The U.S. potentially could reduce non-transportation energy consumption by 23% by 2020 and greenhouse gases by 1.1 gigatons annually, but this goal is achievable only if significant barriers are addressed and overcome, says a new report from McKinsey & Co. These barriers include $520 billion in needed up-front investment and a fragmented network of buildings, devices, building codes and other requirements.
The potential for reducing energy consumption in the U.S. is huge, but coordinated national and regional strategies are needed to unlock the existing potential, says the New York City-based management consulting firm in its July 29 report. “Energy efficiency should be elevated to a national priority,” says Kenneth Ostrowski, McKinsey senior partner. “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.”
A comprehensive executed strategy could reduce annual non-transportation end-use energy consumption from 36.9 quadrillion BTUs in 2008 to 30.8 quadrillion BTUs in 2020, saving 9.1 quadrillion BTUs relative to a business-as-usual level. The energy-efficiency potential is divided across three sectors of the U.S. economy: industrial (40%), residential (35%) and commercial (25%).
But the barriers to achieving the 23% reduction goal are “widespread and persistent,” the study authors note. One key hurdle is the $50 billion-per-year up-front investment in energy-efficiency technology and devices that would be required. That investment could be a problem, says Karen Penafiel, vice president of advocacy at the Building Owners and Managers Association. “The financing and funding just are not there,” she says.
Some solutions include tax-and-cash incentives and grants for energy-efficiency devices and measures, educational programs to increase awareness about energy-saving opportunities and potential requirements for mandatory audits and/or assessments.
The study authors note that no single solution will be as effective as a combined approach. “By leveraging existing green- building approaches, like [Leadership in Energy and Environmental Design], which is rooted in holistic and integrated design, we have the ability and capacity now to address multiple barriers and thus generate additional resource efficiency and cost savings,” says Rick Fedrizzi, CEO and founding chairman of the U.S. Green Building Council, one of the sponsors of the study. Other sponsors include the Environmental Protection Agency, Dept. of Energy, Southern Co. and the Natural Resources Defense Council.
Lisa Wood, executive director of the Institute for Electric Efficiency, a charitable organization governed by electric industry CEOs, says she likes the report’s conclusions that all sectors of the economy—including energy customers—will need to make a commitment to increasing energy efficiency.
Fedrizzi says the report’s findings are timely as Congress debates federal climate-change legislation. “These findings make an overwhelming case that we must dramatically strengthen provisions that support and scale green building,” he says.
In a statement, EPA Administrator Lisa Jackson says the report will be “instrumental in engaging consumers, businesses and everyone else to cut energy consumption, reduce harmful emissions and save money on electricity.”