Yale e360: Why Does Energy Efficiency’s Promise Remain Unfulfilled?


Among the many measures the world can take to wean itself off fossil fuels, few match the benefits of making homes, business, and cars more energy-efficient. But financial and psychological barriers have kept individuals, businesses, and governments from realizing efficiency’s great potential.

by Jon R. Luoma

In 2006, Paul Rak, president of VeriForm Inc, a Canadian steel fabricator, set his company on the kind of do-gooder mission that could have given his corporate accountant fits. Rak had just seen Al Gore’s climate change film,An Inconvenient Truth, his first child had recently been born, and Rak decided he was obliged to find ways to deeply cut his company’s greenhouse gas emissions, even though he knew it was going to cost plenty.

It turned out the company accountant had every reason to relax, even smile. Doing good quickly turned into doing well.

Over the next two years, VeriForm installed more efficient lighting, automated its heating system, and found ways to run its saws and other tools more efficiently. Rak says he was floored by how quickly the resulting energy savings dropped right to the company’s bottom line. Between 2006 and 2008, he told the trade magazine Green Manufacturer, he spent about $46,000 on energy efficiency, an investment that immediately began returning about $90,000 in reduced energy bills annually, a nearly 200 percent return on the investment. Meanwhile, VeriForm had cut its energy costs by 58 percent and its greenhouse gas emissions by 233 metric tons per year. Today, Rak continues to avidly pursue energy efficiency at his company, an effort that this month earned him a $100,000 award from the Canadian government.

That a company, or a household, can make such an energy leap shouldn’t come as a surprise. What is surprising, though, is that more businesses and individuals aren’t embracing energy efficiency measures, given the significant savings that come from steps as simple as changing light bulbs, adding insulation, or installing smart electric meters.

That efficiency programs offer a huge opportunity to slash energy use is no longer in doubt. In the U.S., a pair of high-powered analyses, one by the prestigious National Research Council (NRC) of the National Academy of Sciences, another by McKinsey & Co., a global consulting firm, came to a remarkably similar conclusion: opportunities abound to save energy and reduce carbon dioxide emissions though improved efficiencies.

An investment of $500 billion in efficiency would end up saving $1.2 trillion in energy costs.

Read the rest of this article on the Yale Environment 360 website.