What does the US/China agreement mean for efficiency?

By Elisa Wood

November 19, 2009

The energy efficiency market has a gawky quality. It is not exactly one market but a conglomeration of various industries as diverse as appliance manufacturers, energy auditors, smart meter software designers and cogeneration developers. They are unified only in their ability to save energy.

All arms and legs as it may appear, the efficiency market seems ready to shoot to a new level of maturity. If that wasn’t apparent before, it became so this week with an announcement out of Obama’s visit to Beijing that the US and China will collaborate to curb their combined $1.5 trillion annual energy appetite.

How will this change the efficiency industry?

Given that the two nations consume 40% of the world’s energy, the collaboration could bring new economies of scale to efficiency. The agreement calls for:

• Greening buildings with better building codes and labels, advanced energy rating systems, and more emphasis on training building inspectors.

• Reducing energy waste in industry through benchmarking, on-site energy audits and tools and training programs to support these activities.

• Improving energy efficient consumer products by harmonizing test procedures and performance metrics. The two countries will exchange best practices for labeling systems and promote awareness of the benefits of energy efficient products.

• Working together to demonstrate energy efficient technologies and design practices, building on the research and development of the new U.S.-China Clean Energy Research Center.

• Engaging the private sector in promoting energy efficiency and expanding bilateral trade and investment.

With this new scale, energy services companies (ESCos) may follow a growth pattern similar to that of US solar firms. Just a few years ago, solar installation companies tended to of the two-guys-and-a-truck variety. The operations were small and local, just as many ESCos are now. Then companies like SunEdison came along and began acquiring the smaller ventures. Soon solar had a national footprint, and not long after, an international footprint as European and Chinese companies began buying American firms.

Solar seemed to mature into an international market overnight. Efficiency may now have the same opportunity.

See details on the US/Chinese collaboration here: http://www.energy.gov/news2009/documents2009/US-China_Fact_Sheet_Efficiency_Action_Plan.pdf

Visit Elisa Wood at http://www.realenergywriters.com/ and pick up her free Energy Efficiency Markets podcast and newsletter.