Are we thinking about energy all wrong?

By Elisa Wood

April 29, 2010

The energy world operates under the premise that more is better. If we build more power plants, we’ll have ample supply, and electricity prices will drop. Even better, if those plants are clean and green, we’ll displace older, dirtier plants and reduce emissions. That will help our economy by producing jobs.

But is that the right way to think about power?

Truth be told, new energy sources are likely to play a smaller role in economic recovery than advances in energy efficiency, according to speakers at a recent symposium held by the American Council for an Energy Efficient Economy, as part of its 30^th anniversary celebration.

“Cost-effective investment that can reduce the amount of energy necessary to support a dollar of economic activity is the single most important driver of economic productivity within the United States and around the world,” said John A. “Skip” Laitner, director of economic and social analysis, American Council for an Energy-Efficient Economy.

But too often policymakers view energy efficiency not as an economic driver, but as a means to control demand until we can deploy conventional resources, such as nuclear and oil, he said.

Consider the following data that emerged from the symposium:

• America’s economy has tripled in size since 1970 and three-quarters of the energy needed to fuel that growth came from efficiency advances, not by adding more energy.
• Still, the U.S. economy remains only about 13 percent energy efficient, meaning 87% of the energy we use is wasted. We are behind Japan and several European countries, which have a 20% efficiency level.
• Energy efficiency investments can provide up to one-half of the greenhouses gas emissions reductions most scientists say are needed between now and 2050 – while lowering energy bills.

“The greatest barrier of all to more energy efficiency is the mentality of the growth imperative: the deep seated conviction that growth assures survival in the competitive global race. The focus is on growth, with profits secondary. But we have to ask: The race is to where?” said Robert Ayres, an emeritus professor at the European Institute of Business Administration and author of “Crossing the Energy Divide: Moving from Fossil Fuel Dependence to a Clean-Energy Future.”

“Growth that consumes limited resources is itself unsustainable,” he added. “A new paradigm is urgently needed. The new paradigm must focus on the cost-effective re-use, renovation, remanufacturing and recycling. The energy firms of the future will need to sell efficiency, and energy security, not fuel.”

To hear Laitner and Ayres summarize their findings and answer media questions go to: http://www.aceee.org/.

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