By: John A. “Skip” Laitner
In 2017, businesses, households, and government enterprises throughout the global economy spent an estimated €6.4 trillion to meet the many demands for various energy services. Current projections suggest the present scale of annual expenditures may nearly double to €12.3 trillion by 2050 (with all costs expressed in real 2017 values). Although the global economy derives important benefits from the purchase of energy services, the inefficient use of energy also creates an array of costs and constraints that burden our social and economic well-being.
In our newly-released report – Smart Policies and Programs, undertaken at the request of the International Partnership for Energy Efficiency Cooperation (IPEEC), we highlight the good news within the countless energy markets throughout the global economy. Whether improved lighting in homes and schools, transporting people and goods to new places, or powering the many industrial processes within any given nation, there are huge opportunities to improve the productive use of energy in ways that would reduce the total economic costs.
Perhaps most interesting, those same energy efficiency upgrades can also reduce greenhouse gas emissions that drive climate change, as well as lessen other negative impacts on people and the global environment. As noted in our report, however, it will take an adequately funded set of smart policies and effective programs to drive the optimal scale of energy efficiency investments.
The figure below highlights the scale of policy and program costs which, in turn, catalyze the productive investments necessary to reduce overall costs of energy.
Figure ES. Impact of a Global Energy Efficiency Innovation Scenario
The key insight from the graphic shown above? An efficiency-led investment strategy can save the global economy an average €1.9 trillion in avoided energy costs annually—even after the policy, program, and investment costs have been paid. But without the foundation of smart policy and program investments to drive this result, the net energy bill savings is likely to be substantially less than shown here. In short, it takes money to make money—or in this case, to save money in ways that enhance our social and economic well-being. The more detailed discussion of these key ideas is contained in our new report. If we go green, which is promoting the right mix of policies and programs that drive productive investments, the potential energy bill savings, shown in orange in the infograph above, can be large.
The full report can be found here.
Good stuff Skip!
More policy makers need to better understand more of this kind of analysis and the data that can support smart policy actions.