New ACEEE Report Says Most Economic Projections are off on Potential Energy Efficiency Benefits

"Why do most economic assessments of climate change policies either ignore or greatly understate the potential advances of energy efficiency, which is the largest and most cost effective form of greenhouse gas mitigation?" That was a question raised by John A. "Skip" Laitner, director of the American Council for an Energy-Efficient Economy's (ACEEE) Economic and Social Analysis Program. He answered by saying the "immediate barrier" is the misreading of the historical track record about energy efficiency.

"Most studies for and against greenhouse gas emissions misread the historical records on energy efficiency," said Laitner.

As a means to provide "accurate gauging of climate legislation" the ACEEE published a new report that finds many conventional climate economic impact studies misread the historical record on the nation's energy productivity opportunities. Titled "The Positive Economics of Climate Change Policies: What the Historical Evidence Can Tell Us," the report suggests that most studies that evaluate "cap-and-trade" policies either ignore or greatly understate the potential advances in energy efficiency.

"The evidence shows that productive investments in energy-efficient technologies can enable the U.S. economy to save money and to substantially reduce its greenhouse gas emissions - both immediately and by mid-century," said Laitner, who authored the report.

As part of the study, Laitner conducted a diagnostic review of the recent assessments of the H.R. 2454 climate change legislation. The economic data makes the following conclusions:

Energy efficiency investments can provide up to one-half of the needed greenhouse gas emissions reductions most scientists say are needed between now and the year 2050;
Investments in more energy-productive technologies can also lead to a substantial net energy bill savings for the consumer and for the nation's businesses. In the diagnostic assessment summarized in this report, savings are on the order of two trillion dollars by 2050 (measured in constant 2007 dollars);
Non-energy expenditures within the United States tend to be more labor-intensive and provide a greater rate of contribution to the nation's gross domestic product compared to expenditures on energy. Instead of taking jobs away from the economy, the diagnostic assessment here suggests a small but net positive gain in the economy; and
Hence, shifting away from the production and consumption of conventional energy resources, in favor of more productive investments in energy-efficient technologies, can lead to a more robust economy and to a greater level of overall employment opportunities with the U.S.
"The evidence is compelling," Laitner said. "With advances in new materials, new designs and the emerging contributions from information and communication technologies, energy productivity gains can power the economy in new ways that reduce greenhouse gas emissions."

He also added, "Our report shows much education needs to be done if we're to get the economic models on the right page when it comes to the real potential and future benefits of energy efficiency," said Laitner.