The Fifth Fuel is Our Most Valuable, Says New Report: Energy Efficiency Worth Forty Power Plants a Year
Al Gore recently challenged America to generate all of its electricity from carbon emissions-free sources by 2018. The Boston Globe has reported that John McCain and Barack Obama agree that Gore’s is a worthy goal. How can it be achieved?
Energy efficiency may be the biggest piece of the puzzle. “Efficiency is often referred to as the ‘fifth fuel’ for electricity generation. Coal, natural gas, nuclear, and renewables are the other four,” explains KLD Senior Research Analyst Andrew Brengle.
A new report entitled “The Size of the U.S. Energy Efficiency Market: Generating a More Complete Picture” (available for purchase here) details just how important the fifth fuel is to our economy. Andrew and KLD intern Ben Steinberg alerted me to the study, and they’ve analyzed the 60-page document in depth – thanks to both of them for providing assistance with this article. The report’s author, the American Council for an Energy Efficient Economy (ACEEE), is a non-profit “dedicated to advancing energy efficiency as a means of promoting economic prosperity, energy security, and environmental protection,” according to its website.
ACEEE defines energy efficiency as a means for using less energy to provide the same (or greater) level of energy services. Efficiency efforts range from energy-saving light bulbs to hybrid cars to the cogeneration and heat-capture efforts of heavy industry.
Where are the biggest opportunities? ACEEE considers energy consumption and efficiency investments in four sectors: buildings, industrial, utilities, and transportation. Interestingly, a sector’s investment in efficiency does not correspond to its share of total energy use. Buildings have seen the biggest efficiency gains, but sectors that consume more energy have received much less efficiency investment.
The sector with the biggest potential is transportation:
Within the buildings sector, investments in appliances and electronics (48%) far exceeded the proportion of energy consumed by these devices (7.7%). In the industrial sector, the proportion of investments was lower than the proportion of energy use (25% and 34%, respectively). … [The] transportation sector also proved to be significantly unbalanced, representing only 11% of efficiency investments but 28% of overall energy use.
The report presents a wealth of data, but I found this especially telling: Efficiency gains saved the US forty coal-fired power plants’ worth of new generating capacity in 2004 alone.
How does ACEEE arrive at this astounding number? It’s difficult to measure efficiency, so the study seeks to account for money that wasn’t spent, watts that weren’t generated, and power plants that weren’t built. ACEEE estimates that:
- The US needed 3.84 quads [quadrillion British Thermal Units] of energy to meet demand growth since 2003;
- 2.14 quads of demand were met through new energy supplies;
- 1.7 quads of demand were met through efficiency and structural changes – approximately the energy output of 40 mid-sized coal-fired power plants.
Other ACEEE data illustrate the power of the fifth fuel:
- In 1970, the US consumed 18,000 BTU to produce one dollar of GDP. In 2008, each dollar of output only required 8,900 BTU.
- Since 1970, energy efficiency and structural change are estimated to have accounted for about 75% of all new energy demand.
Can we build on this impressive record, or have we already made all the easy gains? We may be approaching “Peak Oil.” Are we also nearing “Peak Efficiency”? ACEEE argues that much more can be done. In 2004, the US invested approximately $300 billion in energy efficiency technology. This is a huge sum, but it represents less than one third of the nation’s annual energy spending. ACEEE suggests that the US can cost-effectively reduce energy consumption by at least 25-30% over the next 20 years.
Al Gore believes that the de-carbonization of the American economy is not only possible, but necessary. As rate payers and governments are asked to support alternate energy sources, we should also work towards rewarding higher efficiency and reducing demand – not just meeting it.
While windmills, solar panels and nuclear plants will be the most visible roads taken, the watts not generated could make all the difference.
For more on the promise of energy efficiency, see this Salon article by Joseph Romm.
Also see the KLD Global Climate 100 Index page for a sample research profile of efficiency innovator Alfa Laval AB.
Do consumers hold the key to the 6th fuel? That is what about simplifying our lifestyles, eating less animal products, shopping less, spending more time in nature and with our families, reducing waste and reusing? We don’t speak on this it seems because it’s perceived as negative until one by one we discover that we can be as happy or even happier with less.
I also like the idea of a the Genuine Progress Indicator (GPI) in as an alternative to the gross domestic product (GDP). We need to measure the impact of our choices on the interdependencies of human, environmental and economic causes and effects to better reflect the reality of our situation and respond accordingly.
“In 1970, the US consumed 18,000 BTU to produce one dollar of GDP. In 2008, each dollar of output only required 8,900 BTU”. Yes, efficiencies have contributed to that reduction but one should also factor in the shift from Manufacturing to Service economy the US has experienced, and the fact that the US has exported a lot of its manufacturing energy demanding jobs (they still consume but not under the US Banner).