Energy efficiency is getting the maximum use from energy consumed.
This is a simple statement, yet characterizing energy efficiency is a complex task. Energy efficiency goes beyond a single product or policy. It encompasses a range of technologies, behaviors, designs, and industries, and it has relevant applications to most sectors of the economy and all U.S. geographies. It can respond to various market and policy signals and unlock financing strategies to achieve energy savings. The range of energy efficiency adds up to a massive, accessible, and low-cost, zero-carbon energy resource.
This report shows 59 indicators that highlight the main features of the energy efficiency market, describe what our previous commitments to energy efficiency have achieved today, and give a sense of how much further it can take us.
The indicators in this report highlight several key features of energy efficiency:
Energy efficiency delivers savings, creates jobs, and reduces emissions.
For decades energy efficiency has delivered savings by doubling economy-wide energy productivity, lowering per-capita energy consumption, and slashing carbon emissions and air pollutants. The investments are driven by a combination of markets and government programs and policies: research and development funding, building energy codes and appliance and fuel economy standards, utility programs and energy efficiency resource standards, certification and benchmarking programs, technical assistance, and financing tools. Investing in energy efficiency is not dependent on a single strategy, policy, or technology, but is available through a portfolio approach with tremendous diversity and breadth.
Energy efficiency works.
As an energy resource, energy efficiency is proven, affordable and reliable. In our energy systems, we plan for it, count on it, and it helps to keep the lights on. Energy efficiency is recognized as a resource in capacity markets and integrated resource plans, and as an alternative to building new infrastructure. Governments, utilities, and corporations know, trust, and rely on energy efficiency, have done so for decades, and continue to do so now more than ever. And when compared with investments in supply-side generation, efficiency is often the least cost option, even as the electric grid becomes increasingly renewable.
Energy efficiency is high-impact, large-scale, and growing to meet new needs.
Our energy efficiency potential is larger-scale and more powerful than generally realized, and new energy efficiency technologies, like electric vehicles, heat pumps, and connected devices and controls, are scaling up quickly, increasing this potential further. As these efficient technologies become increasingly effective and affordable, their usage can grow to meet today’s challenges.
Energy efficiency is a reliable and low-cost, distributed resource.
Energy efficiency is the foundation of deep decarbonization and is also one of the best-established and most-implemented examples of a distributed and zero-carbon resource that usually does not require additional land use. Energy efficiency, together with grid integration technologies, also plays an important role in shaping electricity demand to match supply, features that make it an enabler in deploying variable renewable resources. However, the scale of energy efficiency required for deep decarbonization dwarfs the current size of energy efficiency investments.
Energy efficiency is a distributed and zero-carbon resource.
Energy efficiency is the foundation of deep decarbonization and is also one of the best-established and most-implemented examples of a distributed and zero-carbon resource that usually does not require additional land use. Energy efficiency, together with grid integration technologies, also plays an important role in shaping electricity demand to match supply, features that make it an enabler in deploying other renewable resources. However, the scale of energy efficiency required for deep decarbonization dwarfs the current size of energy efficiency investments.
Energy efficiency can improve people’s lives.
By reducing emissions and air pollutants, energy efficiency can deliver major public health benefits—such as avoided respiratory and cardiovascular illnesses, and avoided premature deaths—each year. Energy efficiency can also lower home energy costs, improve home comfort, increase grid reliability and resilience to weather disasters, and reduce the need for individuals to forego other necessities in order to pay their energy bills.
Energy efficiency is key to achieving tomorrow’s objectives.
Whether we’re seeking to boost economic productivity, improve air quality or meet climate-related emissions reductions objectives, energy efficiency is a foundational tool to achieve these goals. Just as our progress to date has relied on extensive policy and programmatic support, ensuring we take full advantage of tomorrow’s energy efficiency will require sustained commitment to use our energy well.
Recent Major Developments:
Infrastructure Investment and Jobs Act (IIJA)
The IIJA was enacted November 15th, 2021, as a $1.2 trillion-dollar bipartisan spending package that included funding for transportation, broadband, utilities, and other kinds of infrastructure projects. Several of the programs funded by the IIJA are intended to deal with climate change, either through reducing emissions, or improving infrastructure resilience. This landmark legislation includes $7.5 billion for electric vehicle chargers, $6.4 billion for transportation carbon reduction programs, $3.5 billion for the low-income Weatherization Assistance Program, $3 billion for the Smart Grid Investment Matching Grant Program, more than $1 billion for building energy codes implementation and building retrofits, and more than $1 billion for industrial efficiency and emissions reductions.
Inflation Reduction Act (IRA)
The Inflation Reduction Act was signed into law August 16th, 2022. The bill, which was passed through budget reconciliation, included $369 billion in spending programs, mainly intended to address climate change and other environmental concerns. With that in mind, the IRA has tens of billions of dollars explicitly for energy efficiency programs. Included in the law is an expansion of the 25C, 45L, and 179D energy efficiency tax credits; $9 billion for home energy retrofits and electrification; $1 billion in grants to strengthen building energy codes; more than $3 billion for low-carbon materials and sustainable technologies in federal buildings; $6 billion to industry for innovative decarbonization technologies; new and expanded electric vehicle tax credits; $3 billion to support affordable transportation access; $27 billion for a greenhouse gas reduction fund including for green banks; over $40 billion in authority for the DOE’s loan program; and many other programs.
