The Importance of Energy Efficiency

Energy use accounted for 82 percent of U.S. greenhouse gas (GHG) emissions in 2006, according to the Department of Energy (DOE). Energy efficiency is the best and quickest way to reduce GHG emissions. A report released last week by the American Council for an Energy Efficient Economy detailed how deploying semiconductors technologies generated “sizeable energy productivity benefits.”

The U.S. economy has grown by over 60 percent in 20 years, but energy demand only increased by 20 percent. The energy needed to produce $1 of the U.S. GDP continually decreased because of technological innovations. The ACEEE report predicts future innovations will continue the trend.

The report calculated that the “cumulative electricity bill savings enabled by semiconductors” may be greater than $1.3 trillion through 2030, and reduce carbon emissions by 700 million metric tons. In 2006, the “entire family of semiconductor-enabled technologies” created net savings of about 775 billion kilowatt hours (KWh). If 1976 technologies were used now another 184 power plants would need to be built.

Overcoming barriers to energy efficiency

There are barriers to overcome in regards to increasing energy efficiency. One of the main barriers is the lack of knowledge about efficiency opportunities, according to Midwest Energy. Midwest conducts free energy audits for their customers in order to demonstrate the importance of energy efficiency.

Another barrier is large upfront capital expenditures. Midwest pays the upfront cost of their customers’ efficiency upgrades, and customers repay the utility company via a monthly charge on their energy bill. However, the repayments are less than monthly energy savings, so the customers will still see a reduction in their bill.

The stimulus funds for power companies

The American Recovery and Reinvestment (ARRA) provides billions of dollars in federal funding and tax incentives for power companies to increase energy efficiency. Power companies can improve their infrastructure and facilities, or deliver efficiency programs and energy savings to customers with ARRA funds.

In 2008, the State Energy Program (SEP) received $44 million. ARRA waived a 20 percent cost share for states, and waived the provision that had limited capital investments to 50 percent of SEP funds. The funds from SEP are given to state energy offices. Energy efficient projects are funded through SEP.

The Energy Independence and Security Act of 2007 authorized the Energy Efficiency and Conservation Block Grant (EECBG), whose main purpose is to improve energy efficiency. Previously unfunded, ARRA provided $3.2 billion for EECBG.

The Weatherization Assistance Program has been around since the 1970s. ARRA provided $5 billion for the program in order to meet President Obama’s campaign promise to weatherize a million homes a year.

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