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The Energy Efficiency Gap & The Research Myth

Thomas Gerke's picture
  • Member since 2018
  • 58 items added with 8,525 views
  • Jun 25, 2013

Every time energy policy is being discussed, you’ll usually find a call for more R&D spending at the top of the list of ways to solve problems. While I agree that research is great, it’s obviously not enough and, if anything, only the first step.


Unfortunately, calls for more R&D spending can sometimes be nothing more than a distraction – a way to give policy makers an excuse for postponing meaningful action. Nobody dislikes investigating how to solve (big) problems, so it’s only natural that a failure to enact effective policy is accompanied by a little feelgood research spending. The theatre of politics requires the main character to sell this minimal end result of his/her initial ambition as a meaningful success that will eventually accomplish the original goals. This in turn reinforces the public opinion that there are no solutions to the problems of the current energy system.

“Oh my, the problems are gigantic, and thus the solutions have to be big. Since we’ve got not big solutions yet, we obviously need more research before meaningful action is possible!”

Needless to say, there are also economic interests that are more than happy if the public remains in a “Nothing We Can Do About It Now” state of mind, and with the US being a $1.3 trillion energy market (EIA 2011), those are naturally very powerful economic interests.

How Much Energy Efficiency R&D is Necessary?

I think most people would agree that higher energy efficiency is the no-brainer of energy policy. In a world of rising fuel prices, climate change, and geo-political nightmares arising from the location of the remaining easy-to-access (cheap) fossil fuels, it is simply common sense to replace current energy consumption with technology. It is also pretty common knowledge that eliminating the unnecessary waste of energy is the most important & propably “easiest” step to solve our energy problems.

So, how much did the US spend on energy efficiency–related R&D in the past, and did this investment have a significant impact on US energy consumption?

30 Years of Energy Efficiency R&D - Source: IEA

30 Years of Energy Efficiency R&D – Source: IEA

According to IEA statistics, the US spent significantly more than Japan and Germany on energy efficiency–related research. In total, the US invested almost $18 billion (in 2011 prices) over the past three decades. More than 10 times the amount Germany has spent and twice as much as Japan.

Logic dictates that if more R&D spending is actually an incredibly relevant part of solving our energy problems, there should at least be a correlation between spending and the efficiency of these three nations.

To compare the three nations, I’ve looked at the final energy consumption of the different sectors (residential, commercial, industry and transport) in each nation and divided the energy demand by the number of citizens in each nation. The resulting simple indicator reveals how much energy each nation consumes on a per capita basis.


The result of this comparison doesn’t come as a surprise to anyone who is remotely interested in energy issues. There is a massive energy efficiency gap between the US and other world economies. While this is no surprise to many, it should be a lesson for all those who tell the public that meaningful action requires yet more R&D spending. The 200 million citizens of Japan and Germany are proof that even the technology and the concepts of the past can make a huge difference.

So, get cracking America, and start bridging the gap before it becomes an abyss!

One More Thing

You are probably aware that increasing energy efficiency is an important pillar of the German “Energiewende” (energy transition). To showcase the further efficiency potentials German energy experts see, I’ve compiled the following (conservative) guesstimate.


As you can see, there are still massive efficiency potentials that can be unlocked. Some efficiency gains are just a matter of time, while others require effective policy to accelerate long-term trends. In other areas, there is still a lot of technological uncertainty, which makes it hard to predict how much final energy will eventually be required to do the job (looking at you transport sector!).

But one thing is certain, we (humankind) can do this, and we don’t have to wait for some fancy scientific breakthrough to start solving our energy crisis.


In 1995 the share was just 4.7%, growing to 8% by 2000.


Thomas Gerke's picture
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John Miller's picture
John Miller on Jun 25, 2013

Thomas, Germany has made substantial progress in recent years, but I suggest you consider other factors that affect countries’ per capita energy consumption.  Factors such as population density (per capita per unit area), number of vehicles and vehicle miles traveled (transportation usage per capita), cost of energy (transportation fuels, heating and electricity) and possibly other standards of living factors (GDP, income, etc. per capita).  These and other non-efficiency factors may give you a broader insight into the differences of energy consumption between countries. 


