Energy Use Can Be Cut by Efficiency, Survey Says

The growth rate of worldwide energy consumption could be cut by more than half over the next 15 years through more aggressive energy-efficiency efforts by households and industry, according to a study by the McKinsey Global Institute, which is scheduled to be released today.

The energy savings, the report said, can be achieved with current technology and would save money for consumers and companies. The McKinsey report offers a long list of suggested steps, including the adoption of compact fluorescent light bulbs, improved insulation on new buildings, reduced standby power requirements, an accelerated push for appliance-efficiency standards and the use of solar water heaters.
Those moves, among others, could reduce the yearly growth rate in worldwide energy demand through 2020 to six-tenths of a percent, from a forecast annual rate of 2.2 percent, the report concluded.

The estimate of potential energy savings is one conclusion of a yearlong research project by McKinsey that analyzes energy productivity worldwide by regions, fuels and industrial and residential markets.

To take advantage of the energy-saving opportunities, some product standards would have to be tightened and some policy incentives changed. Current regulations and fuel subsidies, for example, often favor consumption over efficiency. But many steps are not taken, the report said, because energy users lack information or do not value efficiency enough to change their buying habits.

“The opportunities are huge and yet they are being left on the table,” said Diana Farrell, director of the McKinsey Global Institute, a research arm of the McKinsey consulting firm. “Standard economics would say that energy prices would work their way through everything. But that’s not really the case, particularly in the consumer market.”

That is especially the case, according to other energy experts and executives, if an energy-thrifty product has a slightly higher purchase price and the financial payoff for users takes a while. That helps explain the slow progress made by compact fluorescent light bulbs in the marketplace. Years ago, these efficient light bulbs cost up to 10 times as much as conventional incandescent bulbs, and their light had a somewhat different hue.

But today, the light spectrum has been corrected and compact fluorescents are only slightly more costly than conventional bulbs, yet they last 10 times as long and consume 75 percent less electricity. The overall financial advantage of using compact fluorescent bulbs is obvious and sizable, even if the initial purchase price is higher.

“One of the great mysteries is why the public has not shifted faster to fluorescent bulbs,” said Alexander Lidow, a Stanford-educated physicist and the chief executive of International Rectifier, a maker of power management equipment for energy-efficient appliances.

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