Big money in energy efficiency

A new report on energy efficiency from the consulting firm McKinsey found that the United States could save $1.2 trillion through 2020, by investing $520 billion in improvements like sealing leaky building ducts and replacing inefficient household appliances with new, energy-saving models. Such savings are far greater than the $520 billion that would be needed for upfront investment in efficiency measures.

That investment would cut the country’s projected energy use in 2020 by about 23 percent. It would also more than offset the expected growth in energy use that would be expected otherwise in the United States.

The reduction in energy use would also result in the abatement of 1.1 gigatons of greenhouse gas emissions annually, the equivalent of taking the entire U.S. fleet of passenger vehicles and light trucks off the roads.

Homes account for about 35 percent of the possible gains in end-use efficiency, according to McKinsey. The industrial sector accounts for 40 percent and the commercial sector for 25 percent.

Barriers to achieving the savings were: it would be expensive; inertia and poorly aligned incentives. The report recommendations include better information and education about potential energy efficiency savings; tighter codes and efficiency requirements for appliances; and stronger financial incentives for making efficiency improvements.

What’s more, energy efficiency is the very best way to create so-called green jobs.

Well, what’s true of the US also holds elsewhere, even if on a smaller scale. In the developing world, a large chunk is still deprived of access to power. But that doesn’t mean the rest do not waste energy using inefficient technology. India’s integrated energy policy recognizes the role for energy efficiency.

Encouragingly, the Bureau of Energy Efficiency (BEE), through its sustained campaign, has prodded households to go for star-studded certified energy-saving appliances and ensured industries adopt new technologies, helping save electricity worth 1,500 mw in 2008-09, says a survey by the National Productivity Council.

As much as 2,106.16 million units of power was saved through BEE’s star rating programme for electrical appliances. BEE has proposed to provide tax advantage to consumers to encourage them to purchase more energy efficient electrical appliances.

But as MGI report says, more awareness, tighter codes and stronger financial incentives can help to obtain the maximum from efficiency drives.