Energy efficiency (EE) means eliminating pure waste and making more happen with less energy, usually with higher comfort level and lower operating costs. While most understand EE to mean well-known applications such as compact fluorescent or LED light bulbs and better insulated buildings as well as more fuel-efficient vehicles, a huge frontier in efficiency also exists for commercial and industrial processes.
Why it’s important and has implications
For households energy efficiency means savings, for governments it can create lower expenses, for businesses it can lead to greater profitability, and for a nation efficiency can mean greater national security.
The least expensive new power plant is the one that doesn’t need to be built. The costs of EE have been found to be plummeting in recent years, now down to $.025 per kilowatt hour, less than the cost of energy from the cheapest sources such as old coal plants.
Even better, using energy more efficiently is one of the best drivers of economic development when efficiency measures are installed locally and the savings that result are also kept or spent locally. These are the jobs that “cannot be outsourced’ and the local spending and saving then feeds that local “multiplier effect”.
“In 2010, Ford Motor Company turned off unused computers and saved $1 million. The graphics design firm Ripe Graphics in Washington DC realized that their high end plasma screen monitors were actually on even though they said they were “off” (your television does this to you). They plugged them into a powerstrip and when they left for the day, they flipped the switch off – now the devices are really off. Ripe cut their electric bill from $200 a month to $90. This is free money!” ~ Hunter Lovins
ACEEE, the American Council for an Energy Efficient Economy issued a report in 2009, Saving Energy Cost-Effectively: A National Review of the Cost of Energy Saved Through Utility-Sector Energy Efficiency Programs noting: “…recent conventional energy supply-side options have typically cost between $0.07 and $0.15 per kWh — about three to four times the cost of energy efficiency investments. In 2008, pulverized coal cost between $0.07 and $0.14 per kWh, combined-cycle natural gas cost between $0.07 and $0.10 per kWh, and wind cost between $0.04 and $0.09 per kWh … Furthermore, as energy supply-side resource costs are highly volatile, energy efficiency remains a financially stable, long-term investment.”
Maggie Eldridge, report co-author said, ”The data show conclusively why energy efficiency should be universally regarded as the ‘first fuel’ in making energy decisions. It is cheaper, cleaner, faster, and more easily realized than any other resource out there.’ ”
Climate change has resulted largely from the dramatic increase of CO2 and other greenhouse gases in the earth’s atmosphere since the dawn of the industrial era, which have accumulated mostly from our use of fossil fuels. According to the International Energy Agency, improved energy efficiency in buildings, industrial processes and transportation could reduce the world’s energy needs in 2050 by one third, and help control global emissions of greenhouse gases. Efficiency is also, therefore, pivotal in helping the nations of the globe supply energy for a world population that is continuing to grow in number and industrialization.
The 1973 oil embargo was a painful national crisis that introduced efforts for energy efficiency in the United States, bringing the subject into national dialogue and created federal policy such as fuel efficiency standards for cars and trucks that subsequently fluctuated with oil prices.
However in 1978, one state in the nation implemented lasting efficiency efforts that produced exemplary results. The first large state to implement efficiency for electricity and the built environment was California, where physicist Art Rosenfeld at the Lawrence Berkeley National Laboratory developed a broad range of efficient technologies such as mini ballasts for fluorescent lighting (leading to the development of CFL’s), low emissivity windows, and window film to block heat but allow light to pass through. In 1978 Dr. Rosenfeld was responsible for developing DOE-2 a computer program for building energy analysis that was incorporated in to California’s building code in 1978 and has resulted in California having flat per capita energy use since the 1970’s despite popularity of high tech gadgets, hot tubs and more. The building code has been used in many states of the US and foreign countries including, recently, China.
For California, Rosenfeld’s influence has been estimated to have saved $30 billion annually in energy costs and this success has been dubbed the “Rosenfeld Effect”.
While energy efficiency is the most cost-effective source of new energy, its widespread development remains hampered by market imperfections and a perceived “hassle factor”. Hunter Lovins’ 1997 report, “Climate Making Sense and Making Money” detailed eight categories of market imperfections including the fact that individuals and companies lack adequate information and education about what the opportunities are, which efficiency measures make sense, and how to implement them.
“The market lacks appropriate financing measures, and access to capital is inequitable. Utilities that build power plants have access to cheap financing, but we pay MasterCard interest rates on home efficiency improvements.” ~ Hunter Lovins
Industrial modes of efficiency rely on case by case design enhancements and installation for industrial processes, so they are less well known than manufactured items such as lights. However, they are often even more profitable in payback times. Such improvements include better use of waste heat off of boilers or thermal power plants to support other purposes such as hot water systems or heating for other buildings. In some cases waste heat can be used for additional power generation, which is called co-generation.
Banking giants Fannie Mae and Freddie Mac wrote regulations that effectively stopped a new energy efficiency funding mechanism that was authorized in over 27 states known as PACE financing. Property Assessed Clean Energy Financing (PACE) is a policy to allow home and building owners to install efficiency (and renewable energy) improvements on their structures and pay for it through their property tax bill, as they would also do for sewer or sidewalk improvements. The counties in which such borrowers live would attract funding through bonds which would be highly rated because property tax bills are “first lien” debt instruments, meaning, they get paid first in the event of foreclosure. This method allows for particularly low interest rates.
“PACE programs allow homeowners to make energy-saving modifications on their houses through a voluntary assessment on their property, at no cost to local taxpayers. Our bill facilitates participation by homeowners in states with PACE programs, which promote conservation, energy savings and job creation.” ~ Congresswoman Nan Hayworth, R-NY.
In the summer of 2011, three members of the US Congress, Nan Hayworth, Daniel Lungren and Mike Thompson have introduced the “PACE Protection Act of 2011 to establish strict underwriting criteria and lender protections for PACE programs. The bill guarantees that PACE assessments will only be allowed for credit-worthy participants, and that improvements must be revenue positive.
Support the reauthorization of PACE financing for home and building by contacting your elected member of Congress. Or use this form.
Explore your house and work place for ways to use less power and heating fuel. Quick fixes include replacing incandescent bulbs with CFL’s or LED’s, completely powering down one’s cable box and TV set when not in use with a power strip (cable boxes can draw as much as a refrigerator when not in use), instituting a company policy of turning computers off when not in use. Have your building or home given an energy audit and plan appropriate next steps in retrofits for efficiency.
Support or petition to strengthen President Obama’s fuel efficiency standards or cars and commercial vehicles, and for your own commute, explore efficiency in the use of bicycling, motorcycling, public transportation, walking, and hybrid vehicles.
*A special thank you to Hunter L. Lovins, President and Founder of Natural Capitalism Solutions, for her contribution to this page.