Energy Sources
Conservation and Energy Efficiency
Facts
Global energy intensity — the amount of energy needed to generate each unit of GDP—has fallen steadily over the last several decades owing to several factors, including improvements in energy efficiency. If no improvements in energy intensity had been made between 1980 and 2008, global energy consumption would be 32% higher today than it currently is. The equivalent amount of energy saved is comparable to the combined current consumption of the United States and the European Union.
Source: IEA. “World Energy Outlook 2010.” (http://www.worldenergyoutlook.org/)
Overview
Conservation and Energy Efficiency has been broken into Residential, Commercial, Industrial and Transportation
Residential
Weatherization projects can reduce residential energy consumption by over 30% in the US. These projects include improvements such as sealing ducts, insulating basements and attics, sealing home air leaks, installing wall sheathing, upgrading windows, and insulating slab foundations. Additional savings could be had by instituting time-of-day electricity pricing which encourages consumers to run appliances when electricity is cheapest.
Source: McKinsey. “Unlocking Energy Efficiency in the U.S. Economy.” (http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf)
Under the US Weatherization Assistance Program, which specifically targets low-income households, the US Department of Energy estimates that 30.5 million BTUs are saved each year, and that the program returns $2.69 for every dollar spent. The program has already served 6.4 million low-income households and was recently expanded as part of the American Recovery and Reinvestment Act, receiving $5 billion in additional funding.
Source: US DOE. “Weatherization Assistance Program.” (http://www1.eere.energy.gov/wip/wap.html)
Energy efficiency improved by over 8% in households in the European Union between 1997 and 2007, equivalent to an average efficiency gain of 0.8% per year.
Source: “Energy efficiency progress for households in the EU-27.” Odyssee: http://www.odyssee-indicators.org/reports/household/household9.pdf
Increasing the efficiency standards for home appliances would increase energy savings by nearly 30% in the US. Despite the fact that appliances have become more efficient in the past three decades, an increase in the number of electronics and appliances purchased has led to an overall increase in household energy consumption.
Source: McKinsey. “Unlocking Energy Efficiency in the U.S. Economy.” (http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf)
Source: American Council for an Energy Efficient Economy (ACEEE). “Residential Sector: Homes & Appliances.” (http://www.aceee.org/sector/residential).
It is not uncommon for residential properties in developing countries to not be billed for the actual amount of electricity that they use as many properties are not metered. As a result, there is little incentive to conserve or use energy efficiently. Increasing the number of residences that are metered could therefore improve efficiency without incurring costs associated with new technologies.
Source: “World Energy Outlook 2010.” IEA.
The biggest opportunity for energy savings in homes will come from electronic devices. In the US alone, the energy savings potential of efficient electronics will double between 2020 and 2030. In developing countries, where electronics usage is expected to soar, it will be increasingly important to promote energy efficient products.
Source: EPRI. “Assessment of Achievable Potential from Energy Efficiency and Demand Response Programs in the U.S. (2010–2030).” (http://my.epri.com/portal/server.pt?space=CommunityPage&cached=true&parentname=ObjMgr&parentid=2&control=SetCommunity&CommunityID=405).
Homeowners who rent homes/apartments are often reluctant to invest in energy efficiency upgrades, as oftentimes the savings will only be realized by the tenants who pay the utility bills. Conversely, if utilities are included in the cost of rent, then tenants have less motivation to maintain daily energy efficient practices.
Source: McKinsey. “Unlocking Energy Efficiency in the U.S. Economy.” (http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf)
Commercial
The commercial sector offers the greatest opportunity to improve efficiency in lighting. Lighting in office buildings often stays on regardless of occupancy. The potential energy savings from efficient lighting and lighting conservation measures in the commercial sector is nearly double that of the residential sector (480 trillion BTUs for the former, compared with 280 trillion BTUs for the latter in the US)
Source: Electric Power Research Institute (EPRI). “Assessment of Achievable Potential from Energy Efficiency and Demand Response Programs in the U.S. (2010–2030).” (http://my.epri.com/portal/server.pt?space=CommunityPage&cached=true&parentname=ObjMgr&parentid=2&control=SetCommunity&CommunityID=405).
Source: McKinsey. “Unlocking Energy Efficiency in the U.S. Economy.” (http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf)
One of the most significant areas of potential energy savings for the US commercial sector comes from data centers. Servers, auxiliary data equipment and supporting power systems draw great quantities of power. Energy consumption from these systems is expected to triple by 2020. 30% of the potential savings in the commercial sector can be achieved with improvements in data center efficiency.
