Driven by Economics, Energy Efficiency Can Lead to New Energy Paradigm

In the absence of comprehensive climate legislation and with an EPA regulatory regime fast-approaching, businesses and state and federal governments will increasingly look towards efficiency measures as a means of both cutting costs and complying with emissions mandates. With support both from a wide range of political actors as well as cost-conscious businesses, efficiency measures have garnered a level of bipartisan support and may provide basis for future legislation in the next Congress. Today’s GR Insight analyzes the benefits of current efficiency programs, noting how both consumers and companies can benefit from applying energy saving techniques.

After the breakdown of legislative action on energy and climate change, businesses developing best practices on energy efficiency have a unique opportunity to drive what Washington will do when it makes another serious attempt at energy legislation.  Cost concerns and the “politics of the possible” are now driving the debate.  Lacking clear legislative guidance, companies that move ahead on energy efficiency can make the argument to policymakers that energy legislation should focus on piggy-backing off those efforts, rather than allowing “command-style” regulation force businesses to conform to a specific plan to meeting energy and climate goals.  Today’s GR Energy and Climate Brief concludes that given the options currently on the table, in the absence of climate legislation, energy efficiency offers the most attainable way for both producers and consumers of energy to reduce their carbon emissions and even profit in the short- to medium- term.  Even more important, there is an opportunity for business to get out from under the coming wave of EPA regulations by taking the lead and moving forward with a bold agenda on energy efficiency.

In a Resource Constrained Era, Cost Savings is Central

If the sclerotic nature of climate change policymaking in both the US and in international forums has proven anything, it is that transformations in how energy is produced and consumed will be more likely to succeed if they are based in self-interest, particularly achieving cost savings.  International negotiations have stalled  over continuing disputes regarding financing and growth, breaking down between developed and developing nations over responsibility for climate change, and thus responsibility for reducing carbon emissions—a debate that is at the core really about who pays for what, and who bears the biggest burden when it comes to emissions reduction.  In the US, proponents of climate legislation focused on the potential of clean energy to grow the economy and create jobs, but were unable to persuade skeptics in Congress to back carbon pricing, seen by many environmentalists as essential to reducing dependence on fossil fuels.  Partisan rancor, meanwhile, has made action on any sort of energy legislation, large or small, exceedingly difficult, discouraging investors in clean energy from putting their money in the US: a Deutsche Bank official noted earlier this week that capital for renewable energy investment would likely turn elsewhere without policies in place in the United States to promote renewable energy.

While the US continues to stall out on a policy approach, China offers a stark contrast in its approach to energy and climate policy  The government there has aggressively invested in renewable energy and limiting the growth of coal consumption, going so far as to begin work in creating a domestic carbon trading program in the next five years. 


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