Foreign Policy Blogs

Energy Efficiency for Fun and Profit

"Half the cuts in greenhouse gas emissions needed to make the world safe can be achieved at a net profit to the global economy, a study has found."  That's how this article from today's "Financial Times" leads.  (The threshold for "safe" is the 550 ppm of carbon dioxide in the atmosphere that the IPCC posits is the limit.  That's about double the amount we had prior to the Industrial Revolution.)  Ceres, a coalition of institutional investors, commissioned the report by the McKinsey Global Institute.   Ceres's president is quoted in the article:  "Efficiency is the fastest, cheapest way to reduce greenhouse gases and could bring large profits to the global economy."  This graphic from the Swedish energy group, Vattenfall, underscores her contention.


You can access the full report online from the MGI – Curbing Global Energy Demand Growth: The Energy Productivity Opportunity.  You'll find not only the report there, but a slideshow as well and a pretty good video from a recent event in which New Mexico Governor Bill Richardson, former US Secretary of Energy and recent presidential aspirant, is the keynote speaker and Diana Farrell, director of the MGI, presents the findings from their report.  There's a good panel of experts discussing this after Farrell's presentation.

The report asserts that "targeted policies can overcome the policy distortions and market imperfections that are currently acting as barriers to capturing higher levels of energy productivity."  They go on to say "The obstacles that thwart improvements in energy productivity include information gaps, market-distorting subsidies, an inadequate financing infrastructure, and misaligned incentives. To overcome such barriers, policy makers must terminate distorted policies, make the price and use of energy more transparent, create new market-clearing and financing mechanisms, and selectively implement demand-side energy policies (such as new building codes and appliance standards) while also encouraging demand-side innovation by companies."  In the category of "market-distorting subsidies" they might include the billions in dollars in tax breaks currently be enjoyed by the oil and gas industry and the eye-popping subsidies being given to ethanol production. 

This is hugely useful information and policy makers everywhere should embrace it.  The new energy law from Congress does incorporate a good number of important initiatives that the MGI report endorses.  Mile to go, though, miles to go



Bill Hewitt

Bill Hewitt has been an environmental activist and professional for nearly 25 years. He was deeply involved in the battle to curtail acid rain, and was also a Sierra Club leader in New York City. He spent 11 years in public affairs for the NY State Department of Environmental Conservation, and worked on environmental issues for two NYC mayoral campaigns and a presidential campaign. He is a writer and editor and is the principal of Hewitt Communications. He has an M.S. in international affairs, has taught political science at Pace University, and has graduate and continuing education classes on climate change, sustainability, and energy and the environment at The Center for Global Affairs at NYU. His book, "A Newer World - Politics, Money, Technology, and What’s Really Being Done to Solve the Climate Crisis," will be out from the University Press of New England in December.

Areas of Focus:
the policy, politics, science and economics of environmental protection, sustainability, energy and climate change