Energy efficiency has provided more energy services over the last thirty years than any other source of energy

The American Council for an Energy Efficient Economy (ACEEE) recently published another excellent report (they are very prolific!). This one, “Calculating the Nation’s Annual Energy Efficiency Investments” by Skip Laitner undertook the ambitious task of documenting the annual investment in energy efficiency in the USA and the benefits. It found that in 2010 the USA invested between $479 and 670 billion on energy efficient goods and services and the incremental cost of energy efficiency was $90 billion (between $72 and $101 billion). This was about half the $170 billion spent on investments in conventional energy supply.

Since 1970 the amount of energy to produce one dollar of economic output in the US has been cut in half, from 15.9 thousand Btus per dollar to 7.3 thousand Btus. In that time demand for energy services has gone up by 3.18 times but energy use has only gone up 40 percent. The difference is the result of improved efficiency.

The difference between the energy that the US would have used if the economy had more than tripled (as it did) at the same efficiency level as in 1970, and the energy it actually used was a cumulative 2,198 quads or equivalent to 379 billion barrels of oil. The amount of ‘new’ energy consumption in that period, i.e. the cumulative total that led to the 40 percent increase, was ‘only’ 785 quads or 135 billion barrels of oil. Therefore energy efficiency met 74 percent of the total demand for energy services and new energy supply only met 26 percent.

So to sum up:

• between 1970 and 2010 energy efficiency (which for a large part of that period was largely ignored by policy makers) supplied three quarters of the demand for energy services.
• the energy efficiency was delivered at substantially lower cost than energy supply.
• the $90 billion spent on efficiency in 2010 was roughly half that spent on energy supply.

Skip Laitner thinks that the economically optimum level of investment in energy efficiency in the USA would be about $142 billion per annum compared to the 2010 level of $90 billion. This would drive US energy consumption in 2050 from the official forecast of 122 quads right down to 50 quads. This would generate up to 2 million jobs and save consumers a net $400 billion per year, or the equivalent of $2,600 per household per year.

The US seems to be firmly heading towards a more efficient future and I wouldn’t want to bet against them achieving something like that 50 quad level by 2050. A famous quote, usually ascribed to Winston Churchill says, ‘Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.’ It may turn out to apply in energy efficiency – meanwhile despite much talk I am not sure Europe is doing the right thing yet.

A UK version of Skip Laitner’s analysis would make very interesting reading.