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Making US Industry More Competitive:Increasing Energy
Efficiency
Lester B. LaveElectricity Industry Center
Carnegie Mellon University
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USA
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High #is worst
Mark Levine, Lawrence Berkeley Lab
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Low #is worst
Mark Levine, Lawrence Berkeley Lab
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High #is worst
Mark Levine, Lawrence Berkeley Lab
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High #is worst
Mark Levine, Lawrence Berkeley Lab
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Low #is worst
Mark Levine, Lawrence Berkeley Lab
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High #is worst
Mark Levine, Lawrence Berkeley Lab
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McKinsey Analysis:$100 Bills on the Floor?
• McKinsey: Many projects have a negative cost of abating CO2 emissions
• Internal rate of return (IRR) of many energy efficiency projects is > 10%
• This implies that Companies are not making profitable investments – can this be?
• Ignorance, not SOP, don’t have $, don’t disrupt production, no managerial time
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Economists Vs. McKinsey• Companies make all profitable
investments!
• Consumers don’t – landlord vs. tenant, time horizon, ignorance, etc.
• California spends $700 million/yr to get efficiency increases – payback in 3 years
• Energy efficiency is not easy, simple or cheap – major investment in time & talent
• Need to pay utilities for conservation
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Per Capita Consumption of Electricity(not including on-site generation)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
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60
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62
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00
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02
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06
kW
h/p
ers
on
United States
California
Per Capita Income in Constant 2000 $1975 2005 % change
US GDP/capita 16,241 31,442 94%Cal GSP/capita 18,760 33,536 79%
New York
16Electricity use per person in California and in the USA
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Increasing Electricity Efficiency
• In generation:– Lowering heat rates
15,000 to 7,000 BTU/kWh
– Combined heat & power, distributed generation
• In use:– CFL, refrigerators, air
conditioners, etc.– Parasitic loads,
plasma TV– Automatic shutoff
switches
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Energy intensity (BTU/$) 1850-2006
0
10000
20000
30000
40000
50000
60000
year
BTU
/$
USA Energy Intensity (BTU/GDP) 1850-2006
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What is Sensible Policy?
• Is 1.1 cars per licensed driver enough?
2002 BTU/GDP BTU/pop GDP/pop
• Denmark 38 148 39
• Austria 55 171 31
• France 63 182 29
• Sweden 72 244 34
• USA 81 333 38
