Who is ahead in energy efficiency – the US or Europe?

On my recent travels through the American mid-west (my favourite and a much maligned part of the US) I was asked the question, “who is ahead in energy efficiency, the US or Europe?”. This is an interesting question I have thought about a lot over the last few years. The first part of my answer is that the grass always looks greener on the other side. On an earlier visit to the USA to attend the 2012 ACEEE financing forum I was intrigued by the general reaction to the UK situation which was characterised as, ‘you guys over there have it so good because of all the advanced policies you have’. I explained that what may look like great policy from afar doesn’t always look like that when you see it up close and have to work within it. As we know the UK energy efficiency policy has evolved a lot in the last 2 years but it is still far for ideal, with a multiplicity of policies and programmes and still much uncertainty, particularly about using the Electricity Market Reform to boost demand for demand side activities.

So back to the question. The next part of the answer is of course is that the USA is actually 50 countries with a common currency and generally a common language whereas Europe is 27 countries with no common language and 23 with a common currency. This makes if difficult to compare the US and Europe. Anyway, having caveated the answers with all of the above here is my take on the question.

In parts of the US (and an increasing number of places) the realisation that energy efficiency is a huge opportunity to create value has sunk in and as always when that happens in the US a lot of very talented people and a lot of investment flows into the opportunity. Secondly efficiency has been decoupled from the climate change issue which removes a lot of debate and allows believers or non-believers in climate change just to get on with it. Thirdly the link between efficiency and job creation is really starting to be taken seriously, more so than in Europe. Some US (and Canadian) cities are making great progress on long-term energy plans based on efficiency and linked to economic development. Energy efficiency financing is more advanced in the USA where the market is growing and transforming itself from a publicly funded activity (mainly stimulus and rebates) to a privately financed activity. In Europe my take is that most often ‘energy efficiency financing’ implies public funding of some kind.

There is probably more potentially transforming technologies coming out of the US than Europe, and that is everything from systems that seriously reduce the cost of re-lamping with LEDs to totally radically data centre cooling technologies. That just reflects the huge scale of R&D in the US and the interest of the Venture Capital industry. The UK and Europe is better at energy management, particularly around Monitoring & Targeting (M&T) and motivation programmes. On the subject of policy the answer depends entirely on what you are comparing. There is little doubt that advanced US states like Massachusetts are way ahead in areas such as decoupling electricity revenues for volumes. They now appear to have decoupled electricity demand growth from economic growth. Europe (although not the UK) is ahead on integrated utilities selling power and heat generated in efficiency CHP and Dh stations.

So at the end of the day, it depends which jurisdictions you are comparing, what you are comparing and where you are looking from. There are examples of bets practice in both the USA and Europe. I can’t help feeling though that ‘Yankee ingenuity’ and the pursuit of value will in time produce better rates of improvement (from different bases) in the USA than in Europe.