Energy and the Economy: Report Says U.S. Can Save $1.2 Trillion through Energy Efficiency Measures

McKinsey & Company, the worldwide management consulting firm, has released a report that highlights the connection between energy and the economy by demonstrating that the U.S. could save up to $1.2 through the use of non-transportation energy efficiency measures.

Titled “Unlocking Energy Efficiency in the U.S. Economy” (165 pages, pdf), the July 2009 report offers, in the words of the official company press release, “a detailed analysis of the magnitude of the efficiency potential in non-transportation uses of energy, a thorough assessment of the barriers that impede the capture of greater efficiency, and an outline of the practical solutions available to unlock the potential.”

The upshot of the report is its claim that a $520 billion upfront investment, excluding programming costs, could potentially eliminate $1.2 trillion in waste by 2020. Additionally, the same measures would reduce greenhouse gas emissions by 1.1 gigatons annually — “the equivalent of taking the entire U.S. fleet of passenger vehicles and light trucks off the roads.”

And what’s the report’s verdict on the role of commercial and industrial HVAC, which is, of course, our primary field of concern here at Just Venting? (But of course, issues of climate change and the national economy aren’t exactly non­-concerns). In various ways the report shows HVAC and HVAC-related issues to be central to the energy efficiency measures in question.

In fact, it divides its analysis into three separate categories – approaches to energy efficiency in the residential, commercial, and industrial sectors – and devotes a chapter to each, and in each case HVAC factors highly among the areas that offer the greatest potential payback, as when it points out that “Improper design and installation of HVAC equipment and building insulation can reduce their efficiency by as much as 30 percent” and recommends retro-commissioning of HVAC systems and building shells as a means of harnessing huge energy savings.

The report also points to some of the other economic benefits of pursuing HVAC efficiency, as in this paragraph about Sick Building Syndrome (SBS), which we have written about more than once recently:

Efficiency-related upgrades in commercial buildings can increase worker productivity directly, as well as indirectly, through reduced sick leave. SBS costs the nation an estimated $60 billion annually in sick days, medical costs, and reduced productivity. A study by Lawrence Berkeley National Laboratory suggests higher indoor air quality itself can increase worker productivity by as much as 5 percent. Occupants of green buildings report themselves to be more satisfied with thermal comfort and air quality in the workspace than occupants of non-green buildings, and may also benefit from the additional use of natural light. Furthermore, worker productivity is higher at certain temperatures, which can be maintained more consistently throughout a building with higher-efficiency HVAC systems. In all, improvements in worker health and productivity due to improved air quality may total $37 billion to $210 billion annually according to some sources.

This all takes on additional weight when you consider the recent warnings coming from some very thoughtful, reliable, and well informed sources. Journalist Richard Heinberg has said there’s a very real possibility that economic growth as we have traditionally conceived it may have been permanently altered or even halted by the magnitude of our current breakdown. The Washington Post, after talking with an economist from the Brookings Institution, warned on August 17 that the metaphorical “rubber band” that has always snapped the economy back to a high after a downturn may have actually broken this time, since the current downturn is “so severe, global and transformative.” And this is all occurring in tandem with the blossoming of what more and more observers are describing as a permanent energy crisis.

Save $1.2 trillion dollars by investing less than half of that while simultaneously reducing greenhouse gas emissions and SBS by unlocking the efficiency potential of HVAC systems and other non-transportation uses of energy? Sounds great to us, even without all of those serious troubles bearing down! Given that they are bearing down, this all sounds more than great. It sounds like a necessity.

Matt Cardin

Goodway Blogging Team