Energy efficiency means using less energy to perform the same task – that is, eliminating energy waste. It is the goal to reduce the amount of energy required to provide products and services. For example, insulating a home allows a building to use less heating and cooling energy to achieve and maintain a comfortable temperature. Installing LED lighting, fluorescent lighting, or natural skylight windows reduces the amount of energy required to attain the same level of illumination compared to using traditional incandescent light bulbs.
Energy efficiency harnesses technology to help avoid or reduce energy waste so that you can still turn on the lights, drive, or wash your clothes but use less energy doing so. It really all comes down to smarter energy use.
Improvements in energy efficiency are generally achieved by adopting a more efficient technology or production process or by application of commonly accepted methods to reduce energy losses.
Reducing energy use minimizes energy costs and may result in a financial cost saving to consumers if the energy savings offset any additional costs of implementing an energy-efficient technology. Reducing energy use is also seen as a solution to the problem of reducing greenhouse gas emissions.
According to the International Energy Agency, improved energy efficiency in buildings, industrial processes and transportation could reduce the world’s energy needs in 2050 by one third, and help control global emissions of greenhouse gases.
Energy efficiency brings a variety of benefits: reducing greenhouse gas emissions, reducing demand for energy imports, and lowering our costs on a household and economy-wide level. While renewable energy technologies also help accomplish these objectives, improving energy efficiency is the cheapest and often the most immediate way to reduce the use of fossil fuels. There are enormous opportunities for efficiency improvements in every sector of the economy, whether it is buildings, transportation, industry, or energy generation.
From the point of view of an energy consumer, the main motivation of energy efficiency is often simply saving money by lowering the cost of purchasing energy. Additionally, from an energy policy point of view, there has been a long trend in a wider recognition of energy efficiency as the “first fuel”, meaning the ability to replace or avoid the consumption of actual fuels. In fact, International Energy Agency has calculated that the application of energy efficiency measures in the years 1974-2010 has succeeded in avoiding more energy consumption in its member states than is the consumption of any particular fuel, including oil, coal and natural gas.
Energy efficiency and renewable energy are said to be the twin pillars of sustainable energy policy and are high priorities in the sustainable energy hierarchy. In many countries energy efficiency is also seen to have a national security benefit because it can be used to reduce the level of energy imports from foreign countries and may slow down the rate of energy at which domestic energy resources are depleted.
Moreover, it has long been recognized that energy efficiency brings other benefits additional to the reduction of energy consumption. Some estimates of the value of these other benefits, often called multiple benefits, co-benefits, ancillary benefits or non-energy benefits, have put their summed value even higher than that of the direct energy benefits. These multiple benefits of energy efficiency include things such as reduced climate change impact, reduced air pollution and improved health, improved indoor conditions, improved energy security and reduction of the price risk for energy consumers.
Methods for calculating the monetary value of these multiple benefits have been developed, including e.g. the choice experiment method for improvements that have a subjective component (such as aesthetics or comfort) and Tuominen-Seppänen method for price risk reduction. When included in the analysis, the economic benefit of energy efficiency investments can be shown to be significantly higher than simply the value of the saved energy.