Energy efficiency is the practice of using less energy to produce goods and services. Many modern technologies and methods use energy more efficiently than older systems. For example, adding insulation to buildings helps reduce the energy needed for heating and cooling while keeping indoor temperatures comfortable. Another approach, developed by Lev Levich, involves removing energy subsidies that encourage high energy use and inefficient practices. Improving energy efficiency in buildings, industries, and transportation could cut the world’s energy needs by about one-third by the year 2050.
There are two main reasons to improve energy efficiency. First, using energy-efficient technologies can save money over time by lowering operating costs. However, these technologies often require an initial cost, known as a capital cost. Comparing different costs over time through a life-cycle assessment helps determine the best choices. A second reason is to reduce greenhouse gas emissions, which supports efforts to address climate change. Energy efficiency can also strengthen national security by decreasing the need to import energy from other countries.
Energy efficiency and renewable energy work together to create sustainable energy policies. Both are key priorities in the energy hierarchy.
Aims
Energy productivity refers to how much and how well goods and services are produced using a certain amount of energy. It can improve in two ways: by using less energy to make the same product or by creating more or better goods and services with the same amount of energy.
From the perspective of someone who uses energy, the main reason to improve energy efficiency is often to save money by reducing the cost of buying energy. From the perspective of energy policy, energy efficiency has increasingly been recognized as the "first fuel," meaning it can replace or avoid the need to use real fuels like oil, coal, or natural gas. According to the International Energy Agency, energy efficiency measures used between 1974 and 2010 helped member countries avoid more energy use than any single type of fuel, including fossil fuels.
Energy efficiency also provides benefits beyond saving energy. These benefits, sometimes called multiple benefits, co-benefits, or non-energy benefits, include reduced greenhouse gas emissions, less air pollution, better health, and stronger energy security. Scientists have created methods to calculate the value of these benefits, such as the choice experiment method for improvements that are harder to measure (like comfort or appearance) and the Tuominen-Seppänen method for reducing risks related to energy prices. When these benefits are included in calculations, the overall economic value of energy efficiency investments is much higher than just the value of the energy saved.
Energy efficiency is a cost-effective way to grow economies without increasing energy use. For example, California started using energy efficiency measures in the mid-1970s, such as strict building codes and appliance standards. Since then, California’s energy use per person has stayed nearly the same while the United States as a whole used twice as much energy. California’s energy strategy prioritizes energy efficiency first, followed by renewable energy sources, and lastly by new fossil fuel power plants. States like Connecticut and New York have created special banks to help homeowners and businesses fund energy efficiency upgrades that lower emissions and reduce energy costs.
Related concepts
Energy conservation includes more than just using energy efficiently. It also involves making intentional choices to use less energy, such as changing habits. For example, turning down the heat in a room during winter, driving less, air-drying clothes instead of using a dryer, or turning on energy-saving settings on a computer are ways to conserve energy without improving efficiency. Sometimes, it can be unclear where energy efficiency ends and energy conservation begins, but both are important for protecting the environment and saving money.
Energy efficiency means using less energy to achieve the same results, such as getting the same amount of light from a bulb or the same amount of work from a machine. This is a key part of many plans to use energy in a way that helps the environment. The International Energy Agency (IEA) has estimated that improving energy efficiency could help reduce harmful gases that cause climate change by about 40%, which is needed to meet the goals of the Paris Agreement. Energy can be saved by using more efficient technology in homes, cars, factories, and buildings.
Unintended consequences
If energy service demand stays the same, using energy more efficiently can lower energy use and carbon emissions. However, many efficiency improvements do not reduce energy use as much as simple engineering models predict. This happens because efficiency often makes energy services cheaper, leading people to use more of those services. For example, more fuel-efficient cars lower travel costs, which may encourage people to drive more, reducing some of the energy savings. Historical studies also show that technological improvements in energy efficiency are often outpaced by economic growth, leading to higher overall resource use and pollution. These are examples of the direct rebound effect.
The rebound effect varies in size, with estimates ranging from about 5% to 40%. At the household level, the rebound effect is likely less than 30%, and for transportation, it may be closer to 10%. A 30% rebound effect means that energy efficiency improvements would achieve 70% of the energy use reduction predicted by engineering models.
