Energy Efficiency

Building a Clean, Secure Economy

James L. Sweeney

• Publisher: Hoover Institution Press
• Year: 2016
• ISBN:
  9780817919566
• Edition: 1
• Topic: Physical Sciences
• Subtopic: Energy

The entire world, especially the United States, is in the midst of an energy revolution. Since the oil embargo of 1973, individuals, corporations, and other organizations have found ways to economically reduce energy use. In this book, Jim Sweeney examines the energy policies and practices of the past forty years and their impact on three crucial systems: the economy, the environment, and national security. He shows how energy-efficiency contributions to the country's overall energy situation have been more powerful than all the increases in the domestic production of oil, gas, coal, geothermal energy, nuclear power, solar power, wind power, and biofuels. The author details the impact of new and improved energy-efficient technologies, the environmental and national security benefits of energy efficiency, ways to amplify energy efficiency, and more. Energy Efficiency: Building a Clean, Secure Economy reveals how the careful nurturing of private- and public-sector energy efficiency--along with public awareness, appropriate pricing, appropriate policies--and increased research and development, the trends of decreasing energy intensity and increasing energy efficiency can be beneficially accelerated.

1

The Policy Context for Energy Efficiency

President Obama, in his 2013 State of the Union address, reviewed US energy progress since he took office and described an “all-of-the-above” approach for further progress. The accompanying White House Fact Sheet focused on domestic energy production and its impacts on the economy, energy security, and the environment:

Since President Obama took office, oil and gas production has increased each year, while oil imports have fallen to a 20-year low; renewable electricity generation from wind, solar, and geothermal sources has doubled; and our emissions of the dangerous carbon pollution that threatens our planet have fallen to their lowest level in nearly two decades. In short, the President’s approach is working. It’s a winning strategy for the economy, energy security, and the environment.1

Although the president’s summary statements focused on the domestic supply of energy, the administration did give some recognition to energy efficiency in cars and trucks. Nevertheless, Obama appeared to ignore other energy-efficiency improvements that had been continuing for decades:

The Environmental Protection Agency (EPA) has released a new report that underscores the progress we have made to improve fuel economy, save American families money at the pump, and reduce carbon pollution that contributes to climate change.2

The White House Fact Sheet, like the vast majority of energy statements from members of both political parties, paid scant attention to the many energy-efficiency enhancements since the energy crisis of 1973–74. The supply side of energy markets again was the focus of political discourse, even though most of the action has been on the demand side of these markets.

In fact, these historical changes in energy efficiency have had more beneficial impacts on US energy security and on the environment than all of the increases in domestic production of oil, gas, coal, geothermal energy, nuclear power, solar power, wind power, and biofuels combined.

This book reviews the advances in energy efficiency within the United States since the 1973–74 energy crisis and documents the generally unheralded contributions of energy efficiency to the economy, energy security, and the environment. This history suggests that the United States can enjoy the many benefits of future efficiency gains if it maintains the interacting conditions that enabled accomplishments of the past 40 years. With careful nurturing of private- and public-sector energy efficiency, with appropriate pricing and other policies, the trend of increasing energy efficiency can be accelerated, with further beneficial impacts on the environment, national security, and the economy.

Energy Efficiency as an Energy Policy Strategy

To understand why energy efficiency—economically efficient reductions in energy use—is a desirable policy strategy, one needs merely to reflect on the basic goals underlying United States energy policy, at least since the energy crisis of 1973–74.3 These goals have been adopted not just by the US, but internationally, although different countries place different emphases on the three goals.

Figure 1.1. The Energy Policy Triangle

Energy policy typically strives for improvements in the health and growth of the economy, protection of the domestic and international environment, and enhancement of domestic and international security. These three policy goals are summarized by the energy policy triangle (Figure 1.1).

The Environment

Energy-related issues of the environment include local and international impacts of energy production and use. Energy efficiency is good for the environment: reductions in energy use mean that less energy needs to be produced, transported, or transmitted. Because virtually all energy production and transportation have negative environmental consequences, energy efficiency reduces environmental impacts. Stated most succinctly: the cleanest energy is the energy you don’t need in the first place.

One particularly important environmental issue is the role of energy efficiency in reducing greenhouse gas emissions in the atmosphere, either carbon dioxide or methane. Combustion of fossil fuels is the dominant source of greenhouse gas emissions in the United States. In a later chapter of this book, I quantify the role of changing intensity of energy use and that of energy system decarbonization.

Other domestic environmental impacts include release of particulates, oxides of nitrogen, sulfur dioxide, and other pollutants into the air4; water pollution associated with the production of fossil fuels such as coal or natural gas; use of water for production of primary energy or for conversion of primary energy into electricity; and disruption of natural habitats.

Security

Issues of security include vulnerability of the United States to deliberate or accidental restrictions on oil imports, vulnerability of the US economy to rapid fluctuations in energy prices, or limitations placed on US foreign-policy options as a result of US dependence on foreign energy sources. Domestic security issues include protection against terrorist attacks on energy infrastructure such as the electric grid, or impacts of natural disruptions such as hurricanes or other storms.

