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Benefits of Energy Efficiency Understated, Report Finds

August 2009 - Energy Efficiency

U.S. energy consumption and the greenhouse gas emissions could both be cut about in half by 2050 through increased energy efficiency, while achieving a small but net positive gain in the economy, a recent American Council for an Energy-Efficient Economy (ACEEE) report finds.

Titled “The Positive Economics of Climate Change Policies: What the Historical Evidence Can Tell Us” the report states that based on the available record and the economic evidence to date, energy efficiency is a substantially larger and more cost-effective resource than most economic policy models now acknowledge.

The report concludes:

- Energy efficiency investments can provide up to one-half of the needed greenhouses gas emissions reductions most scientists say are needed between now and the year 2050.

- Investments in more energy productive technologies can lead to substantial net energy bill savings for the consumer and for the nation’s businesses on order of about half or $2 trillion by 2050 (measured in constant 2007 dollars).

- Non-energy expenditures within the U.S. tend to be more labor-intensive and provide a greater rate of contribution to the nation’s GDP compared to expenditures on energy. Instead of taking jobs away from the economy, the diagnostic assessment here suggests “a small but net positive gain” in the economy. Hence, shifting away from the production and consumption of conventional energy resources, in favor of more productive investments in energy efficient technologies, can lead to a more robust economy and to a greater level of overall employment opportunities with the U.S.

Building on the available economic data and the larger historical record, the report outlines a diagnostic review to evaluate the recent assessments of proposed climate change legislation now before the U.S. Congress.  

In particular, previous climate policy assessments focused on HR 2454, the American Clean Energy and Security Act of 2009. The intent of ACEEE’s diagnostic review is to highlight critical missing assumptions that most economic models are failing to take fully into account that would likely change many of the modeling results done to date.

As one of the richest and more technologically advanced regions of the world, the United States has expanded its economic output by more than three-fold since 1970. Per capita incomes are also twice as large today compared to incomes in 1970. Notably, however, the demand for energy and power resources grew by only 50 percent during the same period.  

This decoupling of economic growth and energy consumption is a function of increased energy productivity: in effect, the ability to generate greater economic output, but to do so with less energy.  Having achieved these past gains with a haphazard and often counterproductive approach to energy efficiency and energy policy, there is evidence to suggest that even greater energy productivity benefits can be achieved.


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