Also, you might find your 75% energy waste illustration has a lot to do with basic thermodynamics (energy’s ability to yield useful work) than just being wasteful.  

I K's picture
I K on Jun 25, 2013

Although I agree that energy efficency is probably the best policy at this stage,  I think your post is somewhat misinformed

The reason Europe is more energy ‘efficient’ is primarily becuase 1. We are poorer than the USA and 2. We have less of our own fossil fuel resources and as such prices for energy are notably higher.

Neither of those two are acceptable or desirable (ie poverty and higher prices).

So its not that our TVs or fridges or boilers are mire energy efficient its that our homes are one third the size. Its not that our business are more efficient at making steel or cement or cloths its simply that we can only afford less of those things

I K's picture
I K on Jun 25, 2013

Having said this there is way and that is narural gas and minimising electrical heating

Not only does building a CCGT running base load at 60% electrical efficency displace a coal plant operaring at 38% efficiency but a CCGT itself consumes less electricity and energy vs the coal station.  Plus coal mining requires more energy vs gas extraction/transportation.  All in a new CCGT uses perhaps only half the primary energy of a coal station.

More importantly is electrical heating. It represents a huge quantity of most nations grids. In the USA its likely more than 1000TWh a year is used for resistive heating.  A big portion of this can be fairly easily convertes to natural gas.

For arguments sake say 500TWh of electrical heating could be converted to gas that would mean 60GW of baseload coal can be retired.  More importantly the worst oldest least efficient 60GW would be retired.

Coal demand would fall a massive 1,350TWht while gas demand would rise 500TWht. the difference of 850TWht would be the energy saving. That is a huge saving that could be implemented worhin a decade and is equal to building 40 reactors or 40,000 large wind mills

Thomas Gerke's picture
Thomas Gerke on Jun 25, 2013

I agree that kWh/capita is a simplistic indicator, that does not reflect the complexity of reality & differences of circumstances and I understand what you are saying about why the US is less energy efficient (lower energy prices, higher subsidies, inefficent urban planing (or general lack of it),…).
However looking at the numbers I fail to notice a valid explainations for the significant differential between the per capita energy consumption of the US and Japan/Germany – and discussing the reasons won’t help if a further increase in prices reduces the disposable income of households => reduces their living standards and ability to consume. 

In 2011 the per capita energy expenditures were already much higher in the US compared to Germany (despite the low/subsidized energy prices). 
US: $4500 / capita (spread over the different sectors)
Germany: 3015€ / capita ( $3920 USD per capita – including a quite substantial taxes-burden of roughly $690 / capita)

This is especially obvious in the case of industry, since the energy expenditure to GDP ratio was just 1:11 in the US while it was 1:17 in Germany – though energy expenditures are actually not that significant for most industries, things add up along the supply chain. 

Of course these are “just” macro-economic observations, but while Germany has a consensus to increase resiliance against rising fossil fuel prices, I see no substantial consensus, policy-frameworks nor public awareness about systemic solutions in the US and that worries me. 

Nathan Wilson's picture
Nathan Wilson on Jun 26, 2013

Good insights John.

The other angle to consider is that energy efficiency has a monentary cost and benefit.  When energy is cheap (as in the US), there is simply less incentive to be efficient.

The supply-side fixes (including efficiency standards for new homes, cars, buildings, and appliances) place less burden on individual action and depend less on monetary incentives.  Simple things like building nuclear power plants instead of coal plants compliment the benefits of efficiency, so there is no reason not to do both. 

I K's picture
I K on Jun 26, 2013

The average German house is about 80 square meters and many are apartments. Compare that to the USA where the average house is probably closer to twice the size and a much lower proportion are apartments.

So once more its not that the germans have more efficient boilers to heat their homes its that they have far smaller homes and many of them are less desirable apartments. 

