America's Untapped Energy Resource: Boosting Efficiency

We don't need new drilling or new power plants. We need to get efficient

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Jeff Jacobson / Redux for TIME

Lightbulbs in integrating spheres at the Electric Power Research Institute are tested for energy consumption and longevity

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Appliance standards have been another success story; manufacturers always squeal when they're proposed but end up designing products that are not only more efficient but cheaper. But new proposals have languished in the Bush Administration, which routinely missed deadlines until it lost a lawsuit to environmentalists and is now finally adopting a few wimpy standards. Google.org energy director Dan Reicher, a member of Obama's transition team, says most furnaces on the market already meet the Bush team's latest proposal — and that its standards for boilers and transformers would be even weaker than proposals publicly endorsed by the industry. "In the Obama Administration, you're going to see a much, much stronger commitment," Reicher says.

Let utilities make money saving energy. Six states have already decoupled electricity profits from sales volume to give utilities incentives to eliminate energy waste, and nine more may follow. Regulated utilities should also be assured a reasonable rate of return on their investments in efficiency improvements for their customers, just as they are for other capital investments. And nine states already require utilities to meet a percentage of future load growth through efficiency; the American Council for an Energy-Efficient Economy says a tough national standard could eliminate the need for 450 power plants by 2020. At a meeting of the nation's utility commissioners in November, NRDC and the Edison Electric Institute issued a joint call for states to overhaul energy incentives in order to promote "the increasingly urgent mutual goal" of efficiency. "That's a real milestone," says Ralph Cavanagh, a co-director of NRDC's energy programs. "The utilities want in on this."

Of course, cap-and-trade or any other national effort to price carbon would adjust incentives as well, which is one reason utilities are already showing so much interest in efficiency. "For a long time, the industry lost interest in the demand side," says Reddoch, whose institute is funded by utilities. "But now the enthusiasm is sky-high."

Stimulate the market. Mandates provide a big stick, but money is still the best carrot, and Obama has suggested that he wants to spend lots of it to promote efficiency. He has promised that his gargantuan economic-stimulus plan will include smart meters and other elements of a smart grid that could someday keep your air conditioner off until your BlackBerry lets it know you're almost home. He also plans a dramatic expansion of a low-income weatherization program to retrofit 1 million homes a year and is considering incentives for retrofitting inefficient buildings, buying highly efficient appliances and building co-generation plants that help turn waste heat into energy. The idea is that spending money now and saving money later should both help the economy.

The most common knock on efficiency is that it can't possibly reduce our consumption enough to reverse our energy growth or stop global warming, not when the average U.S. household has 26 plug-in devices and China is building the equivalent of two new coal plants every week. Most studies suggest that efficiency can dramatically slow but not erase projected growth in energy demand and emissions. But those studies were conducted before the economy tanked. And most measured U.S. efficiency potential with status-quo assumptions, which is like trying to measure our industrial potential before World War II: it's hard to guess how a major crisis and a committed leader can mobilize the country and rearrange notions of what's possible. "The limits of efficiency have never been tested," says NRDC's David Goldstein. "We've run out of political will long before we've run out of opportunity." Even if we refuse to put on sweaters, a national efficiency crusade combined with a prolonged recession could throttle energy demand enough to delay the need for new power, while the rapid growth of wind power could replace the dirtiest coal plants. "Maybe we could buy enough time until solar matures," Goldstein says.

Still, it's true that efficiency alone probably won't save the world. But real efficiency combined with a real shift toward conservation — carpooling, telecommuting, recycling, running dishwashers full, downsizing McMansions and, yes, adjusting thermostats — well, that might do the trick. We need to squeeze more energy out of every electron. But pardon the eco-lecture: if we really want to save the world, we might have to put on a sweater too.

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