Energy efficiency is beneficial for security. For at least 60 years, the United States has been a net importer of energy, particularly oil. Subsequent to the energy crisis, energy efficiency has allowed the United States to reduce energy imports so that the United States may soon become self-sufficient in energy, with energy efficiency having a larger role than domestic energy supply increases. Reductions in electricity use can reduce stress on transmission lines and congestion in the grid and can increase flexibility of the existing grid by reducing the time variability of electricity use, and therefore can increase domestic security.

In this book, data from the US Energy Information Administration is used to decompose changes in the net energy imports, separating changes associated with increases in energy efficiency from those associated with increases in the domestic production of energy.

The Economy

Economic issues include growth of gross domestic product (GDP), the number and quality of jobs available for the population, and the distribution of wealth.

Economically efficient reductions in energy use are, by definition, good for the aggregate economy: economic benefits exceed the economic costs. Reductions in the government use of energy can provide savings for the federal government, reduce the federal deficit, and reduce the balance of trade deficit. Cost-effective reductions in the use of energy by businesses can make them more profitable and thus increase GDP. And cost-effective reductions in the use of energy by households can leave more disposable income available for other purposes. Particularly for low-income people, reductions in energy costs can be important for overall well-being. Reduced use of electricity has avoided the need to construct thousands of megawatts of new electric generation stations, saving billions of dollars.

But not all energy-consumption reductions are necessarily cost-effective. Growth in energy use is typically associated with economic development. Limiting the development of third-world countries so as to reduce energy growth would not be cost-effective. These observations suggest the need to be clear about the definition of “energy efficiency.”

Some Terminology: Energy Efficiency, Energy Conservation, Energy Intensity, Energy Productivity

Four terms are used here to describe changes in the energy used in the economy: energy efficiency, energy conservation, energy intensity, and energy productivity. The first two—energy efficiency and energy conservation—typically describe changes or differences in the way energy is used or the amount of energy used. These are often applied to a device, a process, a business activity, or a personal choice. The second two—energy intensity and energy productivity—provide aggregate measures of the total energy used, relative to the size of the economy.

For example, replacing a 60-watt incandescent lightbulb with an 11-watt LED light5 that gives the same quality of light changes the amount of energy used to provide the same amount of light. The 11 watts versus the 60 watts describes the difference in energy use at a device-specific level. This change to an 11-watt light would typically be referred to as improving, enhancing, or increasing “energy efficiency.” And that change might also be referred to as “energy conservation.” Assuring that the light is turned off when the room is not occupied would typically be referred to as “energy conservation” but can also be referred to as improving, enhancing, or increasing “energy efficiency.” These are both measures describing change in the way energy is used or differences between alternative ways energy can be used.

All energy-use decisions, taken together in an economy, result in the total energy used. Energy intensity of the economy is a summary statistic measuring the total energy used in the economy, and is not a measure of changes in energy use. Energy intensity of the economy is the ratio of (1) the total amount of energy used in all sectors of the economy to (2) the (inflation-adjusted) GDP. Equivalently, the “energy productivity” of the economy is the ratio of (2) the GDP to (1) the total amount of energy used in all sectors of the economy.

Energy efficiency and energy productivity are simply mathematical inverses of each other. For example, in 2014 the energy intensity of the US economy was 6120 BTUs per dollar of GDP (2009 dollars). The energy productivity was $163.40 of GDP per million BTUs of energy used.6 One percent less energy used for a fixed GDP would reduce the energy intensity by 1 percent and equivalently would increase the energy productivity by 1 percent.

In this book, I primarily use the term energy intensity and only secondarily use energy productivity. Energy intensity has been the more common measurement and accurately describes the concept.7

The combined impacts of all energy-efficiency or energy-conservation changes are reflected in the aggregate statistic, energy intensity. Energy intensity gives an indication of the economy-wide total of energy-efficiency enhancements but does not directly measure energy efficiency.

Energy intensity is calculated and reported by statistical agencies of the US government, in particular, the US Department of Energy, Energy Information Administration. Although some conventions are needed to calculate both total energy use8 and GDP, these conventions remain the same over extended periods of time, so that energy intensity (or energy productivity) is measured and reported consistently over time. Given the conventions, there would be no disagreements about the measure of energy intensity.

Although energy intensity is an agreed-upon and objectively measured concept, the term energy efficiency is used differently by the various scientific disciplines9 and thus can have different meanings among people. One ...

Table of contents

• Contents
• List of Figures and Tables
• Foreword by George P. Shultz
• Acknowledgments
• Introduction
• Chapter 1. The Policy Context for Energy Efficiency
• Chapter 2. Energy Efficiency Is All Around Us
• Chapter 3. Energy Efficiency and Aggregate Energy Intensity in the United States—1950 through 2014
• Chapter 4. Energy-Efficiency Benefits: Environment and Security
• Chapter 5. Sectoral Disaggregation of Energy Consumption
• Chapter 6. Amplifying Energy Efficiency
• Chapter 7. Policy Lessons from the Past Forty Years: What Has Led to Increased Energy Efficiency?
• Appendix A: Conversion Efficiency in Electricity Generation
• Appendix B: Calculation of Carbon Intensity of Energy Consumption
• Notes
• About the Author
• Shultz-Stephenson Task Force on Energy Policy
• Index