Energy Efficiency: Big Upside, Low Sex Appeal

A report was released recently from Mckinsey & Company, one of the (if not the) most prestigous management consulting firms worldwide, regarding the potential cost savings of energy efficiency projects in the United States.  This incredibly in-depth study has been refined over the past few years and provides hard evidence that there’s plenty of work out there for people in the energy industry.

I’ll give you the meat & potatoes :  Mckinsey projects that an investment of $520 billion over the next 10 years will yield a gross savings of $1.2 trillion by 2020.  That an NPV of $680 billion.

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Here’s an idea of the scale we’re talking about.  For a better idea, lets talk about what one could do with $680 billion dollars.

  1. Pay for the ENTIRE Iraq war, from day one to today.  You’d have an extra $7.5 billion to buy yourself a few gumballs.
  2. Pay for all of the US’s social security for a year, with $100 billion left over.
  3. Host 3,700 “My super sweet 16” parties.

So why haven’t these savings been realized yet?  A lot of reasons… structural, financial, and cultural.

Structural:  Our economy is set up in a way that demeans the true cost of energy use.

Financial: There’s simply not enough capital to invest in non-growth projects.

Cultural: People just don’t care.

There is no sex appeal in efficiency.   The current ‘green’ movement in the United States is so much more about glitz and exposure than real, definitive environmental impact.  Let’s illustrate this with an example.   Which is better for the environment… a Prius or a Programmable Thermostat?

A Prius saves about 6,000 lbs/year of carbon emissions over a traditional mid-sized sedan.  A programmable thermostat will save about 1,700 lbs/year over a traditional thermostat.  In general a hybrid costs about $8,000 more than a traditional mid-sized sedan.  A programmable thermostat costs about $20 more than a traditional one.  In other words, you can pay $1.30 per pound of carbon reduced by buying a prius.  Or you can pay $0.01 per pound for the thermostat.

Unfortunately, you can’t drive your programmable thermostat around town to show everyone how ‘green’ you are.

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One Response

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