John A. Laitner

Productivity benefits of industrial energy efficiency measures

We review the relationship between energy efficiency improvement measures and productivity in industry. We review over 70 industrial case studies from widely available published databases, followed by an analysis of the representation of productivity benefits in energy modeling. We propose a method to include productivity benefits in the economic assessment of the potential for energy efficiency improvement. The case-study review suggests that energy efficiency investments can provide a significant boost to overall productivity within industry. If this relationship holds, the description of energy-efficient technologies as opportunities for larger productivity improvements has significant implications for conventional economic assessments. The paper explores the implications this change in perspective on the evaluation of energy-efficient technologies for a study of the iron and steel industry in the US. This examination shows that including productivity benefits explicitly in the modeling parameters would double the cost-effective potential for energy efficiency improvement, compared to an analysis excluding those benefits. We provide suggestions for future research in this important area.

Room for improvement: increasing the value of energy modeling for policy analysis

Abstract There are expanding national discussions on a critical number of energy-related issues ranging from the importance of reducing air pollution and greenhouse gas emissions to enhancing the nation’s energy security and moving towards a competitive electric utility industry. The complex interactions surrounding all of these issues have motivated the development of a relatively large number of energy-economic models to assist policy makers in the framing of appropriate policy directions. But how much do these models really inform the debate? The record of US model-based energy forecasting yields evidence that such models provide biased estimates that tend to reinforce the status quo, inadequately inform policy-makers about new market potential, and serve to constrain the development of innovative policies. This paper reviews some of the reasons for this conclusion and then explores the extent to which energy-economic models may reflect a more dynamic technological diffusion process that encourages new policy development.

Energy efficiency: rebounding to a sound analytical perspective

Abstract Recent controversy suggests that energy efficiency policies used to reduce carbon emissions might actually increase overall energy consumption. The result would be an unintended increase in carbon emissions. This paper examines the underlying issues of this so-called “rebound effect” from both a historical perspective and through the results of a recent macroeconomic analysis completed for the United States. Depending on the assumptions of income and price elasticities, as well as the supply/demand interactions within a macroeconomic model, the rebound effect might reduce overall savings by about 2–3% compared to a pure engineering analysis. In other words, an economy-wide, cost-effective engineering savings of 30% might turn out to be only a 29% savings from a macroeconomic perspective. Despite the impact of a rebound effect, the net result of energy efficiency policies can be a highly positive one.

Modeling technological change in energy demand forecasting: A generalized approach

Conventional economic modeling of energy demand has characterized technological choice as an investment decision driven primarily by the relationship between capital costs and operating costs. Yet the implementation of this approach has tended to yield unrealistically high estimates of the implicit discount rate governing investment decisions, particularly those involving energy efficient technologies. This result arises from incomplete specification of the process of technological choice and the diffusion of innovations. General models of diffusion include conventional costs as one set of factors among many others that influence the spread of new technologies. These more general models have been widely applied to the adoption of other new or improved products, and their use in energy demand forecasting would lead to more accurate and reliable projections. Modification of the forecasts would have policy implications. In particular, the cost of a strategy to reduce greenhouse gas emissions by encouraging more rapid diffusion of energy efficient technologies is likely to be considerably smaller than would be suggested by the conventional economic models.

Cost-effective reductions of non-CO2 greenhouse gases

Abstract To date, most of the focus on greenhouse gas emission reductions has been on energy-related CO 2 emissions. This is understandable since CO 2 emissions currently account for about 82 percent of the total US greenhouse gas emissions weighted by 100-year global warming potentials (EPA, www.epa.gov/globalwarming/publications/emissions, 2001a). 1 However, a number of analyses suggest that the non-CO 2 greenhouse gases included in the Kyoto Protocol—methane, nitrous oxide, and the high-GWP (global warming potential) gases (HFCs, PFCs, and SF 6 )—can make a significant contribution to cost-effective emission reductions for the US and other countries. Our current estimate for the US is a reduction in non-CO 2 emissions of 105 million metric tons of carbon equivalent (MMTCE) at

Emerging Industrial Innovations and the Availability of New Energy Efficiency Technologies

50/ton carbon equivalent in 2010. This paper provides a perspective on the current and projected emissions of greenhouse gas; outlines the potential methods for achieving emissions reductions for various sources; and summarizes several recent studies on the cost of reductions for the US and other countries. Although the paper does not specifically address the potential for reductions of these gases in individual countries outside the US and the European Union, its findings are generally applicable to many countries.

An integrated analysis of policies that increase investments in advanced energy-efficient/low-carbon technologies

The U.S. and the world face enormous energy challenges. Recent trends in world oil markets, including the emergence of China as a major contributor to global demand and continuing instability in the Middle East, bring new urgency to perennial concerns about oil dependence. At the same time, sustained price increases and extreme volatility in natural gas markets are prompting new concerns about this environmentally valuable fuel. Climate change and air pollution resulting from fossil fuel combustion are threatening human health and the future of our ecosystems. Finally, in the wake of the largest cascading power outage in North Americas history, urgent questions are being raised about the prospects for needed investment in an infrastructure that is essential to nearly every facet of modern life. Using energy more efficiently can help to address each of these concerns