(Cross-posted from the Public Policy Blog)
It's no surprise that the cheapest and most available solution to the climate problem is simply to use energy more efficiently. But a recent study issued by McKinsey & Co. details just how compelling an opportunity we are missing. McKinsey predicts that an annual investment of roughly $50 billion over the next 10 years would cut energy demand by 23% and yield savings to the U.S. economy worth $1.2 trillion! The energy savings would be equal to taking the entire U.S. passenger fleet of cars and trucks off the road.
Such efficiency gains are possible only if we overcome some major hurdles. For instance, most people have no idea how much energy we use in our homes on a daily basis or which of our appliances or devices are consuming the most energy. That's one of the reasons that we created Google PowerMeter, a software gadget that shows users detailed information on their home electricity consumption. Studies show that when people have access to this kind information they reduce their energy use by up to 15%. Greater savings are possible if people use the information to buy a more efficient refrigerator or air conditioner, insulate their home, or take advantage of off-peak electricity rates.
The McKinsey report acknowledges that energy efficiency alone won't solve our energy and climate challenges. We must continue to put major resources into low-carbon sources of energy like renewable energy, and the federal economic stimulus, with its tens of billions of targeted dollars and incentives, is a good start. But the McKinsey findings are a wake up call. As we enact more comprehensive energy policies, energy efficiency -- and giving people the information, tools and incentives to take advantage of it -- should be front and center.