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Efficiency improvements could cut global energy demand significantly

Efficiency improvements could cut global energy demand growth significantly

Efficiency improvements could cut global energy demand growth significantly
November 29, 2006

Growth in global energy consumption could be reduced by more than two-thirds over the next 15 years through energy efficiency efforts according to a study released Wednesday by the McKinsey Global Institute.

McKinsey says that worldwide energy demand could grow at a rate of 2.2 percent per year, driven by growth in by developing economies, but that efforts to boost energy productivity could cut end-use energy demand 15 to 25 percent by 2020.

In order to do so, says the study, a number of factors currently impeding improvements in energy productivity — “market-distorting subsidies, information gaps, agency issues, and other market inefficiencies” — must be overcome. McKinsey notes that

Subsidies in many oil-exporting countries further distort prices and delay wider adoption of energy-saving measures, says the report.

McKinsey argues that energy productivity improvements will require “the removal of existing policy distortions; improving transparency in the pricing and usage of energy; and the selective deployment of demand-side energy policies, such as standards.” Further, the report says that policies will have to be tailored to end-users encourage more efficient energy use.

McKinsey’s report is titled “Productivity of Growing Energy Demand: A Microeconomic Perspective”. McKinsey & Company is a leading global consulting firm.


Energy efficiency helped California grow an extra $31 billion finds study
Environmental officials for the state of California and the Brazilian state of Sao Paulo have found significant evidence that greenhouse gas pollution can be substantially reduced at a profit rather than a cost. The study, commissioned by the William and Flora Hewlett Foundation, found that energy efficiency has helped the California economy grow an extra 3 percent – a $31 billion gain – compared to business as usual. Further, the researchers say that each Californian typically saved about $1,000 per year between 1975 and 1995 just through efficiency standards for buildings and appliances.

This article is based on a news release from McKinsey & Company.

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