Energy productivity the profitable path to sustainable growth

As global energy consumption soars, and as greenhouse gas emissions grow, the world needs to find realistic ways to cut energy waste and to use our limited resources more wisely. New research indicates that practical investments in energy productivity – the amount of energy required to achieve a given level of economic output – can help the world continue its economic growth and ensure a sustainable energy future. Better still, the research indicates that these investments have a quick economic payoff, producing savings that cover the initial costs and provide an annual rate of return above 10 per cent.
Overall global demand for energy is projected to increase by 2.2 per cent annually through 2020, according to a new report by the McKinsey Global Institute. This pace is significantly faster than the 1.3-per-cent rate since 1980.

Although the global economy is becoming more efficient at using energy, achieving a 1-per-cent annual increase in its rate of energy productivity, that modest pace alone will not slow overall growth in energy demand – or the associated greenhouse gas emissions.

Yet opportunities for improving energy productivity exist across all sectors. The largest is in the residential realm. As much as 5 per cent of the world’s total projected demand could be eliminated by using technologies such as high-insulation building shells, compact fluorescent lighting, and high-efficiency water heating. And in the industrial sector – in such areas as chemicals, oil refining, and steel manufacturing – investments could reduce projected demand by 7 to 10 per cent. If we could realize all the sectors’ opportunities, we could reduce the world’s projected energy consumption by a remarkable 20 to 24 per cent.

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