The Energy Efficiency Opportunity and the Case for Government Leadership

Governments around the world are supporting energy efficiency because it buoys economic development and drives innovation.. There is a strong business case for energy efficiency which is why it is at the leading edge of a tremendous opportunity.  According to the IEA, in 2016 global investments in energy efficiency grew by almost 10 percent to $231 billion.

There is a powerfully persuasive argument in support of energy efficiency as it offers the dual benefits of decreasing costs and reducing climate change causing greenhouse gases (GHGs). The economic opportunities and savings associated with energy efficiency are considerable. Those who still need convincing need only tally the costs of failing to act on climate change.

Corporations are deriving real value from energy efficiency this includes companies like IKEA and Apple,. Walmart has saved more than a billion dollars by doubling the efficiency of its fleet. Energy management systems have helped to improve industrial efficiency. According to the EIA increasing energy use per unit of economic output in the industrial sector fell by nearly 20 percent between 2000 and 2016. Corporations are not the only ones that are cashing in, schools are reaping financial windfalls from energy efficiency..

While we are seeing leadership from educational establishments and corporations, the lion’s share of the work still remains to be done. The vast size of the energy efficiency opportunity is due to the ubiquity of the need and the tremendous room for growth in this space. The world is very far from meeting its 2030 energy efficiency SDG target and the US barely cracks the top ten in energy efficiency.

Sustainability makes sense on a number of levels and the results oriented case for green building is hard to refute.  Buildings account for 58 percent of the energy efficiency sector which translated to more than $125 billion in 2016. The IEA acknowledges that there has been progress but states that further growth is possible and opportunities for costs savings and emissions reductions abound as the vast majority of buildings are highly inefficient. If we were to implement efficiency into existing buildings we could cut global energy demand by one third by 2050.

There are also tremendous efficiency opportunities in a wide range of other industries including unlikely places like beer and trucking. The biggest opportunities are be found in energy markets and this includes renewables, and energy storage. According to a 2014 IEA report renewable energy, energy efficiency and energy storage can stave off climate change and provide significant economic benefits. The report titled, “Energy Technology Perspectives.” indicates that these measures could generate net savings of $71 trillion by 2050.

Lighting is another domain that will see prodigious growth. The IEA predicts that by 2022, 90 percent of all indoor lighting worldwide will be either compact fluorescent lamps (CFLs) or light-emitting diodes (LEDs).

According to the IEA, energy efficiency enabled the world to reduce its energy usage by 12 percent between 2000 – 2016.  Efficiency avoided $50 billion in additional spending on energy imports in IEA member countries in 2016.

The Obama administration saw results from its support for energy efficiency that had an impact on global energy demand. It also reduced consumers energy bills, decreased emissions and made energy systems more secure. According to the IEA, energy efficiency enabled the world to reduce its energy usage by 12 percent between 2000 – 2016.  Efficiency avoided $50 billion in additional spending on energy imports in IEA member countries in 2016.

Despite the proven performance and the size of the opportunities the reality is that unlike its predecessor, the current US administration does not have any interest in efficiency. They will not set higher standards or craft responsible policy, in fact they are doing the exact opposite. They are lowering or removing standards as part of a bizarre policy of energy inefficiency.

Interest outside of government will continue to drive investments in energy efficiency. Investors and business leaders cannot ignore the plethora of reports that have made the case for energy efficiency as a proven economic performer. An Alliance to Save Energy report summed up the impact of energy efficiency in the US as follows:

“Time and again the business case for energy efficiency is supported through real economic savings. Without the numerous energy efficiency improvements made since 1973, the U.S. would require about
50% more energy to deliver our current GDP. The adoption of more efficient products and services is responsible for 60% to 75% of the increase in energy productivity since 1970.”

Energy efficiency is also at the center of efforts to stave off climate change. In 2006 the Stern Review pointed to energy efficiency as a critical component of climate action. The Alliance report came to the same conclusions seven years later. Social-ecological systems (SES) science shares the view that energy efficiency is a key part of international frameworks to slow warming. This perspective is corroborated by governments around the world. Although the current US administration may reject energy efficiency, it is at odds with it all 7 branches of US armed forces.

“More than ever before, energy efficiency is central to the achievement of a range of policy goals, including energy security, economic growth and environmental sustainability.” the IEA report said.

The case for energy efficiency is compelling, yet in the absence of government support it will not scale quickly enough to address the threats we face.

This article was last updated on August 29th, 2018 at 11:55 AM EST

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