energyfactsheet

8/8/2019 EnergyFactSheet

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“The only by-product o energy eciency is wealth,” trumpets

The Economist . According to the McKinsey Global Institute,

a global energy-eciency drive would be protable, unlike

most other measures needed to halt climate change. The US

government, or example, has reaped a 40-to-1 return on its

eciency investments.

Up to three-quarters o the electricity used in the US today

could be saved with eciency measures, and these mea-

sures will cost less to implement than the electricity itsel.

Developing countries, which will account or 80% o global

energy demand growth up to 2020, could cut their demand by

more than hal using existing technologies to improve energy

eciency, according to the McKinsey Institute. “This would

leave energy consumption some 22% lower than it would

otherwise have been – an abatement equivalent to the entire

energy consumption o China today,” the institute states.

Cheap at half the Cost

It has been called “the only cheap power let,” and indeed,

nothing compares. Many eciency improvements are priced

at 1-3¢ per kilowatt-hour – about one-th the cost o

electricity generated rom new coal and natural gas-red

plants. (Large hydro is more variable, but generally runs

Reducing the impact o our use o energy is one o the key technical, political, and

even moral challenges acing human society in this century. While our sources

o energy have to be made cleaner, our frst priority must be to use energy more ef-

ciently. Efciency measures are cheaper, cleaner and aster to install than any other

energy option. And we lose nothing in the bargain – the point o efciency is to allow

us the same levels o productivity or comort, but with less power.

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This inrared image shows heat leakrom a building. Photo: Thermot

t pw NweffiCieNCy: the gr eeN est eleCtriCity sourCe



between 4-10¢/kWh, not including “externalized”

costs such as environmental and social damages.)

Eciency is not only cheaper than all other

options, it also leads to growth in jobs and per-

sonal income. By reducing energy bills, it rees upmoney that can be spent elsewhere. The result is

a shit away rom the relatively low labor-inten-

sive energy sector to parts o the economy that

employ more workers per dollar invested. It also

creates growth in green-collar jobs such as build-

ing-weatherization specialists and energy auditors.

Eciency also oers less scope or corruption and patron-

age than large energy supply projects. The “downside” is

that the lack o potential or kickbacks can pose a political

obstacle to the adoption o eciency improvements over

new supply projects.

Art Roseneld, the ather o Caliornia’s energy-eciencymovement, has stated, “I believe the world needs only hal

as many new power plants as it thinks it does.” One o the

world’s most energy-ecient economies, Caliornia uses

just 58% o the electricity used by other US states –

and it made money getting to that level o eciency.

(See box opposite.)

Many governments have adopted innovative policies

to improve energy eciency. A ew examples rom around

the world:

n A number o US states have adopted utility pricing that

separates a utility’s ability to make money rom the amount

o electricity that it sells (called “decoupling”). Very small rate

increases may be needed since less energy is being sold, but in

the US exper ience, decoupling has not resulted

in any signicant rate increases, and has led to

more stable electricity prices.

n The US government oers a tax credit to

makers o extremely ecient appliances. Severalstates give rebates, income-tax credits or sales-

tax exemptions to anyone who buys them.

Japan’s Top Runner Program is one o the ew

that regulates rather than rewards eciency; it

uses the most ecient appliances on the mar-

ket today to set eciency standards or the

next generation o appliances. This program has

helped Japan boost the eciency o rerigerators by 55%, air

conditioners by close to 68%, and computers by 99%.

n Retrotting existing buildings with better insulation and

more-ecient appliances can cut energy use by 20-50%.

Many governments have adopted building codes that dictate

minimum levels o eciency. The Indian government’s 2007energy conservation code, or example, is aimed at cutting

energy consumption in commercial buildings by 25-40%.

n Lighting is an area where energy savings can be huge, and

relatively easy to achieve. Just switching to compact fuor-

escent (CFL) bulbs can reduce electricity used or lighting

by 75%, or example. In 2008 the Chinese government gave

substantial subsidies or makers o CFLs. Brazil oers rebates

on CFLs, with the result that Brazilians have installed more

than 48 million ecient bulbs. Namibia, Ghana and Uganda

have all achieved signicant energy savings by distributing

ree CFLs. Ireland, Switzerland, Cuba, and Venezuela are just a

ew o the many governments to have begun to phase out or

ban incandescent light bulbs.

n Electricity drawn by appliances in “standby” mode

(when they are not actively on but still running electr ic cir-

cuitry or internal clocks) currently accounts or 5-10% o

total residential electricity use in developed countries. The

International Energy Association (IEA) estimates that standby

power is responsible or roughly 1% o global CO2

emissions,

and growing. New technologies could reduce standby power

by up to 90% with no loss in eatures customers want, the

IEA states. At least 20 governments are working on improved

standards and labeling to reduce standby power. The IEA

is pressing or a global standard, since these products are

designed, manuactured, and traded globally.

n Japan set energy-eciency targets or the countries’ big-

gest industries beginning in the 1990s, and today its indus-

tries are among the most ecient in the world. For example,

Japan’s steel industry now uses a third less energy than it did

30 years ago. “I the global steel industry adopted Japanese

conservation measures, it could reduce carbon emissions by

some 300 million tons a year,” reports the New York Times.

