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 lower demand for energy, 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

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 high-, medium-, and low-temperature heat
• Improved maintenance and monitoring of energy-intensive processes
• Systematic recovery of waste heat
• Pipe layouts that reduce friction
• Changing pump / valve systems to pumps with variable speed drives
• Valve and fitting improvements

Transportation

• Transition to battery electric and hydrogen fuel cells (EVs are ~3x more efficient than conventional gasoline / diesel vehicles)
• Expansion of public transport infrastructure

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 organization
• Midstream - retailers, realtors, distribution networks
• Downstream - homeowners, building owners / operators, industrial facilities

Applying efficiency incentives farther upstream tends to provide leverage and compound the incentives; impact, while moving downstream, tends to simplify the measurement and attribution of savings. Both are valuable in efficiency programs.

Policy Vehicles 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
• Federal low-income weatherization programs
• Utility energy efficiency programs, or “demand-side management”
  • Customer information and educational programs
  • Financial incentives, such as rebates for efficient equipment or building designs
  • Direct installation of efficiency measures by utility contractors
  • Conventional loan financing, which tends to have minimal impact
  • Inclusive utility investment financing  such as Pay as You Save® (PAYS)*, which is more effective than loan financing and is a promising approach for funding efficiency investments by low-income customers

Drivers

• Makes decarbonization easier because we can provide energy services using less energy
• Reduces impacts of energy resource use such as greenhouse gas emissions, air pollution, habitat impacts, water use, etc.
• Reduces consumer energy costs
• Enables net-zero energy systems by reducing needed size, cost, and material use of renewable supply needed to meet energy loads
• Improves thermal comfort in buildings and reduces health/safety risk in extreme weather
• Improves energy affordability and operational integrity for low-income customers, while reducing arrearages and defaults
• Local economic development, employment, and revenue recycling
• Increases competitiveness and productivity for commercial businesses and industry

Barriers

• 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)
• Efficiency improvements often have to be applied one at a time rather than system-wide, reducing potential cost savings
• Lack of information and education on the potential benefits of energy efficiency

Climate Impact: Low

• Reduces overall GHG emissions

Environmental Impact: Low

• Reduces overall environmental impacts

^{Updated September 2023}