The United States could save about $600 billion in energy costs by 2020 if it hiked annual efficiency spending about five-fold, business consultants McKinsey and Co. said in a report on Wednesday. The research shows that the US economy has the potential to reduce annual for energy consumption for heating and power generation by around a quarter by 2020, eliminating more than $1.2 trillion in waste – well beyond the $520 billion upfront investment (not including program costs) that would be required.
The reduction in energy use would also result in the abatement of 1.1 gigatons of greenhouse gas emissions annually – the equivalent of taking the entire US fleet of passenger vehicles and light trucks off the roads.
Such energy savings will be possible, however, only if the United States can overcome significant sets of barriers, which are widespread and persistent, and will require an integrated set of solutions to overcome them – including information and education, incentives and financing, codes and standards, and deployment resources well beyond current levels.
In addition to the above central conclusion, five observations will be relevant to a national debate about how best to pursue energy efficiency opportunities of the magnitude identified and within the timeframe considered in this report. Specifically, an overarching strategy would need to:
- Recognise energy efficiency as an important energy resource that can help meet future energy needs while the nation concurrently develops new no- and low-carbon energy sources;
- Formulate and launch at both national and regional levels an integrated portfolio of proven, piloted, and emerging approaches to unlock the full potential of energy efficiency;
- Identify methods to provide the significant upfront funding required by any plan to capture energy efficiency;
- Forge greater alignment between utilities, regulators, government agencies, manufacturers, and energy consumers; and
- Foster innovation in the development and deployment of next-generation energy efficiency technologies to ensure ongoing productivity gains.
"The potential to reduce the energy we waste is compelling," said Kenneth Ostrowski, a senior partner at McKinsey. The US needs coordinated national and regional strategies to overcome barriers and deploy more energy efficiency technologies, he said. However, Ostrowski’s colleague, Jon Creyts, warns that current energy saving programmes need to be speeded up to reach such savings; otherwise it would take a century for such initiatives to reach their full potential.
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