Study Finds U.S. Can Reduce Energy Use 25% and Save Consumers $600 Billion Through Greater Energy Efficiency

September 10, 2001

WASHINGTON, D.C. — A new study released today finds that the United States could reduce its projected energy use by more than 25 percent and save consumers more than $600 billion over the next two decades simply by adopting nine key energy-efficiency policies. The study, released by the American Council for an Energy-Efficient Economy (ACEEE), identifies nine policies that together could achieve these savings, including:

  • Increase corporate average fuel economy (CAFE) standards for passenger vehicles;
  • Adopt a national system benefit trust fund to improve the efficiency of electricity use;
  • Enact and strengthen energy efficiency standards on several energy-using products;
  • Enact tax incentives for highly efficient vehicles, homes, commercial buildings, and other products;
  • Expand federal energy efficiency research, development, and deployment programs;
  • Promote clean, high-efficiency combined heat and power systems;
  • Set up voluntary agreements and incentives to reduce industrial energy use;
  • Improve the efficiency and reduce the emissions of existing power plants; and
  • Promote greater adoption of advanced building energy codes.

The U.S. Senate begins consideration of national energy policy legislation this week. The Senate Energy Committee is expected to vote on the national system benefit trust fund and combined heat and power provisions later this week, and to vote on appliance efficiency standards and industrial voluntary programs next week. CAFE standards and energy tax incentives will be considered by the Commerce Committee and Finance Committee, respectively, probably later this month. And power plant emissions standards will be considered by the Senate Environment and Public Works Committee, possibly in October.

“The energy bill passed by the House in early August would achieve only 2% of the energy savings that could be accomplished were these policies to be adopted, ” said Steven Nadel, Executive Director of ACEEE and lead author of the report. “The House bill is basically a penny-ante bet in a very high stakes game. The Senate should act much more boldly to fully exploit the potential savings that energy efficiency offers to the United States.”

The ACEEE researchers estimate that the cost savings due to lower energy use resulting from the nine policies will be more than twice the extra cost of the more efficient equipment, producing net savings of about $600 billion over the next 18 years. Furthermore, by easing the demand for energy, ACEEE found that efficiency policies would help reduce energy prices, resulting in substantial benefits for all consumers. “We found that these policies will reduce annual U.S. energy expenditures per household by $2093 in 2020, a 33% reduction relative to the business–as-usual scenario in which essentially no new policies are adopted,” stated Steve Bernow of the Tellus Institute, whose researchers performed the modeling for the project.

The study also found that the impact of the efficiency policies steadily grows over time as the policies affect more decisions and as more of the existing stock of cars, appliances and industrial equipment turns over. As a result, the policies reduce the growth in U.S. energy use over the 2002-2010 period, and total U.S. energy use declines in the 2010-2020 period. By 2020, energy use falls back to below 1999 levels. “The efficiency policies will substantially reduce the need for new energy supplies and new energy infrastructure, although some of each will still be needed in order to replace current supplies and infrastructure,” noted Nadel.

Relative to the no-new policy case, with the efficiency policies, U.S. oil use will be reduced by 19% and natural gas use will be reduced 23% by 2020. The oil savings will reduce the need for imported oil by 40% relative to the no-new policy case, helping to reduce U.S. dependence on imported oil from volatile regions of the world. However, even with the efficiency policies, oil imports will still increase modestly relative to current levels.

“These policies will make a substantial contribution towards bringing U.S. energy supply and energy demand into better balance, helping to avert the types of supply bottlenecks and energy price spikes that U.S. consumers have had to face this year,” said Nadel. “The efficiency savings we have found are far greater than the amount of oil and gas available in the wilderness areas and wildlife reserves that the Bush Administration is now trying to open up to development.”

The efficiency savings will also help to further reduce emissions of many pollutants now covered by the Clean Air Act, but which would otherwise continue to cause health and environmental problems at current and expected levels, and would also reduce emissions of carbon dioxide, a major greenhouse gas. By 2020, the efficiency policies will reduce sulphur dioxide emissions by 48% relative to the no-new policy case, primarily due to the retirement of many dirty old power plants. The policies will also stop the growth in U.S. carbon dioxide emissions, bringing emissions to 1990 levels by 2020. “The efficiency savings will bring us within reach of the carbon dioxide emissions targets in the Kyoto Protocol,” Nadel said. “We should be able to meet the Kyoto targets through a combination of these efficiency policies, policies to promote use of renewable energy sources, policies to reduce emissions of other greenhouse gases, and emissions credits purchased from other countries.”