Source: McKinsey. “Unlocking Energy Efficiency in the U.S. Economy.” (http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf)
Space heating is a major component of energy intensity in the commercial sector. Because of the low temperatures in this region, firms in northern Europe have a higher energy demand per employee than their neighbors in south Europe. Countries in Scandinavia are experimenting with ways to improve space heating in order to upgrade buildings’ overall efficiency.
Source: “Efficiency Improvements.” Risø Energy Report 4: http://130.226.56.153/rispubl/energy-report4/ris-r-1534p29-36.pdf
Source: “Electricity consumption per employee in services.” Odyssee: http://www.odyssee-indicators.org/reports/services/services9_eu27.pdf
Commercial office buildings are among the largest consumers of electricity in the United States. The International Code Council recently developed a new building code for commercial and residential buildings. If the code is adopted by all states, the changes brought about could save $40 billion in annual energy costs, 3.5 quadrillion BTUs of annual energy consumption and 200 million metric tons of CO2 emissions by 2030.
Source: Alliance to Save Energy. “Code to Vastly Improve Energy Efficiency of Home, Commercial Building Construction.” (http://ase.org/efficiencynews/code-vastly-improve-energy-efficiency-home-commercial-building-construction)
The commercial sector includes community infrastructure such as water distribution, purification, and treatment facilities, as well as street lighting and telecommunications infrastructure. Although community infrastructure accounts for 11% of all commercial energy consumption, it often represents a missed opportunity to improve energy efficiency. This reflects local governments’ preference for reliability over efficiency, and the fact that officials are often unaware of the potential for energy and financial savings.
Source: McKinsey. “Unlocking Energy Efficiency in the U.S. Economy.” (http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf)
Industrial
Energy efficient motors consume 2% to 8% less energy than standard motors. As motor-driven systems consume 65% of total industrial electricity, a rebate or exchange program—involving government subsidies or tax incentives for factories that replace existing motors with more efficient technologies—can significantly cut industrial energy consumption.
Source: McKinsey. “Unlocking Energy Efficiency in the U.S. Economy.” (http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf)
Industry can make the largest contribution towards cutting energy use by promoting energy savings practices. This involves hiring energy managers who focus on improving operating practices, monitoring energy use, and assuring timely maintenance and repairs of all energy-intensive equipment. Currently only 2% of firms in the US report having an energy manager, and they report having reduced their energy consumption by 20 – 30%.
Source: McKinsey. “Unlocking Energy Efficiency in the U.S. Economy.” (http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf)
In industrialized countries almost all industries have become more energy efficient in the past two decades. As a result of improved technologies and standards imposed by the EU, energy efficiency in the industrial sector in Europe has improved by over 25% since 1990. In Europe the biggest improvements have come in the chemicals and cement industries.
Source: “Trends in Industry (EU-27).” Odyssee. http://www.odyssee-indicators.org/reports/industry/industry15.pdf
The expanded use of semiconductors in commercial and industrial practices could boost technology-based energy efficiency gains. Indeed, such gains mean that the US economy could expand by more than 70% by 2030 and still use 11% less electricity than it did in 2008.
Source: ACEEE. “Semiconductors Are Now the Driving Force Behind U.S. Energy Efficiency Gains.” (http://www.aceee.org/press/2009/05/semiconductors-are-now-driving-force-behind-us-energy-ef)
Through efficient motor exchanges and streamlined industrial processes, the US could save 480 trillion BTUs in the industrial sector by 2030, according to an assessment from the US Senate.
Source: ACEEE. “Senate Energy Bill Will Spur Substantial Energy Efficiency Savings But Savings Significantly Less Than House Energy Bill.” (http://www.aceee.org/press/2009/06/senate-energy-bill-will-spur-substantial-energy-efficien)
Overall energy efficiency is already much higher in the industrial sector than it is in the residential or commercial sectors. Indeed, as energy is a major input cost for most industries, many have already made important efficiency improvements. Since there are fewer opportunities for energy savings through energy efficiency improvements in the industrial sector, many firms are instead focused on utilizing alternative sources of energy to reduce their carbon output.
Source: “World Energy Outlook 2010.” IEA.
Transport
Trucking is currently one of the least energy efficient forms of transport. The EU has introduced an initiative, FREILOT, which provides services, such as adaptive speed and acceleration controls, in an effort to increase the energy efficiency of goods transport in urban areas. If successful, the EU hopes to expand these services throughout the continent. Doing so could significantly reduce energy consumption in the trucking sector.
