Smart Energy Policies: Saving Money and Reducing Pollutant Emissions through Greater Energy Efficiency
Report Number	E012
Author Info	Steven Nadel
Details	Executive Summary Multiple Energy Problems Confront the United States There are a variety of serious energy challenges confronting the United States. California has experienced power shortages and severe electricity price spikes. Power reliability problems could spread to other regions such as the Pacific Northwest or New York. Even if the lights stay on, electricity prices will continue to climb in many regions of the country—utilities in several states have increased electric rates by 40–50% this year. Natural gas prices have also significantly increased in many parts of the country, causing skyrocketing home energy bills this past winter. Furthermore, our reliance on imported oil has grown—oil imports more than doubled during the past 15 years and oil imports now exceed domestic oil production. Rising demand for oil and tight supplies have also caused gasoline prices to rise; the average price of gas in the United States topped $1.70 per gallon earlier this year and while prices have since abated, price spikes are likely to be a periodic phenomenon in the future. In addition, emissions of the gases that contribute to global climate change continue to rise. In 2000, U.S. greenhouse gas emissions were up 16% relative to levels in 1990. However, under the Global Framework Convention agreed to in Rio de Janeiro in 1992 by then-President Bush and subsequently ratified by the Senate, the United States voluntarily committed to reducing our emissions to 1990 levels by 2000. Energy Efficiency—A Critical Foundation for U.S. Energy Policy Most of these problems—reliability, high prices, and reliance on imports—are all fundamentally due to imbalances between energy demand and energy supply. As demand approaches available supply, prices rise and reliability deteriorates. Rising demand for oil (driven primarily by growing transportation sector energy use) combined with declining domestic production feeds the need for more imported oil. Statements by the current Bush Administration suggest that these problems can largely be solved by increasing energy supplies—more oil wells, coal mines, pipelines, refineries, power plants, and transmission lines. However, a supply-only strategy will be expensive (e.g., energy prices will need to be high to sustain private-sector investments in supply), time-consuming (it takes years to develop new energy sources), and harmful to our environment (e.g, adverse impacts on our land and air). Furthermore, available domestic supplies are not adequate to fully support the domestic economy. The United States accounts for one-quarter of global energy demand but has only 8% of known worldwide oil and natural gas reserves, placing limits on how much expanding energy supply can contribute to our energy needs. Instead of a supply-focused energy strategy, a far more rationale approach would be to first reduce energy demand to the extent that it is cost-effective to do so, and then meet the remaining demand with increased energy supplies (domestic or imported). Energy efficiency improvement has contributed a great deal to our nation's economic growth and increased standard of living over the past 25 years. Total primary energy use per capita in the United States in 2000 was almost identical to that of 1973. Over the same 27-year period, economic output (GDP) per capita increased 74%. In 2000, consumers and businesses spent over $600 billion for total energy use in the United States. Had the nation not dramatically reduced its energy intensity over the previous 27 years, they would have spent at least $430 billion more on energy purchases in 2000. Even though the United States is much more energy-efficient today than it was 25 years ago, there is still enormous potential for additional cost-effective energy savings. Some newer energy efficiency measures such as hybrid vehicles and sealing home heating ducts have barely begun to be adopted. With proper support, other efficiency measures could be developed and commercialized in coming years. The U.S. Department of Energy (DOE) estimates that increasing energy efficiency throughout the economy could cut national energy use by 10% or more in 2010 and approximately 20% in 2020, with net economic benefits for consumers and businesses. A 1999 ACEEE study estimates that adopting a comprehensive set of policies for advancing energy efficiency could lower national energy use by as much as 18% in 2010 and 33% in 2020, and do so cost-effectively. Whether the energy savings potential is 20% or 30%, increasing the efficiency of our homes, appliances, vehicles, businesses, and industries should be the cornerstone of national energy policy since it provides a host of benefits. Furthermore, increasing energy efficiency does not present a trade-off between enhancing national security and energy reliability on the one hand and protecting the environment on the other, as do a number of energy supply options. Increasing energy efficiency is a "win-win" strategy from the perspective of economic growth, national security, reliability, and environmental protection. View the rest of the executive summary as a PDF.
Other Info	79 pp, 2001 View report (minus appendices) as a PDF.
Publication Price	$ 18.00 each
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