April 20, 2012

A new report from the International Energy Agency outlines the broad benefits of energy efficiency, suggesting that its importantce extends well beyond the realm of energy.

“The failure to properly evaluate the benefits of energy efficiency likely results in underinvestment

in energy efficiency,” the authors wrote. “With estimates of GDP growth resulting from energy efficiency converging on around 1 percent, energy efficiency should be considered as part of mainstream economic policy rather than an energy issue only.”

The benefits authors Lisa Ryan and Nina Campbell spell out include fall into three broad categories:

• Individual-level benefits (improvements in health and well-being, poverty alleviation, increased disposal income);
• Domestic “sectoral” benefits to industrial, transportation, residential and commercial sectors (enhanced competitiveness and asset values);
• National benefits (job creation, reduced energy-related public expenditures, energy security); and
• international benefits (reduced greenhouse gas emissions, lower energy prices, better natural resource management, improved opportunities for development.

The report addresses Jevons paradox, a.k.a. “the rebound effect,” in which lower energy costs lead to increased consumption, wiping out the initial benefit.

While the effect is real, the authors write, dismissing energy-efficiency because of it “is an oversimplification of the dynamics at play and ignores the variety of benefits that flow from energy investments even where reduced consumption does not result.”

More at the IEA.