Energy Efficiency

Energy Efficiency Has Met More US Energy Services Demand Than Any Other Resource

67%
of total US demand for energy services since 1950 has been met by energy efficiency

Energy Efficiency Has Significantly Reduced the Carbon Intensity of the US Energy System

27x
the impact renewable energy generation has had on the reduction of carbon intensity in the US
(1975-2022)

Energy Efficiency is the Most Cost Effective Way to Reduce Greenhouse Gas Emissions

Efficiency measures like fuel efficiency and lighting system improvements reduce energy demand, improve energy services, and often result in cost savings to consumers. For example, the cost-negative decarbonization options on the McKinsey Cost Curve for Greenhouse Gas Reduction are efficiency measures.

Integrative Design

The process of artfully choosing, combining, sequencing, and timing fewer and simpler technologies to optimize whole systems rather than components in isolation.

Downstream, End-Use Perspective

Focus downstream, starting with the desired end-use service to be delivered, to compound upstream savings of energy and capital, and put efficiency before supply, passive before active, simple before complex. The design logic flows in the opposite direction to the energy flow.

Tunneling Through the Cost Barrier

When whole systems are optimized, big energy savings often cost even less up front than small or zero savings.

For example, spending more on thick insulation and good windows can reduce up-front costs by eliminating the need for central heating and/or air conditioning. Read this article about the RMI Innovation Center.

Examples of Electric Motor Driven Systems

• Pumps and Fans (Residential, Commercial, and Industrial)
• Large Home Appliances
• Heating, Ventilation, and Air Conditioning (HVAC)
• Conveyor Belts

Most are in buildings and industry.

Residential and Commercial Buildings

• Efficient building envelope (e.g., high performance windows, insulation)
• Lighting - use of natural light, sensors, and LED lights
• Improved HVAC systems and ducted or ductless heat pumps to replace natural gas or inefficient electric resistance heating
• Electrification of space heating (conversion to heat pumps) and natural gas appliances (stoves, dryers, water heaters)
• Efficient appliances and reduced standby losses

Industry

• Electrification of process heat (see our Industry Decarbonization page)
• Improved maintenance and monitoring of energy-intensive processes
• Systematic recovery of waste heat
• Pipe layouts that reduce friction (avoid right angles)
• Changing pump / control valve systems to pumps with variable speed drives
• Valve and fitting improvements

Transportation

• Combine land use planning with transportation infrastructure planning to reduce vehicle miles traveled (MVT) and the need to commute long distance (e.g., walkable cities with employment, goods and services close to housing; housing concentrated along public transit corridors)
• Expand public transport and bicycle infrastructure
• Reduce vehicle weight via design and the use of lightweight, high-strength materials, such as carbon fiber composites 
• Design vehicles to reduce aerodynamic drag (which is extremely impactful because drag increases with the cube of speed, i.e. 2x speed causes 8x aerodynamic drag forces!)
• In road vehicles, use low rolling resistance tires and ensure proper inflation for all tires
• Electrify personal vehicles, trains, trucks, buses, etc. (e.g., EVs are ~3x more efficient than conventional gasoline / diesel vehicles and benefit from regenerative braking)

Limitations on the Energy Efficiency Resource

• Technical potential - what is technologically feasible
• Economic potential - what is economically feasible and cost effective
• Achievable potential - what is realistic and acceptable for people’s comfort / convenience

Note that all of the above categories of efficiency potential tend to increase with time, technology development, and investment.

Where Energy Efficiency Measures Can Be Applied

• Upstream - manufacturers, builders, standards organizations
• Midstream - retailers, realtors, distribution networks
• Downstream - homeowners, building owners / operators, industrial facilities

Applying efficiency incentives further upstream in the value chain can provide additional leverage and compound energy savings. At the other end of the value chain (further downstream), energy savings resulting from efficiency incentives are typically easier to measure and attribute. Savings all along the value chain are valuable in energy efficiency programs.

Policy Instruments for Improving Energy Efficiency

• Federal and state-level building codes and vehicle and appliance efficiency standards, which are highly effective in removing the least efficient models in a product line from production 
• Public information and labeling programs (e.g., Energy Star)
• Financial incentives, such as tax credits or cash rebates
• Federal low-income weatherization programs
• Utility energy efficiency programs, or “demand-side management”
  • Customer information and educational programs (energy audits, contractor referrals, etc)
  • Financial incentives, such as rebates for efficient equipment or building designs
  • Direct installation of efficiency measures by utility contractors
  • Inclusive utility investment financing  such as Pay as You Save® (PAYS)*, which is more effective than conventional loan financing and is a promising approach for funding efficiency investments by low-income customers

Drivers

• Energy efficiency is the lowest cost, cleanest energy resource
• Reduces energy use while maintaining or improving energy services
• Provides some of the quickest and most cost-effective GHG mitigation options while lowering energy bills and strengthening energy security
• Reduces impacts of energy resource use such as greenhouse gas emissions, air pollution, habitat impacts, water use, etc. 
• Enables net-zero energy systems by reducing the amount of renewable supply needed to meet energy loads
• Reduces consumer energy costs, improving energy affordability and operational integrity for low-income customers, while reducing arrears and defaults
• Increases competitiveness and productivity for commercial businesses and industry
• Many effective measures ready to adopt now (LED lighting, smart devices, heat-pump HVAC systems, etc.).
• Existing programmatic and policy tools to incentivize efficiency

Barriers

• Lack of information and education on the potential benefits of energy efficiency
• Energy users perceive energy savings as highly risky compared to more familiar, but actually riskier investments
• Efficiency improvements are often applied one at a time rather than system-wide, reducing potential cost savings 
• Upfront costs can be prohibitive if not applied correctly (i.e., optimizing in isolation as opposed to applying principles of integrative design)
• Efficiency upgrades must be paid for up-front and in some cases there may be a long cost recovery time
• “Split incentives” between those paying the costs of efficiency measures and those enjoying the savings (e.g., owner vs tenant)

Climate Impact: Low

• Reduces overall GHG emissions

Environmental Impact: Low

• Reduces overall environmental impacts

^{Updated June 2024}