Cause and Effect in European Politics and Law

How much can we save from energy efficiency?

Adelina Marini, August 4, 2009

$1.2 trillion could be saved by energy efficiency, according to a study released Wednesday by the consulting firm McKinsey, quoted by the International Herald Tribune. According to the document the biggest opportunity to improve the energy situation of the US is through a major investment program to make homes and businesses more efficient. An investment of $520 billion in improvements like sealing ducts and replacing inefficient appliances could produce $1.2 trillion in savings on energy bills, the study found, and all this by 2020.

If carried out over the next decade, could cut the country’s projected energy use in 2020 by about 23 percent, a savings that would be “greater than the total of energy consumption of Canada,” Ken Ostrowski, a senior partner in McKinsey’s Atlanta office, said at a forum in Washington on Wednesday. The study also says that homes account for about 35 percent of the potential efficiency gains. The interesting thing is that the share of the industrial sector is just a little bigger than the domestic - 40% and the commercial sector - 25%. But the document did not consider the potential environmental benefits of cutting energy use.

After the good news the authors of the study admit that one of the biggest barriers to achieving the savings is the initial costs, because the $52 billion annual investment envisioned by McKinsey is four or five times more than the nation currently spends on energy efficiency.

In the meantime, the IHT quotes another report released on Tuesday by the National Research Council, according to which potential energy savings of 15 percent by 2020 and 30 percent by 2030 if more efficient technologies were adopted. Unlike McKinsey, the research council included transportation, acknowledging that it would be a difficult sector to transform quickly.