Titled "The Long-Term Energy Efficiency Potential: What the Evidence Suggests," the new report is from the American Council on an Energy Efficient Economy (ACEEE). The report outlines three scenarios under which the U.S. could either continue on its current path or cut energy consumption by the year 2050 almost 60 percent, add nearly two million net jobs in 2050, and save energy consumers as much as $400 billion per year (the equivalent of $2600 per household annually).
According to the ACEEE, America is thinking too small when it comes to energy efficiency, while also making the mistake of "crowding out" economically beneficial investments in energy efficiency by focusing on riskier and more expensive bids to develop new energy sources.
So why aren't we investing in Energy Efficiency? Because it is difficult to make money in Energy Efficiency when energy prices are so low. When the price of energy is low, then every BTU or KWH you save by becoming more energy efficient is worth very little. As energy prices rise, every BTU or KWH saved becomes that much more valuable.
Just today, the New York Times reports that oil and gas companies are "flaring" or burning off natural gas at oil wells because the price of natural gas is so low right now that it is cheaper to waste the gas than to find a place to store it. This is an incredibly inefficient use of resources. The inefficiency has absolutely nothing to do with the state of technology. The inefficiency is driven 100% by the low price of natural gas. Why bother saving natural gas, when it is actually cheaper to waste it?
The other barrier holding back energy efficiency is the dispersion of benefits. Unlike a power plant, where the owners of the plant can capture the lion's share of the economic benefits, the benefits of energy efficiency tend to be more dispersed and indirect. According to the ACEEE, increased investments in energy efficiency would allow lower investments in power plants and other supply infrastructure, thereby substantially lowering overall energy expenditures on an economy-wide basis in the residential, commercial, industrial, transportation, and electric power sectors. In plain English, the people who pay for increases in energy efficiency don't necessarily get all the benefits directly.
What we need -- and what the ACEEE urges -- are government policies that incentivize a longer-term and society-wide view to the issue of energy sustainability and independence. And the new ACEEE report provides the data to back up the long-term benefits both to investors and to the health of the U.S. economy.
Examples of potential large-scale energy efficiency savings identified by ACEEE include the following:
- Electric Power. Our current system of generating and delivering electricity to U.S. homes and businesses is an anemic 31 percent energy efficient. That is, for every three units of coal or other fuel we use to generate the power, we manage to deliver less than one unit of electricity to our homes and businesses. What the U.S. wastes in the generation of electricity is more than Japan needs to power its entire economy. What is even more astonishing is that our current level of (in)efficiency is essentially unchanged in the half century since 1960, when President Dwight D. Eisenhower spent his last year in the White House.
- Transportation. The fuel economy of conventional petroleum-fueled vehicles continues to grow while hybrid, electric, and fuel cell vehicles gain large shares, totaling nearly three-quarters of all new light-duty vehicles in 2050 in the report's middle scenario. Aviation, rail, and shipping energy use declines substantially in this scenario through a combination of technological and operational improvements. In the most aggressive scenario, there is a shift toward more compact development patterns, and greater investment in alternative modes of travel and other measures that reduce both passenger and freight vehicle miles traveled. This scenario also phases out conventional light-duty gasoline vehicles entirely, increases hybrid and fuel cell penetration for heavy-duty vehicles, and reduces aviation energy use by 70 percent.
- Buildings. In residential and commercial buildings the evidence suggests potential reductions of space heating and cooling needs as the result of building shell improvements of up to 60 percent in existing buildings, and 70-90 percent in new buildings. The ACEEE scenarios also incorporate advanced heating and cooling systems (e.g., gas and ground-source air conditioners and heat pumps and condensing furnaces and boilers), decreased energy distribution losses, advanced solid-state lighting, and significantly more efficient appliances.
- Industry. In the industrial sector, energy efficiency opportunities reduce 2050 energy use by up to half, coming less from equipment efficiency and more from optimization of complex systems. The ACEEE analysis focuses on process optimization in the middle scenario, but also anticipates even greater optimization of entire supply chains in the most aggressive scenario, allowing for more efficient use of feedstocks and elimination of wasted production.
As the ACEEE report points out, the U.S. already has achieved considerable advances in the energy efficiency context and is poised to do more: "The U.S. economy has tripled in size since 1970 and three-quarters of the energy needed to fuel that growth came from an amazing variety of efficiency advances—not new energy supplies. Indeed, the overwhelming emphasis in current policy debates on finding new energy supplies is such that emphasis on new supplies may be crowding out investments and innovations that can help to achieve greater levels of energy productivity. Going forward, the current economic recovery, and our future economic prosperity, will depend more on new energy efficiency behaviors and investments than we've seen in the last 40 years."
John J.P. Howley
Woodbridge, New Jersey