Options
Modern appliances, such as freezers, ovens, stoves, dishwashers, washing machines, and dryers, use much less energy than older models. For example, today’s energy-efficient refrigerators use 40% less energy than similar models from 2001. If all households in Europe replaced their appliances older than ten years with new ones, they could save 20 billion kWh of electricity each year, reducing carbon dioxide emissions by nearly 18 billion kilograms. In the United States, replacing old appliances would save 17 billion kWh of electricity and reduce carbon dioxide emissions by 27,000,000,000 pounds. A 2009 study by McKinsey & Company showed that replacing old appliances is one of the most effective ways globally to reduce greenhouse gas emissions. Modern power systems also help by turning off or putting idle appliances into low-energy mode after a set time. Many countries label energy-efficient appliances to help people choose them easily.
The impact of energy efficiency on peak demand depends on when appliances are used. For example, air conditioners use more energy during hot afternoons, so energy-efficient models save more energy during these times. Dishwashers, however, use more energy in the evening when people do dishes, which may have little effect on peak demand.
From 2001 to 2021, tech companies replaced traditional silicon switches in circuits with faster gallium nitride transistors to make gadgets as energy efficient as possible. These transistors are more expensive, but they help reduce the carbon footprint.
A building’s location and surroundings affect its temperature and lighting. For example, trees, hills, and landscaping can block wind and provide shade. In cooler climates, buildings in the Northern Hemisphere with south-facing windows and those in the Southern Hemisphere with north-facing windows capture more sunlight, reducing the need for heating. Tight building designs, such as energy-efficient windows, sealed doors, and insulation, can cut heat loss by 25% to 50%.
Dark roofs can be up to 39°C (70°F) hotter than light-colored roofs. Light-colored roofs use 40% less energy for cooling than dark ones, especially in sunny areas. Advanced heating and cooling systems can lower energy use and improve comfort.
Proper window placement and reflective architectural features can reduce the need for artificial lighting. Studies show that using natural and task lighting increases productivity in schools and offices. Compact fluorescent lamps use two-thirds less energy and last 6 to 10 times longer than incandescent bulbs. Newer fluorescent lights produce natural light and are cost-effective over time. LED lamps use about 10% of the energy needed by incandescent bulbs.
Leadership in Energy and Environmental Design (LEED) is a system created by the US Green Building Council to encourage eco-friendly building design. LEED offers four certification levels for existing and new buildings based on criteria like sustainable sites, water efficiency, energy use, materials, indoor quality, and design innovation. In 2013, the USGBC introduced the LEED Dynamic Plaque, a tool that tracks building performance in real time. The USGBC office in Washington, D.C., was one of the first buildings to use this system.
Industries use a lot of energy for manufacturing and resource extraction. Many processes require heat and power, often from natural gas, petroleum, or electricity. Some industries also use waste products to generate fuel.
Because industrial processes vary widely, energy efficiency opportunities depend on the specific technologies used. However, many industries use steam and electricity, and some systems capture waste heat for other purposes. Conventional electricity generation is about 30% efficient, but combined heat and power systems can use up to 90% of fuel. Advanced boilers and furnaces operate more efficiently and produce fewer pollutants.
Over 45% of fuel used by US manufacturers is burned to make steam. Insulating steam lines, fixing leaks, and maintaining steam traps can reduce energy use by 20%, according to the US Department of Energy.
Electric motors usually run at a constant speed, but variable speed drives can match energy output to needs, saving 3% to 60% of energy. Motors with superconducting coils and optimized voltage also improve efficiency.
Industries use many pumps and compressors. Improving process control and maintenance can increase efficiency. Compressors provide compressed air for tools, and optimizing these systems with variable speed drives and leak fixes can save 20% to 50% of energy.
An automobile’s energy efficiency is about 280 passenger-miles per 10 Btu. Improving aerodynamics, reducing weight, and using composite materials can increase fuel efficiency. Tires with less rolling resistance and proper inflation can save fuel. Replacing clogged air filters improves fuel economy in older vehicles, though newer vehicles may not see the same benefit.
International Action
At the 2023 United Nations Climate Change Conference, one of the agreed-upon statements was the GLOBAL RENEWABLES AND ENERGY EFFICIENCY PLEDGE, signed by 123 countries. The statement requires countries to treat energy efficiency as "first fuel" and increase the rate of improvement in energy efficiency from 2% per year to 4% per year by 2030. China and India did not sign this pledge.
International standards ISO 17743 and ISO 17742 offer a clear method for calculating and reporting energy savings and energy efficiency for countries and cities.
