalent to a country the size of Argentina, and without efficiency efforts these emissions will quadruple by 2020.

Source: McKinsey & Company, Energy efficiency: A compelling global resource, 2010 (

Several European countries have introduced initiatives to improve the energy efficiency of buildings. The government of the Netherlands, for example, aims to reduce the energy use of commercial buildings to 50% of 2009 levels by 2015. In France, all new buildings are expected to be "energy positive" (produce net energy) by 2020.

Source: European Commission, Low Energy Buildings in Europe (

Energy demand by commercial buildings in the US is forecast to increase by just 9% through 2035, even though commercial floor space is expected to increase by three times that amount. Energy efficiency savings will come from technologies such as distributed generation and combined heat and power systems, as well as more efficient office equipment, especially personal computers.

Source: US Energy Information Agency, Annual Energy Outlook 2012

U.S. commercial buildings that achieve the "Energy Star" label of the Environmental Protection Agency (EPA) – awarded to buildings that rate 75 or higher on the EPA’s 1-100 energy efficiency scale – use on average 35% less energy than similar buildings.

Source: Environmental Protection Agency and Department of Energy, Energy Star Program (


Rising energy costs have increased the return for companies on investments in energy efficiency. The return on investments made to optimize energy use was generally about three times greater in 2006 than it was in the 1990s, when oil was about 25% cheaper.

Source: McKinsey & Company, Energy efficiency: A compelling global resource, 2010 (

Over the years improvements in industrial energy efficiency in the member states of the European Union (EU) have varied considerably. Generally, the countries in eastern Europe have shown greater efficiency gains (of up to nearly 9%), while the more mature, large economies in the west have shown the lowest rates of efficiency gain (2% or lower) annually between 1998 and 2007. The EU average is below 2%.

Source: Odyssee database, managed by Enerdata for ADEME (

Energy efficiency in industry improved by 30% in the EU-27 between 1990 and 2007, with the chemicals sector leading the improvement. However, the rate of improvement was markedly lower after 1998.

Source: Odyssee database, managed by Enerdata for ADEME (

If the US were to take full advantage of currently available information and communication technologies to improve energy efficiency, it could reduce energy consumption by up to 22% between now and 2020, and save hundreds of billions of dollars.

Source: Association of Computer Electronics and Electrical Engineers, A Defining Framework for Intelligent Efficiency, June 2012 (

Most manufacturing companies can improve their current overall energy efficiency by 10% or more with a relatively small investment, and by up to 35% with a substantial investment. Savings vary by sector, but typical savings among integrated steel companies in Europe and the US are between 10% and 15%, and 10% to 20% for chemical companies.

Source: McKinsey & Company, Energy efficiency: A compelling global resource, 2010 (

Global energy demand for industry will increase by 49% between 2010 and 2035, increasing its share of total global energy demand from 27% to 29%. Developing economies will account for most of the growth, with China alone accounting for more than one-third of the growth. Natural gas, electricity and renewable energy sources will see demand growth of 2% a year or more, whereas demand for coal and oil will grow much more slowly.

Source: International Energy Agency, World Energy Outlook 2011


Improvements in the government-mandated energy efficiency of vehicles in the U.S. are expected to slow the rate of growth of the sector’s energy demand. Energy consumption for transport is expected to grow at a rate of 0.1% per year between 2010 and 2035, much slower than the 1.2% average annual growth rate seen between 1975 and 2010.

Source: Energy Information Administration, Annual Energy Outlook 2012 (

In the EU, car emissions fell from 159 grams of carbon dioxide (CO2) per kilometer in 2007 to 154 grams of CO2/km in 2008, but that was still much higher than the target of 140 grams of CO2/km. The EU has new rules that will require car emissions to fall gradually to 95 grams of CO2/km in 2020.

Source: European Environment Agency, "TERM 2011" (

The marine transport industry accounts for about 10% of global transport energy consumption. There is a great deal of scope for energy efficiency improvements, but a particular challenge is the fact the vessels typically have long lives – around 30 years. A combination of retrofit and operational technologies could improve existing ship efficiency by 40% or more, and new ships can be up to 65% more energy efficient.

Source: World Economic Forum, Repowering Transport, 2011 (

By avoiding speeding and aggressive stopping and starting you can reduce your gas mileage by 33%. Each 5 miles per hour (mph) you drive above 50 mph is the equivalent of paying an additional 26 cents a gallon for gas. Excess weight in the vehicle and idling is also inefficient and costly.

Source: US Department of Energy, Driving more efficiently (


Energy efficiency technologies are already in place.

Energy efficiency and conservation programmes can save residents and businesses billions of dollars. Such programmes can reduce a country’s reliance on foreign sources of energy and diminish the impact of a city’s energy consumption on the environment.

Source: McKinsey, Unlocking Energy Efficiency in the US Economy (

New technologies will improve efficiency and will become the standard.

As older equipment and buildings are replaced over the next two decades, cities will have increasing opportunities to standardize energy-efficiency measures.

Source: McKinsey, Unlocking Energy Efficiency in the US Economy (


Diminished opportunity for savings without stronger incentives.

While consumers may use new efficient products, most buildings/appliances may not be replaced/upgraded by 2015 without strong government incentives or an increase in energy prices.

Source: International Energy Agency, World Energy Outlook 2011 (

More efficient construction will still entail higher upfront costs.

Efficient buildings, appliances and machinery are more expensive to purchase than older models, and government incentives or financing programs are often needed to reduce these upfront costs.

Source: McKinsey, Unlocking Energy Efficiency in the US Economy (