Expert Commentary

Unlocking energy efficiency in the U.S. economy

In response to concerns about climate change, fossil fuels, and nuclear power, a 2009 McKinsey & Company study looks at the potential benefits of conservation.

Press coverage of energy, whether from fossil fuels, nuclear, or renewables, tends to be dominated by talk of production. Production is only half the story, though: Every energy equation is a balance between generation and consumption, and both count equally.

As concern has risen about climate change, fossil fuels, and nuclear power, energy efficiency has attracted increasing attention. A 2009 study by McKinsey & Company, “Unlocking Energy Efficiency in the U.S. Economy,” looks at the potential benefits of reducing energy consumption.  The study concludes that:

  • Using existing technology at scale, U.S. energy consumption could be reduced by 23% in 2020 from current levels.
  • The resulting savings would be $1.2 trillion for a cost of $520 billion, a net gain of $680 billion
  • Such a program would avoid emitting up to 1.1 gigatons of greenhouse gases annually.

In addition, an earlier McKinsey report, “Curbing Global Energy Demand Growth: The Energy Productivity Opportunity,” calculates that energy productivity investments have an internal rate of return of 10% or more. A related paper by the Widener University School of Law, “Stabilizing and then Reducing U.S. Energy Consumption: Legal and Policy Tools for Efficiency and Conservation,” provides a useful guide to realizing the potential benefits of energy efficiency.

Tags: carbon, greenhouse gases, conservation, technology

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