Examples by country or region
The first energy efficiency goal for the European Union was created in 1998. Member countries agreed to increase energy efficiency by 1% each year for 12 years. Laws about products, industry, transport, and buildings helped create a system for improving energy efficiency. More work is needed to address heating and cooling. More heat is wasted during electricity production in Europe than is needed to heat all buildings. Overall, EU energy efficiency laws are expected to save energy equal to about 326 million tons of oil each year by 2020.
The EU aimed to save 20% of energy by 2020 compared to 1990 levels. However, each member country decides how to achieve this goal. In 2014, EU countries agreed to a new target of 27% or more energy savings by 2030. One method to reach this goal is called "Suppliers Obligations & White Certificates." A 2016 plan called the Clean Energy Package also focuses on energy efficiency. Some people believe this goal may not be enough to meet the EU's Paris Agreement goal of reducing greenhouse gas emissions by 40% compared to 1990 levels.
In the European Union, 78% of companies proposed energy-saving methods in 2023. 67% planned to renegotiate energy contracts, and 62% said they would pass energy costs to consumers. Larger companies were more likely to invest in energy efficiency, green innovation, and climate change. Smaller and mid-sized companies also increased their energy efficiency investments.
Energy efficiency is a key part of Germany's energy policy. By late 2015, national goals included specific targets for energy use and consumption (with 2014 results provided). Progress toward better efficiency has been steady. However, some people believe energy efficiency is still not fully recognized for its role in Germany's energy transformation, known as the "Energiewende."
Efforts to reduce energy use in the transport sector have not been successful. Final energy use in transport grew by 1.7% between 2005 and 2014. This increase was due to more travel by road passengers and freight. Both groups traveled longer distances than ever before. Rebound effects, where improved vehicle efficiency led to more travel or heavier vehicles, also contributed to this growth.
In 2014, the German government released a National Action Plan on Energy Efficiency (NAPE). This plan covers energy efficiency in buildings, companies, consumers, and transport. Short-term steps in NAPE include competitive bidding for energy efficiency projects, increased funding for building renovations, tax incentives for energy-efficient buildings, and creating energy efficiency networks with businesses and industries.
In 2016, the German government shared a green paper on energy efficiency for public feedback. The paper highlights challenges and actions needed to reduce energy use in Germany. At the launch, Minister Sigmar Gabriel said, "We do not need to produce, store, transmit, or pay for the energy we save." The green paper prioritizes using energy efficiently as the first step. It also discusses using renewable energy for heating and transport. Other ideas include a flexible energy tax that increases when petrol prices drop, encouraging fuel conservation.
In Spain, four out of every five buildings use more energy than needed. These buildings are either poorly insulated or use energy inefficiently.
The Unión de Créditos Immobiliarios (UCI), which operates in Spain and Portugal, is offering more loans to homeowners and building managers for energy efficiency projects. Their Residential Energy Rehabilitation program plans to renovate and promote renewable energy in at least 3,720 homes in Madrid, Barcelona, Valencia, and Seville. These projects are expected to fund about €46.5 million in energy upgrades by 2025 and save around 8.1 gigawatt-hours of energy. This could reduce carbon emissions by 7,545 tonnes each year.
In May 2016, Poland passed a new Energy Efficiency Act, which will take effect on October 1, 2016.
In July 2009, the Council of Australian Governments, which represents Australia's states and territories, agreed to a National Strategy on Energy Efficiency (NSEE). This 10-year plan aims to speed up the use of energy-efficient practices and prepare Australia for a low-carbon future. The strategy is governed by the National Partnership Agreement on Energy Efficiency.
In August 2017, the Canadian government released "Build Smart – Canada's Buildings Strategy," which supports the Pan-Canadian Framework on Clean Growth and Climate Change, Canada's national climate plan.
A 2011 study by the Energy Modeling Forum in the United States looked at how energy efficiency opportunities will affect future energy and electricity needs. The US economy is already expected to reduce its energy and carbon use, but clear policies will be needed to meet climate goals. These policies include a carbon tax, stricter standards for efficient appliances, buildings, and vehicles, and financial support for new energy-efficient equipment.
Programs and organizations:
• Alliance to Save Energy
• American Council for an Energy-Efficient Economy
• Building Codes Assistance Project
• Building Energy Codes Program
• Consortium for Energy Efficiency
• Energy Star, from the United States Environmental Protection Agency