The Business Case for Electrical Energy Efficiency - USA

This paper describes the benefits from a policy on electrical energy efficiency, and suggests policies and technologies that could be used to help capture them as the US moves towards more economically optimal levels of electricity consumption.

There is a strong, profit-based business case for investing in more energy-efficient products and designs. Energy efficiency, however, often is viewed as something that businesses and individuals should do as good citizens. The reality is that using energy inefficiently is like walking past money on the ground - - - money that could be put to far better use than paying electricity bills. Investing in energy efficiency creates economic value.

More than ten percent of the electricity used in industry could by saved through projects that pay for themselves in three years or less, with all of the energy savings beyond the breakeven point representing pure profit. The resulting energy savings would help protect human health and the environment; increase the profitability, competitiveness, and growth of the industries involved; create jobs; and benefit the national economy.

If the business case for energy efficiency is so strong, one would expect market forces to ensure that companies and households operate at optimal levels of energy use. But the market does not always act perfectly. Purchasing decisions are often made on the basis of first cost (the sticker price of an appliance or piece of equipment) rather than lifetime operating and maintenance costs. Consumers and corporate purchasing departments may lack information to make wise energy decisions, and company managers may be focused on other priorities.

These and other barriers can be corrected or compensated for with the right set of public policies. This paper presents an array of proven policies that are available for governments interested in promoting the development and adoption of energy-efficient technologies. The policy options range from standards and codes to labels, voluntary programs, informational campaigns and financial support programs. A carefully crafted suite of policies, phased and targeted to overcome the particular hurdles that each technology faces at different stages, can help promote energy efficiency and improve both the economy and the environment.










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