Economists have called it the world's greatest energy resource, and it has been hiding in plain sight for decades. It's the cleanest, cheapest fuel you've never heard of: energy efficiency. At the upcoming G20 summit, world leaders have a major opportunity to bring this hidden energy source into the limelight--and capitalize on its $18 trillion global potential.
Energy efficiency is clean, cost-effective and creates jobs. It has contributed more to the world's energy supply than any other single fuel source. Yet its full potential remains largely untapped, mostly because of policies that subsidize fossil fuels, ignore the costs of pollution and take away incentives for energy efficiency improvements. This month, G20 leaders could change this picture in a single stroke. Just by raising and aligning their energy efficiency standards for appliances, buildings, industry, and transport, G20 nations could bring many of the market barriers to energy efficiency tumbling down, and help unleash the full potential of the world's cheapest, cleanest energy source.
In a new report, the independent, international research group The New Climate Economy found that setting strong energy efficiency standards across the G20 could reduce climate pollution 6.9 gigatons per year by 2030. That's as much climate pollution as the United States currently emits each year. Investing in the energy efficiency improvements needed to meet these standards, the researchers calculated, would lift world GDP $18 trillion by 2035.
How does improving energy efficiency help economies? For one thing, standards drive innovation, providing an incentive for companies to create better products and compete in the global market. Energy efficiency, in particular, needs people on the ground to manufacture and install new technologies and equipment, like better batteries for electric and hybrid cars, or energy-management systems for office buildings. Energy efficiency investments have been shown to create three times as many jobs per dollar as fossil fuel investments.
Energy efficiency also lets consumers scoop up savings that they can spend elsewhere. In the United States, we've seen how energy efficiency standards can help consumer's pocketbooks. Thanks to existing standards, U.S. electricity use is projected to be about 14 percent lower by 2035 than it would have been otherwise and total net savings from existing appliance and equipment standards will exceed $1 trillion.
On a state level, utilities have found that consumers save $3 for every dollar invested in energy efficiency programs, like rebates for efficient appliances or funding for home weatherization. That doesn't include additional savings from cleaner air, which reduces health care costs and missed days of school and work.
Energy efficiency plays a huge role in national economies, too, because it allows people and businesses to do more with less. Saving money on energy frees up funds for other, more productive investments. America's economy has tripled in output in the last 40 years while energy use only increased by one-third, largely due to improved efficiency.
Global energy efficiency standards are a win-win for economies and for the environment. Since G20 countries consume 80 percent of the world's energy and produce 94 percent of the world's cars, strong standards here are likely to drive the spread of efficient technologies worldwide.
In other words, where the G20 goes, the world is likely to follow. It's up to G20 leaders now to take that first crucial step on the path toward global energy efficiency--and the cleaner air, better jobs, and more stable climate it can help provide. The world can't afford to keep energy efficiency's $18 trillion potential hidden away much longer.