Energy Efficiency Potential In The USA

"Heated Earth"
Earth image from Earthobservatory at NASA, Compiled by iStockphoto/Adam Korzekwa, Science Daily, January 28, 2009.

New McKinsey & Company Report Focuses On Barriers To Achieving Energy Efficiency

A significant tool in the portfolio of climate change solutions is improved energy efficiency across a broad range of applications throughout global society. Although energy efficiency has been widely touted as desirable for at least the past several decades, its full-scale potential remains far from being realized.

In July 2009, McKinsey & Company through its electric power and natural gas division published an important report entitled, “Unlocking Energy Efficiency in the U.S. Economy.”

"The report is the product of a year-long effort by McKinsey & Company in close collaboration with 13 leading U.S.-based companies, government agencies and environmental NGOs."

See both the Preface and pages 143-144 for lists of contributors.

The focus of the collaborators “…has been to identify what has prevented attractive efficiency opportunities from being captured in the past and evaluate potential measures to overcome these barriers. Our goal is to unlock the efficiency potential for more productive uses in the future.”

The report examines in detail the energy saving potential “…for greater efficiency in non-transportation uses of energy…” and reaches this central conclusion:

“Energy efficiency offers a vast, low-cost energy resource for the U.S. economy – but only if the nation can craft a comprehensive and innovative approach to unlock it. Significant and persistent barriers will need to be addressed at multiple levels to stimulate demand for energy efficiency and manage its delivery across more than 100 million buildings and literally billions of devices. If executed at scale, a holistic approach would yield gross energy savings worth more than $1.2 trillion, well above the $520 billion needed through 2020 for upfront investment in efficiency measures (not including program costs). Such a program is estimated to reduce end-use energy consumption in 2020 by 9.1 quadrillion BTUs, roughly 23 percent of projected demand, potentially abating up to 1.1 gigatons of greenhouse gases annually.”

The report acknowledges that decline in energy demand attributed to energy efficiency is only one tool in reducing carbon-emitting energy production. There will be demand for new clean energy power plants, both to serve regions of growth and to retire “…economically or environmentally obsolete energy infrastructure…” such as nearly all existing coal-fired power plants.

The collaborators reaffirm that energy efficiency represents an emissions-free energy resource. “If captured at full potential, energy efficiency would abate approximately 1.1 gigatons CO2e (carbon dioxide equivalent; also, CDE) of greenhouse gas emissions per year in 2020 relative to BAU (Business-As-Usual) projections, and could serve as an important bridge to a future era of advanced low-carbon supply-side energy options."

[For BAU = Business-As-Usual projections, the collaborators used the U.S. Energy Information Administration's Annual Energy Outlook 2008 to focus on the 81 percent of non-transportation energy with end uses that the collaborators were able to attribute.]

The report has a thorough glossary, a detailed explanation of methodology, a 20-page reference list, and sidebars to explain and complement the highly informative graphics.

The graphs throughout are very informative. For example, the graphic on page 11 shows itemized energy efficiency potential -- expressed as cost savings -- for building components and other actions relative to the year 2020.

You can download the 165-page document as a 6.4-megabyte .pdf file:

McKinsey & Company, 2009, Unlocking Energy Efficiency in the U.S. Economy: McKinsey Global Energy and Materials, Electric Power & Natural Gas, July 2009, 165p.

Another way to look at energy efficiency potential is a flow chart recently published by the Lawrence Livermore National Laboratory and the U.S. Department of Energy. The diagram shows "Estimated U.S. Energy Use in 2008: ~99.2 Quads."

[One Quad = 1 quadrillion BTUs]

The flow chart shows a grey box in the upper right labeled "Rejected Energy 57.07 (Quads)".

[1 Quad = approximately 293,071,000 megawatt hours.]

"Rejected Energy" means that out of 99.2 Quads produced from all energy sources, about 57.5% (fifty-seven and one-half percent) is wasted. Wasted energy is that energy produced that is not used for the services we demand, labeled as "Energy Services" on the flow chart. Improved energy efficiency would make better use of that wasted energy and/or would reduce total energy demand.

In a typical statement on USA energy waste, Clark Energy Group (2009) says:

“Electricity from the (USA) grid is tremendously inefficient as less than half of the energy utilized to produce grid electricity is used productively. In fact, much of grid electricity’s energy is lost from waste heat during the generation process, transmission losses, converting between AC and DC current, and the like.”

Click on the chart below to enlarge it and make it more readable.

Flow Chart for Estimated U.S. Energy Use in 2008: ~ 99.2 Quads.
Graphic prepared by Lawrence Livermore National Laboratory and U.S. Department of Energy.