“Energy eciency itsel creates jobs,simply because o the household

spending it takes out o the carbon-supply chain and puts into espressodrinks and haircuts. Caliornia’s energy-reduction programs generated 1.5million jobs, worth $45 billion in payroll,between 1972 and 2006.”

- David Roland-Holst, a resource economist at the University o

Caliornia at Berkeley, and author o “Energy Efciency,

Innovation, and Job Creation in Caliornia”



effiCieNCy: the greeNest eleCtriCity sour

Caliornia is a world leader in energy

eciency. In the past three decades,electricity per capita has stayed fatin Caliornia while it has risen 60%in the rest o the country.

The state wasn’t always a paragono smart energy regulations. In 1974,75% o Caliornia’s electricity camerom oil, and it had plans to build20 nuclear plants up and down thecoast. An oil embargo and publicprotests against nuclear powerpushed the state’s energy plannersinto a corner. Caliornia’s ecien-cies come rom three key changes:better energy policies, a shit awayrom energy-intensive businessesueling the Caliornia economy, andhigher energy prices. “We’ve saved$16 billion a year in electricity, witha net savings o about $1,000 peramily per year,” notes John Wilson,ormerly o the Caliornia EnergyCommission. Put another way, everydollar invested by Caliornia’s utilitiesin eciency measures has generat-ed more than two dollars in savings

or customers. The state mandatesenergy eciency as the deault rst-choice to meet energy needs beorenew supply can be considered.

Hal the state’s savings are due tobuilding and appliance standards,which are revised upward everythree years. “We were told the 1993standards couldn’t be done, andtoday we’re meeting a standardthat is 20% more ecient than thatone,” Wilson says. “I think we’ll getto zero-net-energy buildings in 10

years.” The state’s rerigerator stan-dards alone have saved 40,000megawatts o electricity – equivalentto about 80 typical coal plants.

Caliornia undertook a broad menuo common sense measures: better

insulation, energy-ecient lighting

and heating and cooling systems.But some o its savings came romunexpected places. The state oundthat the average residential air ductleaked 20-30% o the heated andcooled air it carried, so it requiredleakage rates below 6%. The stateound that about 15% o outdoorlighting was directed up, illuminat-ing the sky rather than streets andparking lots, so it required new x-tures that directed 94% o the lightdownward. Flat roos on commercial

buildings are required to be white, torefect the sun and reduce air-condi-tioning demand.

But one o the state’s most impor-tant policy changes was to removeprots rom energy sales. Caliorniarst decoupled sales and prots orgas in 1978 and or electricity in1982. Ater a disastrous run withderegulation during which utilityrates were no longer regulated, thusundermining many eciency pro-grams, the state reversed course. In

2007, the state adopted a schemecalled “decoupling plus,” whichaims to make investments in energyeciency more protable or utili-ties than new power stations wouldbe. Fees to nance energy-savingmeasures are added to each bill,and utilities spend the money in pur-suit o targets set by the CaliorniaPublic Utilities Commission. Thecommission then calculates the sav-

ings rom these investments, com-pared with the cost o new powerplants. I a utility achieves between85% and 100% o the target, itcan keep 9% o these savings. Iit exceeds the target, it gets 12%,more than it would earn rom build-ing new inrastructure. Between65% and 85% it does not earn anyreturn at all, and below 65% it paysa ne or every kilowatt-hour bywhich it has allen short.

While Caliornia is one o theworld’s most ecient economies,there is still room or improvement(Western Europe is even more e-cient, or example), and the stateis striving to achieve as much newelectricity savings by 2020 as it hasin the past three decades.

t Cn Md

“I all Americans had the same per capita electricitydemand as Caliornians currently do, we would cutelectricity consumption 40%, without raising

American electric bills.”

- Joseph Romm, director o the Center or Energy and

Climate Solutions and ormer assistant secretary

o the US Department o Energy.

Insulating buildings can bring signifcantenergy savings. In the US, buildings

account or 70% o electricityconsumption.



