Greater U.S. Efficiency Can Counter Global Energy Chaos

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Much of the proposed energy response to Russia’s invasion of Ukraine has focused on increasing domestic oil and gas production. While helpful, another powerful tool that has not received enough attention is increasing energy efficiency in the United States.

Not only would greater home energy efficiency reduce the influence of Russian oil and gas on the United States, but it would also bring other important benefits to American consumers and the economy. Any strategy to counter Russia-induced energy chaos should place more emphasis on promoting energy efficiency at the national level.

Some have described how increasing domestic oil and natural gas production is critical to protecting US strategic interests. Although true, the impact may be overstated. Although the United States has become a leading oil producer and net exporter of oil, a significant portion of the oil purchased by Americans at the pumps and elsewhere continues to be produced overseas. Last year, for example, the United States imported 8.47 million barrels of oil per day, or 43% of national consumption. Going forward, imports are expected to continue even as domestic production increases due to various factors, including mismatches between the type of crude oil produced domestically and refining capacity in the United States. Increasing domestic production may help shift the share, but it will not remove the large presence of imported oil in US markets.

Greater energy efficiency, however, provides an important strategic complement to domestic production by helping to reduce the amount of oil and natural gas Americans must consume. Whether it’s better insulation of homes and commercial buildings, improved industrial processes, efficient HVAC systems, or more fuel-efficient vehicles – as well as more mundane actions such as tuning the engine and maintaining proper tire pressure – fuel efficiency saves energy with various related benefits.

Of particular note in today’s high price environment, energy efficiency helps reduce US consumers’ exposure to price volatility in international energy markets. When you need less energy to get to work or heat your home, spikes in international oil prices will have less of an impact on household spending. Reducing US energy demand through efficiency also helps reduce upward pressure on prices, which benefits all consumers. This reduces the amount of money U.S. consumers send overseas to foreign energy providers, improving the U.S. balance of trade through lower imports while improving household energy budgets.

It is important to note that energy efficiency typically involves investments in domestic companies, from US manufacturers to more local service providers. The contractor who installs windows or efficient heat pumps is usually nearby. Spending locally to create jobs rather than spending on energy imports that fund foreign governments should have political resonance. Additionally, as Europe and other countries will need to invest more in their own energy efficiency for safety and climate reasons, the global market for energy efficiency products and know-how is expected to grow. . Promoting energy efficiency domestically can help US industry become a leader in these technologies, creating business opportunities around the world.

Home energy production is indeed a strategic asset for the United States, and home energy efficiency generates many similar gains. Additionally, it can help support Europe and other allies by increasing the amount of energy the United States has available for export, regardless of the level of domestic production. And by selling a greater share of domestic production overseas, not only will strategic partners benefit, but again the US trade balance will improve.

For some, the most important attributes of energy efficiency are climate benefits. The International Energy Agency (IEA) model consistently ranks energy efficiency as the top clean energy technology. For example, it drives 37% of the emissions reductions needed to meet the Paris Agreement’s “well below 2 degrees Celsius” temperature target – more than renewables, which weigh in at 32%. Greater energy efficiency in the United States offers a way to insulate wallets from price spikes while protecting people from increased fires, droughts and other damage that runaway climate change could cause. It would also improve air quality by reducing pollutants through less energy consumption.

Government programs within the Department of Energy and state-level agencies, as well as private sector companies, have been implemented to promote energy efficiency. Many offer financial support to households and industries to purchase energy efficient equipment, with the benefits to consumers and society far exceeding the costs.

Yet a much greater effort is needed to stimulate the much larger investments needed to tackle climate change. As shown in the IEA’s modeling, a fourfold increase in energy efficiency investment in the United States is needed by the 2030s, and a similar increase is required globally.

Given all these benefits, why not invest more in energy efficiency? The reasons are many and well known within the energy efficiency community. They understand an industry that lacks financial and political clout, especially compared to oil companies and other energy providers. Energy efficiency too, unfortunately, lacks appeal. While “Big Oil” geopolitics has captured the imagination for decades, installing insulation and other energy-saving stories are less compelling. Although energy efficiency may lack allure, its benefits are still too great to ignore, especially in today’s unstable world.

The United States needs greater energy efficiency to protect its consumers from foreign-induced energy chaos, whether it’s Russia’s invasion of Ukraine or unpredictable future events, even predictable.

Philippe Benoit has over 25 years of international business experience, including senior positions at the World Bank and the International Energy Agency. He is currently Research Director at Global Infrastructure Analytics and Sustainability 2050.

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