Covid-19’s Impact on Energy Use and Efficiency
Covid-19 caused people across the United States to use less energy temporarily. From coast to coast, people who were accustomed to long commutes and working in an office suddenly found themselves working from home with no commute at all. This, along with a warm winter and reduced industrial output, resulted in a 7.4% drop in American energy consumption in 2020. U.S. emissions also declined by 11% during that same year. Working from home can increase transportation system efficiency, but an economic crash is neither efficient nor sustainable. And in fact, those trends were mostly short lived as we saw U.S. energy consumption rise by 5.3% in 2021. That said, in 2021, energy productivity improved by 0.4%, meaning the economy still grew slightly faster than energy use. 1
Source: IEA (2021), Use of energy in explained
Source: EIA (2021), Frequently Asked Questions (FAQs)
About U.S. Energy Consumption
- U.S. per capita energy consumption is roughly 2.5 gallons of oil,6 9 pounds of coal,7 and 245 cubic feet of natural gas per day.8
- Residential electricity consumption is estimated to be 12.2 kilowatt-hours (kWh) per capita per day.9
- In 2018 total energy (or primary energy) terms, consumption was 850 thousand British thermal units (Btu) per day per capita, or 309 million Btus per year.10
- Energy consumption can be grouped into different end-use sectors (as well as the power sector), which each require different energy consumption and usage patterns: Residential, Commercial, Industrial, and Transportation. Energy consumption in the residential and commercial sectors is in (or around) buildings; the industrial sector includes energy consumed in energy-intensive industrial processes, and often includes on-site energy generation. The transportation sector is predominantly reliant on petroleum fuels.11
EIA (2021), Monthly Energy Review
Basics of Energy Consumption Impacts
- Economy: U.S. total energy expenditures in 2020 were $1.01 trillion, or 4.8% of U.S. GDP, down from $1.22 trillion in 2019 (5.7% of GDP).12
- Environment: The combustion of fossil fuels is the primary source of greenhouse gas (GHG) emissions, including carbon dioxide (CO2), nitrogen oxides (NOx), sulfur dioxide (SO2), particulate matter, and other pollutants such as mercury. In 2020, 73% of total U.S. anthropogenic GHG emissions were due to combustion of fossil fuels.13
- Energy volatility and costs: Though the U.S. has been experiencing a period of low energy prices relative to previous periods, energy prices remain volatile. The day-to-day operations of energy-intensive industries are inextricably linked to energy prices, and these costs are often passed along to the consumer.
- For businesses: Energy price volatility creates risk and uncertainty for energy-intensive sectors. For example, fuel costs have been estimated at 24% of operating expenses for the global aviation industry in 2022;14 For cement, about 29% of the expense is spent on energy,15 and it cost more than $141 billion dollars to operate commercial buildings in the U.S. in 2018.16
- For households: 67% (25.8 million) of low-income households in the U.S. experienced a high energy burden in 2017, defined as spending more than 6% of their income on energy expenses, and 15.4 million of those experienced a severe energy burden, defined as spending more than 10% of their income on energy expenses.17 These burdens are felt disproportionately by certain households. Half of low-income multifamily residents; 36% of Black, Native American, and older adult households, 30% of renters, and 28% of Hispanic households experience a high or severe energy burden, compared to 23% of White non-Hispanic and 6% of non-low-income households. Two in every five low-income households experienced severe energy burdens. In 2020, roughly one quarter of U.S. households reported reducing or forgoing necessities such as food or medicine to pay an energy bill, 12% reported leaving their home at an unhealthy temperature, and 12% reported receiving disconnect or delivery stop notices due to inability to pay. 18
EIA (2019), State Energy Data System; FRED (2019), GDPDEF
ACEEE (2019), Understanding Energy Affordability
As is shown, all five metrics track exactly with household income. The five metrics being: Households reporting any household energy insecurity, reducing, or forgoing food or medicine to pay energy costs, leaving the home at unhealthy temperature, receiving disconnect or delivery stop notice, unable to use heating equipment, and unable to use air-conditioning equipment. All show the same pattern.
- EIA (2022), Monthly Energy Review
- Census Bureau (2019), U.S. and World Population Clock
- The World Bank (2022), GDP – United States, World
- EIA (2019), FAQs: What is the United States’ share of world energy consumption? We note that 2019 is the most recent year of global energy demand available.
- Climate Watch (2019), Global Historical Emissions
- EIA (2021), FAQs: How much oil is consumed in the United States?
- EIA (2021), Coal Explained
- EIA (2021), Natural Gas Explained
- EIA (2021), Electricity Data Brower
- EIA (2021), FAQs: How much energy does a person use in a year?
- EIA (2022), October Monthly Energy Review
- EIA (2022), Primary Energy Consumption, Energy Expenditures, and Carbon Dioxide Emissions
- EIA (2022), Where Greenhouse Gases Come From
- International Air Transport Association (2022), Fuel Fact Sheet
- N.A. Madlool, R. Saidur, et al. (2011), A critical review on energy use and savings in the cement industries
- EIA (2022), CBECS Survey
- ACEEE (2020), How High Are Household Energy Burdens?
- EIA (2022), Residential Energy Consumption Survey – Household Energy Insecurity