By Michael Sciortino Environmental and Energy Study Institute

The role of renewable energy in our future energy mix has gained considerable attention over the past few years. Politicians, business leaders, and the media eagerly discuss the merits of solar, wind, biomass, and geothermal technologies. The discussion on energy efficiency, however, tends not to extend past the importance of installing compact fluorescent lights.

The wide-reaching potential of energy efficiency should not be understated. Residential and commercial buildings alone contribute about 40 percent of total greenhouse gas emissions in the United States. More than half the electricity produced in North America is consumed in buildings. A rapid market uptake of currently available building technologies could reduce these emissions by 77 percent, according to the Commission for Environmental Cooperation of North America. Opportunities for efficiency savings are abundant in the industrial sector as well, which accounts for 29 percent of greenhouse gas emissions. Efficiency offers an immediate remedy to reduce energy use and air pollution, which cause acid rain, smog, and climate change. Measures to reduce energy demand are the low-hanging fruit that cannot be left to fall and rot at our ankles, warns efficiency pioneer Amory Lovins of the Rocky Mountain Institute.

The adoption of energy efficiency will necessitate new regulations and sustained federal investment in energy efficiency technology and implementation. Utilities are a good place to start. Most utilities currently have a disincentive to pursue energy efficiency strategies, since they profit from energy sales. Regulations that separate profits from energy sales for utilities, known as decoupling, will be essential for the widespread adoption of energy efficiency. These policies would reward utilities for their role in saving energy by allowing them to recover the costs of energy saving programs and adjust rates depending on efficiency savings.

California has successfully pursued decoupling regulations with its utilities, and the results have been remarkable. Over the past thirty years, electricity consumption per capita stayed flat in California while it rose 60 percent in the rest of the nation. By allowing utilities to profit from energy saved rather than energy sold, energy efficiency investments became as profitable as increased power generation. Utilities implement dozens of energy efficiency programs that touch every sector of the economy, from residential to agricultural efficiency programs. The cost of these energy efficiency programs has cost about 2 to 3 cents per avoided kilowatt hour, which is about one-fifth the cost of electricity generated from new nuclear, coal, and natural-gas fired plants.

California's efficiency success also stems from the state's stringent building codes, which provide requirements for a tight building envelope, efficient lighting and HVAC equipment, and other important energy related building components. California's building efficiency standards (along with those for energy efficient appliances) have saved more than $56 billion in electricity and natural gas costs since 1978. It is estimated the standards will save an additional $23 billion by 2013.The state proves that efficiency is a limitless resource-it believes it can achieve as much additional electricity savings by 2020 as it has in the past three decades.

The success of energy efficiency depends on whether we can dismantle the market and regulatory barriers that hinder its advancement on a large scale. Decoupling and more stringent building codes are a good start, but federal investment in energy efficiency programs offer high rates of return for taxpayers. The United States National Academy of Sciences found that a research and development investment of $400 million in three Department of Energy efficiency programs between 1978 and 2000 returned about $30 billion.

The recent economic turmoil may result in an enormous stimulus package from the incoming Obama Administration. Energy efficiency represents an infrastructure investment that can stimulate job creation, reduce energy costs for homeowners and businesses, and advance the technologies of an environmentally beneficial sector.

The U.S. federal government can start with its own facilities. Along with federal buildings, an investment in State Energy Programs would be prudent as well. Less than 25 percent of public sector buildings have had comprehensive energy retrofits. Energy efficiency investments in public sector buildings could potentially save billions of taxpayer dollars. These energy savings would help relieve cash-strapped schools and local governments.

The U.S. Department of Energy has numerous energy efficiency programs such as the Save Energy Now and Weatherization Assistance Programs to help companies and homeowners lower energy costs. These existing programs represent options in which there is an established funding channel that allows for an immediate economic impact. Similarly, the Canadian Natural Resources department's Office of Energy Efficiency conducts programs for businesses and homeowners.

A recent report from the consulting firm McKinsey and Co. found that in order to reduce greenhouse gas emissions, energy efficiency in buildings, appliances, and factories should play a central role. Improvements in energy efficiency could offset 85 percent of the projected incremental demand for electricity in 2030, largely negating the need for new coal-fired power plants. While we will surely need to increase the supply of clean energy in the coming decades, it is equally critical to minimize demand. It's time to put energy efficiency at the center of the economic and environmental discussion.

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