A major new survey reveals planned corporate investment in energy efficiency measures here and around the world is at its highest level ever. And that means the trend of decoupling economic growth from energy consumption will continue, especially in this country.
It also means that cutting carbon pollution sharply will indeed be as super-cheap as all of the independent analyses have been saying for years.
Johnson Controls’ recent Energy Efficiency Indicator (EEI) survey of over “1,200 facility and energy management executives in the United States, Brazil, China, Germany and India shows interest and investment in energy efficiency are at an all-time high.” Johnson Controls reports that half of the respondents said their companies are “paying more attention to energy efficiency” today compared to a year ago.
Perhaps more significant, 72 percent of global respondents expect to increase investments in energy efficiency and onsite renewables over the next year — whereas only 42 percent expected such an increase in 2013. For China and India, a whopping 85 percent and 89 percent of respondents expect to increase investments.
Here are some other key findings:
- 42 percent of organizations are willing to pay a premium to lease space in a certified green building versus 15 percent in 2013.
- 62 percent of organizations said they are very or extremely likely to have one or more facilities able to operate off the grid in the next ten years.
- 80 percent of organizations plan to achieve nearly zero, net zero or positive energy status for at least one of their facilities versus 49 percent in 2013.
While reducing business costs is still the top driver of efficiency investments, companies’ investment decisions are “increasingly considering” factors such as “customer and employee attraction, greenhouse gas reduction, enhanced reputation, government policy and investor expectations when making investment decisions.”
Specifically, Johnson Controls found that 64 percent of American companies “now have an internal or publicly stated carbon reduction goal, compared to 41 percent in 2013.”
Rising energy efficiency investments have become a powerful force in this country. As Bloomberg New Energy Finance (BNEF) reported in February, “Since 2007, electricity demand has been flat, compared to a compounded annual growth rate of 2.4% from 1990 to 2000.”
While this decoupling is an unprecedented achievement in modern U.S. history, it seems very likely to continue for the foreseeable future, thanks to growing concern about carbon pollution and increasing policies to encourage efficiency investments.
A key driver of the decoupling of electricity use and GDP growth has been state policies to promote energy efficiency, in particular Energy Efficiency Resource Standards (EERS) and new regulations that decouple a utility’s revenues from the amount of electricity they generate and sell. An EERS requires a utility to put in place a specified amount of energy efficiency measures. Decoupling removes a key utility disincentive to invest in energy efficiency — efficiency reduces electricity sales, which would, under old regulations, reduce profits.
As a result of these policies, utility efficiency spending is up four-fold since 2006, and so “since 2007, incremental efficiency achievements have risen 17% on average annually.”
Fundamentally, energy efficiency is the low-hanging fruit that grows back. The efficiency resource never gets exhausted because technology keeps improving, smart control systems keep getting smarter, and knowledge spreads to more and more people.
Energy efficiency investments boost worker health and productivity.
We learned from a major 2014 International Energy Agency report that new energy-efficient technologies and green building design improve both worker health and productivity. A central conclusion of “Capturing the Multiple Benefits of Energy Efficiency” was 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 found 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.
The study also found that when the value of productivity and operational benefits of 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.
At the time, I wrote that the IEA’s findings “should lead governments and corporations to sharply increase their efficiency budget.” That increase appears to be happening.
Finally, we can expect the efficiency trend to continue expanding if the Supreme Court ultimately approves the Clean Power Plan (CPP), which is a set of carbon pollution standards for power plants issued by the EPA in consultation with the public, industry, and states. The CPP gives states unique flexibility in how they achieve CO2 reductions in the electricity sector, allowing them, for instance, to use energy efficiency as a core strategy.
Energy efficiency is what keeps the cost of climate action so low — and what helps ensure that the total health, environmental, and productivity gains of action vastly exceed the costs of inaction.