Did You Know...

That with a commitment to energy efficiency, businesses around the globe have a fantastic opportunity to help avert a global climate crisis?

Around the world, energy is used in many simple, fundamental and diverse ways; for instance, heating, cooling, manufacturing, cooking and, of course, transportation.

Yet, many of us tend to think of energy only in terms of supply and demand. For example, we may worry about how long supplies of energy like oil, will last.

While some researchers believe that as much as two-thirds of the energy we currently use is wasted, Diana Farrell of the McKinsey Global Institute argues that a commitment to energy efficiency can effectively help avert a global climate crisis.

Here are the top five global priorities Farrell recommends:

  1. China's industries. Between now and 2020, China will account for one-third of global energy-demand growth, nearly half of which will come from its industrial sector. Farrell suggests that as much as the equivalent of six million barrels of oil a day might be saved with the right focus.
  2. Improving the efficiency of power stations in use. Farrell estimates that replacing the world's least efficient power stations with new high-efficiency plants could cut demand by another six million barrels of oil per day by the year 2020.
  3. China's residential and commercial buildings. Farrell states that constructing new buildings with world-class insulation standards and installing energy-efficient heating and cooling equipment would help reduce demand by the equivalent of four million barrels of oil daily.
  4. U.S. homes. If U.S. homes increased to the levels required in California or Europe, global residential energy demand in 2020 could decline by more than a third—the equivalent of nearly four million barrels of oil a day.
  5. Fuel subsidies. Farrell's suggested fifth and final priority is to reduce fuel subsidies. She believes these subsidies not only shield consumers from the true price of energy, but they also actually encourage over-consumption. Farrell estimates that reducing global fuel subsidies by 80 percent would reduce demand for road transportation fuel by 5 percent in 2020.

Despite the magnitude of the energy crisis the world faces, focusing on energy efficiency, whether implementing the McKinsey Global Institute's priorities, or not, can create dramatic reductions in energy usage—and reap benefits for our planet for generations to come. 

Sources:

Facing the Future, Energy Global Issues, Energy Issue in Depth. Available at: http://www.global-issues.net/In_Depth/energy1.htm

Farrell, D. "A Simple Plan to Cut Energy Demand Growth and Carbon Emissions" June 7, 2007, BusinessWeek. Available at: http://www.mckinsey.com/mgi/MGInews/businessweek/simpleplan.asp

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