Energy Efficiency is the Leading Solution to the Energy Problem

by Daniel T Colbert
Executive Director

There’s a source that can make more energy available, and do so sooner and at far less cost, than all the alternative energy sources we can develop in the United States in the next ten years — and today’s energy debate is largely neglecting it. That source is neither carbon-based nor “alternative,” so it will reduce greenhouse gas emissions without requiring the building of new infrastructure.

Energy policy was, for the first time, a leading topic in the recent presidential campaign, and President Obama has made it one of his first priorities upon taking office. Energy impacts on virtually every other crucial issue of our time, including personal and national economics, the environment, national security, and jobs. Energy is no longer cheap, and even with the recent drop in the price of oil, $2.00 a gallon gasoline is likely to be considered cheap forever. While it’s painful now, today’s higher energy prices more realistically reflect the environmental impact on future generations and the scarcity of resources on which we depend, and they motivate the development of less costly, sustainable approaches to the equation of energy supply and demand.

There is no silver bullet solution to the energy problem; rather, a blend of solutions are needed: alternative energy production, nuclear energy, biofuels, and conservation are all viable parts of the solution, as are various policy components, such as putting a price on carbon. For example, nuclear power plants cannot solve the problem alone because they can’t be built quickly enough to meet the coming growth in demand, let alone replace the many aging fossil-fuel fired power plants to be decommissioned over the next two decades. Solar energy remains too expensive to meet a large fraction of energy demand. Both can be components of an overall solution, however.

The leading category of candidate solutions – in scope and in its near-term impact – is Energy Efficiency. Far too little emphasis has been put on the demand side of the equation. Energy efficiency, in all its forms, can produce the greatest near-term impact. For example, widespread adoption of currently available technology for lighting based on light-emitting diodes (LEDs) – already with twice the energy efficiency of compact fluorescent light bulbs – could save $115 billion in electricity costs in the US by 2025, and at the same time eliminate the need for 133 new power stations.

Another area with huge potential for energy, cost, and environmental savings through efficiency is in buildings, which consume 72% of all electricity in the US and 40% of total domestic energy. For example, in the US alone, implementing integrated control technologies for heating, ventilation, and air conditioning (HVAC) systems will save $30-40 billion in electricity costs and eliminate 300 million metric tons of carbon dioxide emissions over ten years. Indeed, the non-profit organization, seeks to establish a new building standard of carbon neutrality by 2030. There are many technologies available today to do this, including solar and wind energy, daylighting, green roofs, and thermal storage cooling; what is required is the will to establish standards and goals. Fortunately, many of these technologies have high returns on investment, making them economically viable. Indeed, a true growth industry is primed for full development.

Energy efficiency is about more than getting more work from a given amount of energy, but is only one key piece of the broader concept of energy productivity – defined as the GDP output divided by a country’s total energy use. Energy productivity takes into account all the economic, policy, behavioral and social factors in addition to how efficiently energy is used. A recent McKinsey Global Institute report states the potential demand reduction in 2020 through enhanced energy productivity is as much as 144 quadrillion BTUs (quads) of energy out of a total worldwide demand of 613 quads, (2003 worldwide demand was 422 quads). There is clearly a large scope for improvement here, and this broad agenda – not only development of energy efficient technologies, but also a focus on energy productivity – must be addressed. It is concerning that the US made more efficient use of its primary energy in 1950, when we used one-third of today’s energy, than it does today. Fifty percent more energy is consumed in the US to produce a dollar of goods than in Japan. This is not surprising, considering that the energy lost in the production and distribution of electricity from US power plants is equivalent to all the energy consumed in Japan. We can do much to reduce this waste. There is vast opportunity.

The view that an emerging Energy Technologies industry will be vitally important – not only to solving the energy problems facing us, but as an economic boom – is being advanced by Thomas Friedman. Others, such as the venture capital firm, Kliener Perkins Caufield and Byers, are actively investing in energy technology companies based on their belief in this emerging industry (see NYT magazine, Oct. 4, 2008). They rightly see a window of opportunity for the US to stake out a leadership role in ET, with resulting economic, social and environmental benefits. Assuming such a leadership role requires an integrated understanding of energy productivity – from the technologies to the economics and policy aspects of implementing them. Energy efficiency is today’s flag-bearer in this effort. The motto of Lee Eng Lock, a noted efficiency engineer, summarizes the potential succinctly and forcefully: “Efficiency is free. Ask for More.”

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