International Rivers | 1847 Berkeley Way, Berkeley CA 94703, USA | Tel: + 1 510 848 1155 | internationalrivers.org January 2009

BeCoMiNg effiCieNt: poliCy poiNters

Energy savings can be ound even in countries where energy

use is just beginning to take o. In act, putting eciency

measures in place now or growing economies makes eco-

nomic sense, since requiring eciencies means there will be

more to share with those currently without access to elec-tricity, and saves money to invest in other pressing needs. The

McKinsey Institute estimates that developing countries could

save an estimated $600 billion a year by 2020 by investing

$90 billion a year in energy ecient cars, appliances and pro-

duction methods. Here is a short-list o steps governments

and utilities can take to improve energy eciency:

n Develop strong building and appliance standards

and promote the aggressive deployment o energy-ecient

technologies and strategies (including those to reduce standby

power). Tighten the standards regularly. To be eective, these

standards should be mandatory.

n Break the link between utility sales and revenue.“Utilitydecoupling” is a necessary step to encourage utilities to pur-

sue a path o energy eciency over expanding supply.

n Establish standards or utilities. While decoupling in

and o itsel will not cut electricity demand, it does mean

that utilities can provide incentives or conservation programs

without losing revenue. Enorceable targets or energy e-

ciency or utilities (also known as a “portolio standard”) will

ensure steady progress. Other strategies to help utilities limit

the need or new power plants include energy conservation,

distributed renewables (such as solar PV on large industrial

buildings and homes), and tactics to manage peak demand

or electricity.

n Adjust energy prices to encourage ongoing efciency.

While this can be politically dicult in poor countries, blan-

ket subsidies discourage eciency and may benet mainly

the better-o. Low-income people can be protected rom

higher energy prices by subsidizing basic consumption and

increasing unit costs or the heaviest users.

n Focus on the energy-intensive industries. such as

pulp and paper, steel, cement, aluminum, petroleum rening

and chemicals. Adopting the most-ecient blast urnaces and

boosting recycling can cut energy use in the steel industry

by close to 40%. Converting China’s cement industry to the

most ecient dry kiln technologies, as used in Japan, couldcut global energy use in the cement sector by 40%.

n Increase awareness among consumers, businesses, build-

ing inspectors and contractors through education campaigns,

labeling o appliances, and trainings. Giving energy users

eedback on how much they use and where savings can be

ound can lead to signicant savings.

n Don’t orget the grid! Transmission systems can be

hugely wasteul. Arica’s power grid, or example, loses twice

as much electricity during transmission as do more mod-

ern systems, and those losses can equal 2% o GDP annu-ally. Even the r ichest nations are exper iencing grid-related

problems. “Smart grid” technologies, which use micro-

processors and sotware to allow inormation to fow back

and orth to all users in the system (rather like the inter-

net), would reduce electrical losses through the wires, give

electricity customers eedback on energy use and costs so

they can be active participants in managing demand, and

enable a much larger expansion o renewables to the grid.

n Create a carbon economy. Smart regulations should

be able to prevent most energy waste but cannot be expected

to catch all wasteul practices. Taxing high-carbon energy

sources would help encourage companies to use energy more

wisely and switch to clean renewables.

None o these things are beyond our reach. In act, energy e-

ciency methods are ready to be deployed now, without having

to wait or any “silver bullet” technologies. All it takes is political

will to get started. I you’re eeling like you lack the personal will

to press your political leaders to get moving on energy eciency,

just imagine this: or every appliance standard adopted or string

o municipal buildings that are insulated, a river somewhere will

breathe a sigh o relie and live another day to run ree.

More resourCes

McKinsey’s resources on eciency are among thebest. Visit their overall page to see their library:http://tinyurl.com/bx99lq. “Fueling sustainable develop-ment: The energy productivity solution” is their Oct.2008 report on reducing energy demand in developingeconomies. (http://tinyurl.com/5ae9wn)

The International Energy Agency’s page on energy e-ciency includes inormation on policies, building codes,a proposal or reducing “standby power” and othergood resources: http://tinyurl.com/bqwb3p

The American Council or an Energy-Ecient Economyhas a library o their policy papers online, and a thor-ough list o links to other sites on eciency at:http://www.aceee.org/altsites/index.htm

“Energy Eciency, Innovation, and Job Creation inCaliornia” by David Roland-Holst, UC Berkeley, 2008.(http://tinyurl.com/6gujn)

A complete list o Caliornia’s specic plans or energysavings can be ound here: http://tinyurl.com/96tpkn

More inormation on utility decoupling to promote energyeciency by the Progressive States Network, 2007(http://tinyurl.com/bv2wxx)

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