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2015: The Year of Energy Efficiency?

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  • Jan 6, 2015 9:00 pm GMT

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Efficiency and the Coming year

Nate Kaufman is a Fellow at the Clean Energy Leadership Institute and an Energy Efficiency Manager at Opower.

As we reflect on 2014 and start to think about what we’re going to do differently in 2015, it’s worth taking a look at how much energy we use, and how we can find simple ways to cut some of the energy waste out of our lives.

The United States consumes more energy per capita than almost every other country in the world, but only about 14% of our energy comes from renewable sources. That means our carbon dioxide emissions per capita surpassalmost every other country too.

Even while renewables constitute a growing portion of our energy mix, we’re sorely lagging behind other countries on the path toward secure, sustainable, domestically produced energy. But the good news is, we’ve got a lot of easy opportunities to do better. The US wastes about 61% of the energy we produce — much of it due to how we generate, transmit, and distribute it.

But there also are plenty of ways to reduce waste where we’re actually using energy, all without sacrificing function or comfort. Energy efficiency, simply put, is using less energy to get the same output or value. Ways of being more energy efficient include using appliances that use less energy or reducing air leakage from our homes and buildings. Programs to increase energy efficiency date back to the energy crises of the 1970s, and continue to be hugely successful today.

Take Michigan for example, where recent data from the Public Service Commission show that the $253 million Michigan utilities spent on energy efficiency programs in 2013 will yield a $948 million return in savings in the coming years. That’s an excellent investment, no matter who you talk to. And Michigan is by no means an anomaly.

We’ve seen states throughout the country see the same kinds of positive returns for their investments in energy efficiency, which continues to prove itself the cheapest “fuel” — investments in energy efficiency per unit of energy output are less costly than both traditional fossil fuels and clean renewable fuels.

Energy efficiency programs are administered by utilities, state agencies, or other third parties, and typically funded by modest charges on ratepayers’ energy bills. While some worry that this causes energy bills to go up, they also cause energy costs to go down, as widespread efficiency upgrades decrease the demand for energy across the state or the utility’s service area, reducing consumer costs. And the customers who participate directly in the programs reap the biggest savings.

It’s a wonder not all states are investing in these kinds of innovative, proven programs. But much of the resistance can be attributed to low energy prices and a lack of political will to charge customers a bit more, even if it does mean big returns. With energy prices steadily rising, such programs will become increasingly attractive to utility regulators and customers. Even historically lagging states like Arkansas and Kentucky are starting to jump on the energy efficiency bandwagon.

No matter where we live or what our personal circumstances are, there’s always room to make changes to improve our energy consumption, whether we make a big investment like installing better insulation, or small simple changes like turning down the thermostat a few degrees in the winter.

As we think about what changes we’re planning to make in 2015, we can look internally at how to reduce energy waste in our own homes and workplaces, as well as help our neighborhoods, communities, and local and state governments make informed decisions to invest in energy efficiency. Even as our energy starts coming from cleaner sources across the country, we can do our part to reduce waste in the energy we already generate — and efficiency is the quickest and cheapest place to look.

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Keith Pickering's picture
Keith Pickering on Jan 7, 2015

It’s useful to note the nearly 4-to-1 financial ROI on energy efficiency investment seen in Michigan, which certainly far outstrips the actual energy reduction that such investments imply. This points up (again) the fact that energy efficiency improvements are primarily about economics, i.e., saving money, while the saving energy part is essentially a fringe benefit.

The importance of this observation is that if reaffirms a central result of physicist Tim Garrett’s work, which demonstrated that increases in energy efficiency cannot lead to overall reductions in energy use, because those efficency gains are inevitably paired with economic growth that uses more energy that is gained by the efficiency. Thus increasing energy efficiency cannot solve the energy/climate problem. We must focus our efforts on decarbonization instead.

Indeed this result should not surprise anyone who considers the historical data. Here is a graph of US energy efficiency, measured in real GDP output per TOE of primary energy use:

And wow, we have doubled our energy efficiency since 1980! So then, we’ve dropped our energy use in half, right? Well, not quite:



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