Energy Efficiency Is Least-Cost Means To Limit Global Warming

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Originally published on RMI Outlet.
By David Labrador

An authoritative new study released earlier this week from a consortium of groups led by Fraunhaufer ISI, a German think tank, and funded by ClimateWorks shows how energy efficiency can be a low-cost pathway to keeping global warming to the critical 2 degrees centigrade mark. The report, How Energy Efficiency Cuts Costs for a 2-Degree Future, shows the results of a detailed study of the world’s largest and fastest-growing economies. It finds that, by leveraging energy efficiency as a significant complement to decarbonizing the energy supply, those countries can realize savings of $2.8 trillion and achieve a net-zero cost to society by 2030 while still achieving decarbonization and minimizing climate change.

blog_2015_11_25-2This study presents further support for solutions RMI has been championing for decades, combining energy efficiency with clean-energy pathways. It is particularly welcome now, with the nations of the world set to meet next week at the Paris climate change conference also known as COP21.

A Least-Cost Means to Limit Warming

How Energy Efficiency Cuts Costs for a 2-Degree Future compared a business-as-usual pathway with an energy-intensive pathway, which included limited energy efficiency, and an energy-efficient pathway, which was much more efficiency-intensive. Jakob Wachsmuth, principal author of the report, said in a statement “energy efficiency holds the key to controlling costs. Each nation we studied should craft a strategy that reflects its domestic energy mix, but our research shows that everyone benefits from some form of aggressive policies to support energy efficiency.”

Notably, the energy-efficient pathway cost from $2.5 to $2.8 trillion less than the energy-intensive pathway in constant 2005 dollars while achieving the same temperature goal by 2030. The energy-intensive pathway relies on decarbonizing primary energy sources and was itself a whopping $1.2 to $1.6 billion less costly than business as usual. This echoes the findings of RMI’s Reinventing Fire and Reinventing Fire: China analyses, which demonstrated the enormous savings that clean energy and energy efficiency can unlock to offset the investments needed to implement them.

The report also underscores the tremendous potential for carbon-emissions reductions by means of energy retrofits of existing buildings in the U.S. and the EU. The report calls for increased incentives for retrofits in the U.S. and improved standards for retrofits in the EU in order to unlock this tremendous—and cost-effective—potential. RMI, for its part, has been actively working to scale up retrofits of existing buildings.

Efficiency Is Effective—and Cost-Effective—Everywhere

The results were fundamentally the same across the six regions studied, though there was some variation. The study focused on the U.S., the EU, China, India, Brazil, and Mexico. The additional cost savings from focusing on energy efficiency ranged from 0.1 percent of GDP in Mexico to 0.4 percent of GDP in the EU, but the study found that energy efficiency was the least-cost option everywhere, saving as much as $250 billion per year.

The efficiency pathway achieves such favorable economics because, in addition to direct savings on energy expenses, the intensive deployment of energy efficiency achieves the same two-degree temperature-rise target while requiring much less investment in new energy supply than the energy-intensive pathway. The study took into account the effect produced by increased energy demand that partially consumes the gains made by energy efficiency. This “rebound effect” is moderate and is drowned out by other gains everywhere, including in India and China, where living standards and mobility are rising.

RMI’s Reinventing Fire from 2011 showed how a mix of energy efficiency and renewable energy can be cost-negative while supporting a 158-percent larger U.S. economy and slashing carbon emissions 80 percent by 2050. The new study is a valuable additional proof point for the role of energy efficiency. It is particularly valuable because of its methodological rigor and its focus on the largest emitters. The regions studied were jointly responsible for more than 60 percent of global greenhouse gas emissions in 2010. This study should make policy makers redouble their attention to energy-efficiency commitments at COP21.

Image courtesy of Shutterstock.

Reprinted with permission.

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Since 1982, RMI (previously Rocky Mountain Institute) has advanced market-based solutions that transform global energy use to create a clean, prosperous and secure future. An independent, nonprofit think-and-do tank, RMI engages with businesses, communities and institutions to accelerate and scale replicable solutions that drive the cost-effective shift from fossil fuels to efficiency and renewables. Please visit for more information.

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14 thoughts on “Energy Efficiency Is Least-Cost Means To Limit Global Warming

  • Energy efficiency means less GDP goes to fossil fuels and more goes to the efficiency devices, this a shift with benefits.

  • Energy efficiency today is largely driven by the other great new technology of the late 20th century: IT, based on ever more powerful software and ever cheaper, smaller and more pervasive processors and chips built round them with sensors, actuators, and communication, in packages costing a few dollars at most. The NEST thermostat for instance is the first step to an intelligent home controller that will manage all our appliances for efficiency as well as convenience. The same thing is happening with industrial machinery of every sort. GE was able to offer owners of older GE wind turbines a guarantee of profits from refitting with new controls.

  • Simple thing – can we please outlaw devices which use energy when in off mode.

    • Efficiency has always been a black swan. Cheapest approach but no sex appeal. But so simple to use a little guidance to make it happen. Think if EU/USA/China agreed to have a sin tax on new building (office or living) that are intended for more than 20 people. Don’t reach platinum LEED 1% fee, don’t make gold 2% fee, don’t make silver 4% fee. Where the % fee is on total construction cost including equipment and finishings. And require all building to post their rating at the entry. Note I picked LEED only because I knew of it, not saying it is best. Use the fees to help update building code, local code run way behind national recommendations; and to do deep retro-fits on public buildings. Of course the 3 did it, when country that want to be considered modern would not feel the need to join in.

      • Why stop at buildings for 20 people though?

        Should residential homes not be included? Just put it on all new construction… Then just need a way to incentivise updates on existing buildings.

    • Bought a television recently? The problem has been fixed. But my ADSL box still runs pretty hot even when there is no traffic, so there is some way to go. Small beer compared to central heating pumps, though.

    • At least the old, heavy “bricks” have been replaced by far more efficient switching devices (phones and such).

      I plug everything to do with tv into a terminal strip.

  • So much energy is mindlessly wasted, people [especially in the USA] don’t even realize it.

    If you could put “Miles Per Gallon”-like metering on energy consuming devices, people will tend to pay attention more. Nothing motivates folks more than personally saving a few dollars here and there.

    • The cost of the display would not usually be worth it. Centralising the information in your Nest-type home controller could be a better bet: all you would need in each device is a fairly standard IoT chip reporting power consumption to it, along with other information needed for intelligent control.

      • Yes, do this and have one central pie chart that shows your energy bill broken into individual devices!

  • Highest return on investment is INSULATION, Triple Pane Windows, Energy Star boilers and furnaces. Rate of return is Far Higher then the US Stock market average long term return of 6.5%.
    Get a Home Energy Audit.
    Then buy a Hybrid if you live in an apartment, and an EV if you live in a house.
    Highest return, lowest risk, lowest volatility.

    • “Get a Home Energy Audit.” Try to get one with blower door installed and running and an infrared camera taking pictures of every room.
      Better: have some one with caulk gun and foam spray going around and plugging the easy-to-see air leaks – takes a day at least.

  • Burn down your McMansion, and build a solar home with 12 inch stud walls.

    • Good points. but energy star does not go far enough. You should also choose the more efficient method. An extreme example is a clothesline compared to a dryer.
      Twelve inch walls are not really necessary, or cost effective, but a well sealed home with R60 insulation in the attic and is no bigger than needed, can be very efficient and inexpensive to achieve. Add a few solar panels and it can even be net zero energy, if not necessarily cost effective at this time.
      Keep in mind that cost effectiveness is not a static situation. Energy costs could go up considerably, and incentives could lower the cost of efficient construction and retrofits.

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