America's Anemic "13 Percent Economy:" Experts Warn U.S. Risks Long-Term Growth by Focusing on New Energy at Expense of More Energy Efficiency

Washington, D.C. — What will play the biggest role in future U.S. economic growth: the new energy that we find … or the energy that we avoid using?

Even as Congress and the news media focus almost completely on the question of where America will find new sources of traditional and emerging energy sources, the little-understood fact is that new energy sources are likely to play a much smaller role in the current U.S. economic recovery and future growth than are new advances in energy efficiency, according to leading experts. Even worse, the overwhelming emphasis today on new energy is “crowding out” meaningful national dialogue and progress on achieving greater energy efficiency in an economy that is struggling today at a level of just 13 percent efficiency in terms of energy use, meaning that 87% of the energy we use is wasted.

In a phone-based news conference today – John A. “Skip” Laitner, director, Economic and Social Analysis, American Council for an Energy-Efficient Economy and Robert U. Ayres, emeritus professor, Economics and Political Science and Technology Management, European Institute of Business Administration (INSEAD), and co-author of “Crossing the Energy Divide: Moving from Fossil Fuel Dependence to a Clean-Energy Future” (2010) – summarized the thinking at a symposium session held Tuesday to mark the 30th anniversary year of the American Council for an Energy-Efficient Economy (ACEEE). Click for more information.

Among the key facts highlighted during the symposium:

• America’s economy has tripled in size since 1970 and three-quarters of the energy needed to fuel that growth came from efficiency advances – not net new energy. Going forward, the current economic recovery and future economic growth are likely to be even more dependent on new energy efficiency advances than was the period of 1970-date.
• Americans may have an overly optimistic impression of how energy efficient the United States is. Despite the enormous strides achieved in the last four decades, the U.S. economy remains only about 13 percent energy efficient. That still unacceptably high level of inefficiency either will be allowed to remain in place and therefore leave the U.S. mired in lackluster economic activity … or it will be tackled head-on, leading to new efficiency advances and unleashing robust future economic growth in the U.S. For example, Japan and several European countries are about 20% efficient, a factor of 1.5 higher than the U.S.
• How big might the next round of potential energy efficiency be? If we invested in more energy productive technologies, energy efficiency investments can provide up to one-half of the needed greenhouses gas emissions reductions most scientists say are needed between now and the year 2050. And that gain in energy efficiency would not only mean reduced greenhouse gas emissions, it would result in lower energy bill for consumers.

ACEEE’s Laitner said: “The dirty little secret today is that most economic assessments of the current climate change policies either ignore or greatly understate the potential advances in energy efficiency, even though it is clearly the largest and most cost-effective form of greenhouse gas mitigation. There is no mistaking the fact the cheapest, least polluting and most economically productive energy is the energy that never gets used. Cost-effective investment that can reduce the amount of energy necessary to support a dollar of economic activity is the single most important driver of economic productivity within the United States and around the world. And this makes sense once we stop paying attention to outdated economic policy models and think about what is it that actually powers our economy. Is it expensive and conventional energy resources, or the increased use of more energy productive technologies? The evidence suggests that it is the latter. We ignore that at our considerable peril.”

Ayres said: “The greatest barrier of all to more energy efficiency is the mentality of the growth imperative: the deep-seated conviction that growth assures survival in the competitive global race. The focus is on growth, with profits secondary. But we have to ask: The race is to where? Growth that consumes limited resources is itself unsustainable. A new paradigm is urgently needed. The new paradigm must focus on the cost-effective re-use, renovation, remanufacturing and recycling. The energy firms of the future will need to sell efficiency, and energy security, not fuel.”