The Economic Imperative and Opportunity
of Long-Term Energy Efficiency
John A. “Skip” Laitner, Senior Fellow
American Council for an Energy-Efficient Economy (ACEEE)
Industry Meets Government: Impact on Energy
32nd USAEE/IAEE North American Conference
Anchorage, Alaska
July 30, 2013
And as we are
reminded by my
favorite American
philosopher,
Gary Larson,
small differences
in assumptions
can lead to very
big differences in
outcomes!!
Sometimes We Actually Do Need to
Reinvent the Wheel
• In 1970 teenager Frank Nasworthy actually did
•
•
reinvent the wheel and it popularized inline
skating.
Energy service companies developed new
business models that expanded, for example,
the deployment of CHP systems.
And the Raspberry Pi may transform energy
efficiency in new ways.
What is the Raspberry Pi?
•
•
•
The University of Cambridge noticed that many PhD
students in computer science had never mucked with
the internal workings of a computer.
Hence, the Raspberry Pi.
Held in my hand, a credit cardsized computer that can be plugged
into your TV and keyboard. It can
be used for many of the things a
desktop PC does, like
spreadsheets, word-processing and
high-definition video games.
I paid $53.95 on Amazon. What might that reduction in
cost and size mean for prospective energy efficiency
improvements? How might we model it?
Two Views on Energy
• Energy as a commodity tracked by the
Energy Information Administration; or
• Energy as the capacity to do useful work.
• To ensure the appropriate development
of innovation that ensures sustainable
economic activity, the emphasis needs to
be on “energy as work.”
Energy as Work
Energy = Exergy + Anergy = Constant
Source: Kümmel (2011)
Work = Exergy * Efficiency
Source: Ayres and Warr (2009), and Laitner (2013)
Source: Ayres and Warr (2009), and Laitner (2013)
What is Wrong with this Picture?
Ergo, 43%
efficient!
But really?
useful
energy
Ergo, efficiency is
more like ≈ 14%
(Ayres & Warr 2009 and
Laitner 2013 forthcoming)
With an assumption
that buildings and
industry are 80%
efficient – which
ain’t true at all. . .
And the very fine print ?
Jumping to the End of the Story
The 2012 ACEEE report, “The Long-Term Energy
Efficiency Potential: What the Evidence Suggests,”
shows how slashing energy use by 40 to 60%‒through
highly cost-effective efficiency investments‒could
generate up to 2 million jobs while saving all
residential and business consumers a net $400 billion
per year, or the equivalent of about $2,600 per
household annually.
The insight? Instead of tiny increments, the U.S. will
be better off “Thinking Big” about energy productivity
and energy services, rather than relying on the usual
set of very costly and conventional energy resources.
Source: The Long-Term Energy Efficiency Potential: What the Evidence Suggests (2012).
Washington, DC: ACEEE. http://www.aceee.org/press/2012/01/aceee-report-us-better-thinking-big-
Conventional assumptions
about the efficiency potential
MORE
BY WASTE
THAN
INGENUITY?
. . . an anemic 14% energy (in)efficiency
Exploring the full
energy efficiency
potential: ~250
billion barrels of oil
equivalent in the
U.S. through the
year 2050. . .
“We shape the world by the
questions we ask”
Physicist John Wheeler
U.S. Exergy Conversion Efficiency
That is, the Ratio of Useful Work to Total Exergy
1950 to1980: from 8% to 12%
1980 to 2010: from 12% to only 14%
Source: Ayres and Warr 2009 with data updates from 2005 to 2010 by Laitner (2013)
Emerging Insights in the Critical Role of
“Used Energy” to Enhance Productivity
Useful Work Per Labor Hour
Used Energy Index 1950=100
300
250
In the U.S. from the period 1950-80
Exergy efficiency: 1.45% /year*
Economy-wide productivity: 2.24%/year
200
From the period 1980-2010
Exergy efficiency: 0.42% /year*
Economy-wide productivity: 1.72%/year
150
100
What we will find is that to regain and maintain a robust
economy, we can no longer afford “business-as-usual;”
rather we must scale to the level of an energy revolution. . .
50
0
1950
1960
1970
1980
1990
2000
* Here energy efficiency refers to the conversion of total primary energy to used energy
Source: Laitner 2013 (forthcoming).
2010
Opportunities for Efficiency?
Offering just three of so many different
examples, if we’re willing to really look!
And imagining industry more as a
source of multiple innovations than
as a consumer of energy
Optimizing our Nation’s Traffic Signals
 There are an estimated 272,000 traffic signal systems



throughout our country today.
Stop and start driving and poorly timed signals cause
unnecessary fuel consumption on our nation’s highways.
Retrofitting these systems with smart sensors and
dynamic programming techniques can improve traffic
flow so that we reduce our highway fuel consumption 510% per year.
The cost? About $10-12 per household. The savings?
About $150 per household per year – and possibly more!
Developing Intelligent Efficiency
 Not yesterday’s idea of real energy efficiency, but

interconnected systems – what we can call “Intelligent
Efficiency” – could reduce energy use by about onefourth of today’s levels, while still maintaining jobs and
a robust economy.
With new information technologies and advanced
sensors and controls, for example, both Schneider
Electric and Rockwell Automation offer services to
manufacturing firms that can reduce electricity use by
up to 40 percent and reduce oil and gas requirements
by up to 35 percent.
Source: A Defining Framework for Intelligent Efficiency (2012). Washington, DC: ACEEE.
http://www.aceee.org/press/2012/06/aceee-major-new-us-energy-find-could
Improving Commercial Buildings
 A 2007 DOE-sponsored study suggested that if all


commercial buildings were rebuilt by applying a
comprehensive package of energy efficiency
technologies and practices, they could reduce their
typical energy use by 60 percent.
Adding the widespread installation of rooftop
photovoltaic power systems could lead to an average
88 percent reduction in the use of conventional energy
resources.
Cost-effective technologies as feedback and intelligent
infrastructure can all be an enabler of this success.
Some Concluding Thoughts
The Current Mix of Prices and
Policies Don’t Seem to be Working
On the Other Hand, Getting the Prices and Policies
Aligned in Ways to Promote Useful Work. . . .
Paraphrasing John Maynard Keynes
Underpinning This Overview: A Selected Bibliography
•
•
•
•
Ayres, Robert U. and Benjamin Warr. 2009. The Economic Growth Engine:
How Energy and Work Drive Material Prosperity. Northampton, MA: Edward
Elgar Publishing, Inc.
Kümmel, Reiner. 2011. The Second Law of Economics: Energy, Entropy, and
the Origins of Wealth. New York, NY: Springer.
Laitner, John A. “Skip.” 2013. “Linking Energy Efficiency to Economic
Productivity: Recommendations for Improving the Robustness of the U.S.
Economy.” Washington, DC: American Council for an Energy-Efficient Economy
(forthcoming August).
Laitner, John A. “Skip,” Stephen Nadel, R. Neal Elliott, Harvey Sachs and
Siddiq Khan. 2012. The Long-Term Energy Efficiency Potential: What the
Evidence Suggests. Washington, DC: ACEEE.
http://www.aceee.org/press/2012/01/aceee-report-us-better-thinking-big-
Note: Other citations can be provided on request.
Contact Information
John A. “Skip” Laitner
Principal Economist and Consultant
Economic and Human Dimensions Research Associates
Senior Fellow, American Council for an Energy-Efficient
Economy (ACEEE)
Senior Fellow, CNA Public Research Institute
Tucson, Arizona 85750
c: (571) 332-9434
Email: EconSkip@gmail.com
And also check out our new website:
EnergyStressTest.com http://www.energystresstest.com/