Source: “FREILOT Urban Freight Energy Efficiency Pilot.” European Union: http://www.freilot.eu/en/projects/about_us/
A study by the US National Academy of Sciences found that the average fuel economy of US vehicles would be 14% worse if it were not for government-imposed Corporate Average Fuel Economy standards.
Source: “Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards.” National Academy of Sciences: http://books.nap.edu/openbook.php?record_id=10172&page=9
The shipping industry has been called the largest potential energy efficiency opportunity in the transportation sector. Although it is already more efficient than ground or air transport, the industry has begun to get renewed attention concerning ways to limit its carbon emissions through new financing models.
Source: “Shipping Efficiency: About us.” Carbon War Room. http://www.shippingefficiency.org/about-us
Driving habits have a great impact on vehicle fuel efficiency. In a midsize car, aggressive driving can lower fuel efficiency by as much as 4 miles per gallon on highways, idling reduces efficiency to 0 miles per gallon, and under-inflated tires can lower efficiency up to 0.7 miles per gallon. Fixing a car that is noticeably out of tune or has failed an emissions test can improve its gas mileage by an average of 4%. Avoiding certain driving behaviors and keeping your car in shape translate into economic benefits at the pump.
Source: “Driving more efficiently.” U.S. Department of Energy: http://www.fueleconomy.gov/feg/driveHabits.shtml
One particularly potent form of energy efficiency is an emerging practice known as building commissioning. "Commissioning" of a building refers to the voluntary process of looking for energy-wasting deficiencies in the way the building is designed or operated. Examples would be simultaneous heating and cooling, mis-calibrated or otherwise malfunctioning energy management controls and sensors, defeated efficiency features, leaky air-distribution systems, and oversized equipment. Uniformly applying whole-building commissioning practices would lift the energy efficiency of buildings above and beyond the levels mandated by building codes. The commissioning process, if implemented throughout the U.S., has an energy-savings potential of $30 billion by the year 2030. This would result in annual greenhouse gas emissions reductions of about 340 megatons of CO2 each year. An industry equipped to deliver the benefits of commissioning to the U.S. would have a sales volume of $4 billion per year and support approximately 24,000 jobs.
Source: http://cx.lbl.gov/2009-assessment.html
Source: ACEEE. “H.R. 2454 Would Save $3900 Per Household by 2030; Energy Efficiency Provisions Will Create 650,000 Jobs by 2030.” (http://www.aceee.org/press/2009/06/hr-2454-would-save-3900-household-2030-energy-efficiency)
Although it offers significant savings down the line, energy efficiency improvements will cost $467 billion in upfront investment in the US alone. This will require significant financing and government incentives to ensure program implementation.
Source: McKinsey. “Unlocking Energy Efficiency in the U.S. Economy.” (http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf)
Without a combination of concerted efforts by governments worldwide and technological advances to break the link between GDP growth and energy consumption, global energy consumption will continue to increase in line with economic growth. Rising energy prices will encourage small improvements in energy efficiency, but larger improvements are unlikely without government action.
Source: “World Energy Outlook 2010.” IEA
The economic impact of new energy efficient homes and buildings will steadily increase. By 2030, 28% of all homes will have been built after 2009, providing an important opportunity to put into action energy efficiency initiatives.
Source: McKinsey. “Unlocking Energy Efficiency in the U.S. Economy.” (http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf)
Incorporating energy efficiency measures during construction is five times cheaper than incorporating the same measures through building retrofits ($0.76/square foot compared with $3.83/square foot), suggesting that the most significant energy and cost savings will come from new builds.
Source: McKinsey. “Unlocking Energy Efficiency in the U.S. Economy.” (http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf)
The energy and financial savings potential from energy efficiency measures is likely to double between 2020 and 2030. The biggest savings will come in the residential and commercial sectors—particularly in lighting cooling, and electronics—with smaller savings in the industrial sector.
Source: EPRI. “Assessment of Achievable Potential from Energy Efficiency and Demand Response Programs in the U.S. (2010–2030).” (http://my.epri.com/portal/server.pt?space=CommunityPage&cached=true&parentname=ObjMgr&parentid=2&control=SetCommunity&CommunityID=405).
Energy efficiency programs in the US alone could prevent 1,020 megatons of CO2 equivalent from being released by 2020, more than the current emissions of all but five countries.
Source: McKinsey. “Unlocking Energy Efficiency in the U.S. Economy.” (http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf)
It is possible for energy efficiency to not lead to significant energy savings, or to even increase global consumption, if efficient products lead consumers to use them more often, especially in developing countries where they were previously more expensive. On a per item basis, less energy would be used, but the overall increase would lead to an absolute expansion in energy use.