Regarding industry again it’s more a case that the Germans can not consume as much rather than their steel or cement plants operating more efficiently.

also distances are lower in Europe vs the USA. For instance in the UK the two biggest cities are only 100 miles apart and many people will hardly ever travil much outside their city vs in the USA where families may live in different states a thousand miles apart. 


Thats not to say that wnwrgy efficenccan’t be effective or positive. Its just that the USA can’t be as efficient unless ot wants to love a lot more densely in smaller homes and live a poorer life. 

Thomas Gerke's picture
Thomas Gerke on Jun 26, 2013

I am sorry, but I think that you confuse conventional wisdom with relevant information. 

Yes Americans have a higher home owner rate and in thus more living space per captia. Yet this fact alone is not an indicator of more wealth but main reason why household debt is significantly higher than in Germany. It’s a cultural difference that can also be observed when looking at German & the Netherlands.

There is no doubt that wastful lifestyle choices / cultural norms can also lead to wasteful energy use, making it harder to fulfill energy needs for lower costs going forward. They are harder to address than switching a light bulb or a boiler, but they are still part of the issue.

For example when applicances are concerned, many Americans have made the lifestyle choice to buy large refridigators that consume more energy. This has little to do with “wealth” since the initital investment for a fridge in Germany and in the US are basic the same. The difference is that a A+++ fridge in Germany consumes 100 kWh / year while a Energy Star product in the US consumes 350 kWh / year. Furthermore studies have proofen that larger refidigators lead to more food being thrown out eventually (which is also wasteful energy use). 

I didn’t even argue that Germans have more efficient boilers – but I will agrue that having energy standards for new buildings since the late 1970s has graduatly reduced the need for space heating. Current standards will eventually cut space heating demand by 70% and there are incentives to build homes that require 80-90% less energy. This enables to heat entire office buildings almost entirly with the body heat of the employees & the waste heat from computers (etc.) even when it’s -10°c outside. 

The argument that “Americans have to travel significantly more due to larger distances” also doesn’t really hold up to scrutiny, since average anual km traveld is 14k in Germany and 16k in US. A 2000 km difference that has propably more to do with habits / lifestyle choices than with long distance family visits. This difference do away with facts that clearly show that new vehicles are more efficient in Germany / Japan compared to the US – (for example new commercially used light duty trucks consume 30% less fuel in Germany compared to the US) 

In total: It doesn’t make much sense to discuss the reasons why Americans require more energy to sustain their current living standards. The question is, what will they do to adapt when it becomes more costly to sustain that lifestyle in a world of ricing energy prices. 

There is alot that can be done on an individual level and some things (urban planing, public transport,…) that requires local political leadership. 

But rising energy bills already cut into budgets in the US.

They do so in Germany aswell, but as I said before: Here we have policy frameworks & incentives in place to address this trend and public awareness concerning solutions is high(er) than in the US.

I K's picture
I K on Jun 26, 2013

The reason americans buy big fridges and Germans or the English don’t is becuase big American fridges can’t fit inside our tiny tiny kitchens.

You have probably never visited the UK. Our average homes are only 70 square meters. Often kitchen are so small you literally can’t have two people in the kitchen and them be able to move freely. Likewise bedrooms are so small tgat once you put a bed in there there is virtually no room to put a desk

I doubt this is what you want for America.  In fact our tiny expensive homes are probably a social disaster in the making

Willem Jan Oosterkamp's picture
Willem Jan Oosterkamp on Jun 28, 2013

I have lived both in Europe (Netherlands and Germany) and in the US (Arkansas and California) . As has been commented houses are much bigger in the US than in Europe as are fridges. The main residential energy consumption is however heating and cooling. Cooling is in the US the most energy intensive. In Europe there is a big push to improve the isolation of houses.

The other aspect are taxes. In the Netherlands we have about 50 % taxes on natural gas e;ectricity, gasoline and diesel fuel. Taxes have been high for at least 20 years. Energy efficiency is thus much more important.


Willem Jan Oosterkamp


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