Energy efficiency is one of the easiest, least-expensive ways to reduce waste and bring energy bills down for homes and businesses alike. Unfortunately, limited information and higher upfront costs often prevent consumers from choosing energy-saving products that offer maximum effectiveness.
Progress toward energy efficiency is central to reaching Net Zero Emissions on the IEA 2050 pathway, along with electrification, behavioral change and materials efficiency.
Reduced Utility Bills
Energy efficiency reduces utility bills for individuals and businesses alike. Simple measures like sealing drafts, upgrading insulation and reducing “vampire loads” can significantly lower electricity bills; more comprehensive approaches such as retrofitting homes and buildings with deep retrofits, green transportation options or smart city infrastructure can save up to 80% in energy costs.
Residential electricity rates are rising and are projected to do so further into the future. Energy efficiency offers a way out by decreasing demand and therefore necessitating less production resources to be added for energy generation.
Businesses benefit greatly from increasing efficiency as it reduces operating expenses while helping them compete against more energy-intensive competitors. Industrial efficiency in particular is especially crucial, given the rising costs of energy. Furthermore, energy efficiency enables businesses to protect against unpredictable energy price spikes while expanding operations without incurring costly capacity expansion costs.
Reduced Carbon Emissions
Energy efficiency is one of the lowest-cost strategies to cut greenhouse gas emissions on a large scale, offering an effective bridge to net zero carbon emissions. Yet energy efficiency alone will never meet our climate change goals; to do that we must accelerate it and accelerate it quickly.
Efficiency in buildings, appliances, vehicles and industrial equipment is central to reducing global electricity consumption, yet their market is often ineffective at rewarding efficiency in ways it rewards performance – for instance through better fuel economy in automobiles.
Policy can reshape markets to encourage efficient investments, supporting behavioral changes that result in wider reductions of energy use. Energy efficiency improvements can lower household energy costs and cushion shocks that disproportionately hit low-income households, while also decreasing demand for power – thus saving on investments for new generation resources, peak shaving fees, regulatory compliance fees, and other system costs.
Reduced Health Inequities
Energy efficiency programs provide an effective means of investing in communities left behind by COVID-19 pandemic. For instance, counties with Black majority populations are six times more likely to experience high COVID-19 death rates compared to counties with white majorities (CDC, 2019).
Racial inequities that put low-income households at greater risk from climate impacts also negatively impact their health and well-being. Indeed, health follows a social gradient; those living in more disadvantaged areas tend to have lower incomes, less education, poorer health status, and limited time left over for enjoying life.
Living in substandard housing posing environmental and health risks such as radon, mold, cockroaches, rats and energy insecurity is the result of structural racism and its legacy of redlining and disinvestment in racially segregated neighborhoods. Energy efficiency and weatherization programs aim to redress longstanding injustices by making housing more affordable, safer and healthier.
Increased Local Jobs
Energy efficiency measures create local jobs in construction, manufacturing, retail trade, installation and repair that cannot be automated or outsourced, keeping money within the local economy. Furthermore, lower energy use reduces energy costs for families, businesses and institutions while simultaneously helping protect wildlife habitats by decreasing fossil fuel usage on public lands and oceans.
Energy efficiency improvements in advanced economies typically stem from large-scale adoption of electric vehicles and grid storage systems, energy efficient buildings and district heating and cooling. Efficiency can also be increased through encouraging behavioral change.
Though energy efficiency offers considerable benefits, its effects are often underestimated by policymakers and investors. Renewables tend to receive much greater focus in national pledges, corporate commitments, and public search data; but for maximum impact concerted action must be taken now in order to unlock this resource and bring all its advantages worldwide.