Block’s Indicator of Sustainable Growth

by Ray Block

Given the high cost of investment in renewable energy, it is often overlooked that progress would be a lot faster, if the electricity industry would concentrate on energy efficiency as the low cost way of reducing greenhouse gases.

The American Council for an Energy-Efficient Economy (ACEEE) maintains that the potential advances in energy efficiency is the “largest and most cost-effective form of greenhouse gas mitigation.”

The consultancy, McKinsey in a July 2009 report Unlocking Energy Efficiency in the US Economy say that efficiency could meet 23 per cent of America’s future electricity demand.

While the upfront investment on American energy would be in the order of US$520 billion in the 11 years to 2020, some $700 billion could be saved.

With more than 100 million American buildings and billions of electrical devices in residential, commercial and industrial settings, there is a lot at stake to unlock the full potential of energy efficiency.

There is the need for greater alignment between utilities, regulators, government agencies, manufacturers, and energy consumers.

Equally, the need for foster innovation in the development and deployment of next generation, energy efficiency technologies to ensure ongoing productivity gains.

McKinsey say there is a compelling nationwide opportunity to reduce annual energy consumption by 23 per cent from a business as usual projection by deploying an array of positive efficiency efficiency measures.

The residential sector accounts for 35 per cent of the end use efficiency potential, (33 per cent of primary energy potential). The industrial sector accounts for 40 per cent of the end use efficiency potential, (32 per cent in primary energy) and the commercial sector 25 per cent (35 per cent in primary energy).

The differences between primary and end use efficiency potential are attributable to conversion, transmisssion,distribution and transport losses.

There has been ongoing energy efficiency in recent years. For example, since 1980, US energy consumption per unit of floor space has decreased 11 per cent in residential and 21 per cent in commercial sectors, while industrial energy consumption per real dollar of GDP output has decreased 41 per cent.

 An even greater potential remains due to multiple and persistent barriers present at both the individual opportunity level and overall system level.

These barriers are widespread and persistent, and will require an integrated set of solutions  to overcome them- including information and education, incentives and financing, codes and standards, and deployment of resources well beyond current levels.