Source: Adam B. Jaffe, Richard G. Newell, Robert N. Stavins, Economics of Energy Efficiency, In: Cutler J. Cleveland, Editor(s)-in-Chief, Encyclopedia of Energy, Elsevier, New York, 2004, Pages 79-90, ISBN 978-0-12-176480-7, 10.1016/B0-12-176480-X/00228-X. (http://www.sciencedirect.com/science/article/B7GGD-4CM9GC0-4B/2/9d0c174457ac8392e7d1c5a777f61a6f)
The growth in energy demand in developing countries is expected to nearly halve between 2020 and 2030 on an annual basis (from 4.6% to 2.6%), in part reflecting the impact of energy efficiency measures. As developing countries are more likely to rely on carbon-intensive fuels, the energy demand reduction will play a significant role in slowing the growth of global carbon emissions.
Source: IEA. “World Energy Outlook 2010.” (http://www.worldenergyoutlook.org/)
According to the IEA, if countries were to put a price on carbon—either through emissions caps or through explicit carbon levies—the value of energy efficiency and conservation measures would increase and result in an emissions reduction of 4.91 gigatons of CO2 by 2035.
Source: IEA. “World Energy Outlook 2010.” (http://www.worldenergyoutlook.org/)
While diverse actions are needed to mitigate against climate change, the International Energy Agency has determined that energy efficiency measures represent 76% of the abatement options up to 2020, but just 43% of the abatement options between 2020 and 2035. Energy efficiency’s role in reducing emissions is expected to diminish in comparison to renewable sources of energy as renewable energy technologies continue to develop. Source: IEA. “World Energy Outlook 2010.” (http://www.worldenergyoutlook.org/)
Energy efficiency and conservation reduces overall energy consumption, which helps to decrease a country’s reliance on foreign sources of energy. This, in turn, lessens its vulnerability to supply and price shocks.
Source: ACEEE. “National Energy Policy.” (http://www.aceee.org/sector/national-policy)
The US has made great improvements in energy efficiency over the last three decades. With current levels of production, the US would use an additional 52 quadrillion BTUs of energy every year if it still had the same efficiency level as it did in 1979. This is roughly equivalent to the US’s current domestic production of petroleum, natural gas, coal, nuclear, and renewables combined.
Source: Alliance to Save Energy. “Energy Efficiency: America's Greatest Energy Resource.” (http://ase.org/resources/energy-efficiency-americas-greatest-energy-resource)
The US has the potential to reduce energy use through efficiency and conservation measures by 9.1 quadrillion BTU annually by 2020, roughly 23% of projected demand.
Source: McKinsey. “Unlocking Energy Efficiency in the U.S. Economy.” (http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf)
Most energy efficiency measures are focused on reducing electricity and natural gas consumption (automobile fuel efficiency being a notable exception). These measures have only a limited impact on reducing reliance on petroleum, the price of which can fluctuate greatly based on production, demand and geopolitical factors.
Source: McKinsey. “Unlocking Energy Efficiency in the U.S. Economy.” (http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf)
The UN has identified inefficient use of energy as an obstacle to meeting the Millennium Development Goals, which are aimed at reducing poverty, infant mortality and disease. Improving energy efficiency, for example through more efficient cookstoves, would reduce the time and money spent on fuel and better allow people in rural areas to take advantage of modern sources of energy, helping reduce poverty and increasing stability in developing countries.
Source: IEA. “World Energy Outlook 2010.” (http://www.worldenergyoutlook.org/)
Conservation and Energy Efficiency: Opportunity
Energy efficiency technologies are already in place and are a comparatively inexpensive way to reduce environmental impacts
Energy efficiency and conservation programs can save residents and businesses billions of dollars. Such programs 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 U.S. Economy.” (http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf)
New technologies will improve efficiency and will become the standard for new buildings and appliances
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 U.S. Economy.” (http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf)
Conservation and Energy Efficiency: Challenges
Most buildings, appliances and machinery will not be upgraded or replaced by 2015, diminishing the opportunity for energy savings
While consumers may be inclined to take advantage of efficient products when making new purchases, it is unlikely that most existing buildings and appliances will be replaced or upgraded by 2015 without strong government incentives or a significant rise in energy prices.
Source: IEA. “World Energy Outlook 2010.” (http://www.worldenergyoutlook.org/)
More efficient construction will still entail higher upfront costs, and the long-term savings are not always realized by the investors
Efficient buildings, appliances and machinery are more expensive to purchase than older models, and government incentives or financing programs are often needed to allay these upfront costs.
Source: McKinsey. “Unlocking Energy Efficiency in the U.S. Economy.” (http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf)