$18 Trillion Windfall: Health And Productivity Benefits of Efficiency Top Energy Savings

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A major report by the global body responsible for energy analysis finds the total benefits from energy efficiency upgrades equals — and often exceeds — the energy savings. The 232-page International Energy Agency report upends decades of conventional thinking about efficiency, and should lead governments and corporations to sharply increase their efficiency budget.

The most noteworthy conclusion of “Capturing the Multiple Benefits of Energy Efficiency” may be that “the uptake of economically viable energy efficiency investments has the potential to boost cumulative economic output through 2035 by USD 18 trillion,” which is larger than the current size of the U.S. economy!

Specifically, the report finds that green building design can achieve health benefits — including reduced medical costs and higher worker productivity — “representing up to 75% of overall benefits.” That is, the non-energy benefits of energy efficiency upgrades can be three times the size of the energy savings.

This study also finds that when the value of productivity and operational benefits of industrial efficiency measures were factored into “traditional internal rate of return calculations, the payback period for energy efficiency measures dropped from 4.2 to 1.9 years.” Payback time was cut in half.

It’s true that the report “challenges the assumption that the broader benefits of energy efficiency cannot be quantified.” But those assumptions have been challenged for over two decades years.

Fifteen years ago this summer I published the first collection of detailed case studies, some one hundred in all, of how businesses were cutting energy use and boosting productivity while reducing pollution — Cool Companies: How the Best Businesses Boost Profits and Productivity by Cutting Greenhouse Gas Emissions.” Walter Cronkite called that book a “an invaluable guide to a more hopeful future.”

And five years before that, green design guru Bill Browning and I published, “Greening the Building and the Bottom Line: Increasing Productivity Through Energy-Efficient Design,” which was peer-reviewed by U.S. Green Building Council.

But those case studies were often dismissed as mere anecdotes. And even though subsequent reports by energy efficiency and design experts like Greg Kats extended the documentation, this new report is a groundbreaking both because of the breadth of the analysis and the credibility of the IEA.

The report’s core finding on buildings is something every developer, every architect, and every building owner needs to understand:

Energy efficiency retrofits in buildings (e.g. insulation retrofits and weatherisation programmes) create conditions that support improved occupant health and well-being, particularly among vulnerable groups such as children, the elderly and those with pre-existing illnesses. The potential benefits include improved physical health such as reduced symptoms of respiratory and cardiovascular conditions, rheumatism, arthritis and allergies, as well as fewer injuries. Several studies that quantified total outcomes found benefit-cost ratios as high as 4:1 when health and well-being impacts were included, with health benefits representing up to 75% of overall benefits. Improved mental health (reduced chronic stress and depression) has, in some cases, been seen to represent as much as half of total health benefits.

The IEA reports that if you include lower total public health spending, then “Addressing indoor air quality through energy efficiency measures could, in a high energy efficiency scenario, save the European Union’s economy as much as $259 billion annually.”

On the industrial side, the IEA concludes, “The value of the productivity and operational benefits derived can be up to 2.5 times (250%) the value of energy savings (depending on the value and context of the investment).”

Energy efficiency remains THE core climate solution and the biggest low-carbon resource by far.