The United States has the potential to save more than $1.2 trillion in energy costs and cut consumption by 23 percent by 2020, according to a report released last week by global management consulting firm McKinsey & Co. The comprehensive energy-efficiency strategy cited in the report removes approximately 1.1 billion tons of greenhouse gas emissions annually — the equivalent of taking the entire U.S. fleet of light trucks and passenger vehicles off the roads. It also could produce savings that exceed California’s total annual energy consumption.
The Obama Adminstration Seems Committed to Energy Efficiency
The Obama Administration seems to be on the same page. The Department of Energy is investing nearly $8 billion in state and local weatherization and energy efficiency efforts as part of the American Recovery and Reinvestment Act. The funds will be divided between the Weatherization Assistance Program, which will receive nearly $5 billion, and the State Energy Program, which will receive up to $3 billion. The DOE has also allocated $4.5 billion to provide funding to improve the efficiency of federal government offices and buildings for the purpose of reducing energy bills. Back in February, Department of Housing and Urban Development (HUD) Secretary Shaun Donovan and U.S. Department of Energy (DOE) Secretary Steven Chu today announced a major partnership between HUD and DOE that will streamline and better coordinate federal weatherization efforts to make it much easier for families to weatherize their homes and spur a new home energy efficiency industry. HUD also has the Energy Efficient Mortgage program (EEM) through the FHA which helps homebuyers or homeowners save money on utility bills by enabling them to finance the cost of adding energy efficiency features to new or existing housing as part of their FHA insured home purchase or refinancing mortgage.
The report, entitled “Unlocking Energy Efficiency in the U.S. Economy,” also outlines methods required to attain the energy savings, including grants, education, and incentive programs, It also provide details on setting nationwide standards for energy efficiency. It is available online at www.mckinsey.com/USenergyefficiency
Califoria Has The Energy Efficiency Answer
According to J. William Ichord, vice president of governmental relations for Sempra Energy, the McKinsey & Co. report demonstrates what Californians have learned over several decades of experience — smart investments in energy efficiency should be a primary weapon in the battle against climate change. In fact, in California, per-customer consumption of natural gas has dropped by about 50 percent since 1970, when the state’s regulators and utilities began their aggressive push in energy efficiency. Similarly, per-customer consumption of electricity has remained relatively flat in California, although increasing significantly in the rest of the country.
Energy Efficiency is a Cornerstone of Any Sound Energy Strategy
“Energy efficiency is a cornerstone of any sound energy strategy because the most cost-effective and environmentally friendly kilowatt of electricity is the one that doesn’t have to be generated,” said Ichord, who joined representatives from McKinsey & Co. and other sponsors today at a launch event for the report in Washington, D.C.
Ichord said California regulators have led the way by taking a progressive approach to utility ratemaking, “de-coupling” utility profits from energy usage. Under this policy, utilities receive incentives for encouraging energy conservation, rather than earning profits based on increased energy sales. Since 1990, Sempra Energy’s utilities — San Diego Gas & Electric (SDG&E) and Southern California Gas (SoCalGas) — have saved enough natural gas to supply more than 800,000 homes and electricity to power nearly 600,000 homes for one year. The utilities’ energy-efficiency programs also reduced peak electricity demand by more than 800 megawatts, the equivalent of nearly two large power plants.
SDG&E and SoCalGas have achieved these savings by providing millions of dollars in incentives and rebates, including $60 million in 2009, to Southern California businesses that upgrade equipment and become more energy-efficient. In 2008, the utilities helped customers exchange more than 4 million standard light bulbs for efficient compact fluorescent light bulbs and weatherized 73,000 homes.
