THE SCOPE AND SCALE OF THE ENERGY EFFICIENCY MARKET
Investing in energy efficiency today has the potential to serve all the growth in U.S. energy demand, or more. However, meeting all of the growth in our energy service needs will require significant investments in products, processes, and infrastructure. While the benefits of efficiency are increasingly well defined, efficiency remains largely invisible as a resource in political circles, and the efficiency community continues to struggle to define efficiency’s investment potential.
So how big is the energy efficiency market? ACEEE has embarked on a new project to answer this critical question. Our preliminary estimates suggest that annual investment in efficiency resources is larger than the annual investment associated with conventional energy supply infrastructure.
According to ACEEE’s initial estimates, sales of Energy Star® products alone accounted for nearly $100 billion worth of product shipments in 2004. This is roughly equal to the $100 billion in annual investments in energy supply. Moreover, the aggregate Energy Star share of those markets appears to be about 33%, suggesting that the total energy service infrastructure investment is in the neighborhood of $300 billion annually.
We are collecting additional data on efficiency-related investments in buildings, industry, and transportation with the goal of providing a fuller picture of the size and scope of the “efficiency economy.” Once all sectors have been incorporated into the assessment, there is little doubt that total annual investments in energy efficiency will surpass supply investment. The real question is by how much.
Efficiency investments are generally more job-intensive than supply investments, because of the higher labor multipliers associated with the sectors stimulated by efficiency technologies. Whereas the energy supply sector employs approximately 1.8 people per million dollars of output, preliminary estimates indicate that the manufacturing sectors associated with the efficiency industry employ 3-4 people per million dollars, and the associated service sectors show even higher multipliers.
ACEEE’s goals for this research include: (1) to define the size and scope of the “efficiency economy;” (2) to document the investment potential and thus accelerate efficiency investment; and (3) to create a clearer image and a stronger voice for the “efficiency industry.” Because we want a quality assessment, ACEEE is looking for new information and insights to help shape the future of this effort. Interested parties should contact Skip Laitner, Senior Economist for Technology Policy or Karen Ehrhardt-Martinez, Senior Research Assistant.
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