This is Part 9 of a paper written about the projected US Energy profile in the year 2050. In this chapter, we take a look at the role of Energy Efficiency. 

The AEO2010 tracks energy intensity over the last couple decades. A high-energy intensity indicates less energy efficiency or a higher cost of converting energy into GDP. A low-energy intensity indicates more energy efficiency or lower cost of turning energy into GDP. Since 1992, our energy intensity has decreased by approximately 1.9 % per year, (EIA, AEO 2010). This change is attributed mostly to the nation’s shift from manufacturing to the service sector. Also, the AEO predicts that energy consumption per capita will decline 0.4 percent per year from 2008 to 2030. If the U.S. government implements proper regulations and incentives, our energy intensity per capita should decline at higher rates of 1 to 2% per year from 2030 to 2050.

By all estimates, adoption of more stringent energy efficiency measures is more cost effective than switching to alternative sources of producing electricity. The chart below shows the direct monetary cost and emissions costs of energy efficiency measures compared to renewables and clean technologies. After implementation of a cap and trade system, we can expect the direct cost to more accurately reflect the emissions cost.

Reduction in energy intensity over the last couple decades has saved the U.S. from large increases in energy consumption. Without previous reductions in energy intensity, we would be consuming much more today. We need a more strategic plan for being a more energy efficient nation, including retrofitting of existing buildings, higher energy efficiency standards for appliances, and comprehensive education for all citizens. Higher efficiency can also reduce overall consumption, thus reducing dependency on foreign resources.  

McKinsey & Company released a study showing the potentially negative cost of carbon dioxide reduction using energy efficiency. Most efficiency losses are in industry and the manufacturing sector. Advancements in technologies to take the efficiency of coal plants from 40% to 60%, for example, will be crucial in making huge energy efficiency leaps. Also, in the U.S. transmission and distribution of electricity see 7% energy losses. Advancements in nanotechnology could allow for fast and efficient transmission. The challenges in transmission are in finding a transmitter that is lighter and cheaper than copper. Nanotubes fit both criteria and have on average 5% energy losses in contrast to 7%. Reducing transmission losses across the nation to 6% would result in a national annual energy savings of 4 X 1010 kilowatt-hoursan annual energy savings roughly equivalent to 24 million barrels of oil (National Nanotechnology Institute).

The barriers to energy efficiency are real but surmountable. The first is inertia. People have a hard time changing their habits, and unless the average consumer gains a new sense of urgency regarding energy reduction, he or she may continue along the same path. Also, energy producers have a disincentive towards promoting more efficiency in the U.S. Another obstacle is that all of the costs are borne upfront and savings are achieved afterwards. Humans can be myopic and weigh short-term costs as more important that achieving long-term gains.

However, there is hope using the power of government policies. The five main tools that the government has to increase energy efficiency are: (1) dissemination of information, (2) restrictive regulations, (3) market incentives, (4) funding/grant programs, and (5) public/private partnerships, (Saidel & Alves, 2003).