PAGE 1 | Scaling Up Energy Efficiency: Saving Money, Creating Jobs, and Slashing Emissions

Scaling Up Energy Efficiency: Saving 

Money, Creating Jobs, and Slashing Emissions

ISSUE BRIEF

Energy efficiency is a proven resource with significant potential to dramatically reduce power plant 

emissions and to do so at low cost. Power plants represent 40 percent of the nation’s total climatechanging pollution. NRDC’s innovative proposal to slash this pollution, Closing the Power Plant Carbon 

Pollution Loophole, illustrates this potential. Meanwhile, more than half of U.S. states have already made 

commitments to achieving aggressive levels of energy savings, and several have demonstrated it is 

possible to quickly ramp up the infrastructure necessary to cut carbon pollution on a large scale.

MARCH 2013

IB: 13-02-B

Efficiency Offers Huge Potential 

for Energy and Cost Savings

Significant cost-effective energy efficiency remains untapped 

in every sector, and in every geographic region, despite 

the opportunities for enormous benefits. A McKinsey & 

Company study shows that investments in efficiency could 

cut U.S. energy consumption by 23 percent by 2020, save 

customers nearly $700 billion, and create up to 900,000 

direct jobs (plus countless more when consumers spend 

their savings elsewhere).1

 Figure 1 illustrates the magnitude 

of options available to save energy (such as sealing leaky 

buildings and upgrading to more efficient appliances) and 

money if efficiency—our cheapest available resource—

replaces conventional power sources. 

http://www.nrdc.org/energy/scaling-up-energy-efficiency.asp
PAGE 2 | Scaling Up Energy Efficiency: Saving Money, Creating Jobs, and Slashing Emissions

Several other studies show equal or greater promise for costeffective savings. However, no one knows the upper limit 

because design biases found in most existing studies make 

even their sizeable projections low. In addition, as companies 

innovate and produce more advanced products, they will 

develop new cost-effective applications to improve energy. 

To date, we have not come close to capturing the immense 

capacity for cost-saving efficiency. Market barriers impede 

the consumer’s ability to make energy-efficient choices, and 

outmoded regulatory approaches in many states discourage 

utilities from investing in efficiency despite it being 

generally cheaper and less risky than financing power plants. 

Fortunately, we can overcome these obstacles with energysaving programs, minimum-efficiency standards, research 

and development, and regulatory reform. Putting these 

policies and programs in place will allow the United States to 

reach the efficiency targets integral to the Natural Resources 

Defense Council’s (NRDC) groundbreaking proposal, which 

calls for states and the federal government to partner in 

setting new carbon pollution standards to cut emissions from 

existing power plants by 26 percent from 2005 levels by 2020. 

The NRDC plan also provides a strong driver for states to 

require utilities to invest more in the low-cost, non-emitting 

efficiency resource.

Energy Efficiency is a Proven Resource

Energy efficiency can provide the equivalent of at least 

10 to 20 percent of total electricity sales within a decade. 

Efficiency can also lower a utility’s cost of providing service 

while diversifying its portfolio, improving service reliability, 

and reducing its risk. Several states and planning regions, 

including those cited in the following section, already treat 

efficiency as a resource by explicitly including it in their 

planning and procurement processes in a way that directly 

reduces the need for other dirtier power supplies. 

The Northwest 

Energy efficiency is at the core of the blueprint guiding the 

operation and procurement of electricity resources in the 

Pacific Northwest region of Washington, Oregon, Idaho, and 

Montana served by the Bonneville Power Administration 

(BPA) and individual utilities. Developed by the Northwest 

Power and Conservation Council (NWPCC), the plan finds 

Figure 1: U.S. Energy Efficiency Supply Curve — 2020

Hydropower

46%

Petroleum &

Petroleum Coke

<1%

Biomass

Wind 1%

4%

Nuclear

4%

Natural Gas

11%

Geothermal

<1%

Energy

Efficiency

16%

Coal

18% Based on Estimate of 2010 Actual

Resource Dispatch/Contribution

1.4

1.2

AZ

IL

OH

Modified from: Northwest Power and Conservation Council

Figure 2: Energy Efficiency is the Northwest Region’s 

Third-Largest Resource
PAGE 3 | Scaling Up Energy Efficiency: Saving Money, Creating Jobs, and Slashing Emissions

that cost-effective efficiency can meet 85 percent of new 

demand over the next 20 years and, combined with more 

renewable energy, could delay investments in future fossilfuel power plants.2 The NWPCC estimates energy efficiency 

is now one of the top three electricity resources in this region 

with some of the lowest electricity rates in the nation, having 

already avoided the construction of more than 10 to 12 large 

power plants (see figure 2).3

New England

The New England Independent System Operator’s (ISONE) long-term forecast projects that because of anticipated 

savings from energy efficiency, there will be no growth in 

electricity consumption and low growth in peak demand 

over the coming decade. The region’s six states invested 

$1.2 billion from 2008 to 2011 to boost efficiency, and they 

expect to leap to $5.7 billion between 2015 and 2021.4

 As a 

result, ISO-NE believes the region can defer 10 transmission 

upgrades once considered necessary to ensure reliability. 

Quick Scale-up is Possible

The ability to scale up energy efficiency quickly and 

significantly has already been established by several states 

not historically active in this area, and many are so confident 

of continued success that they have established savings 

requirements at levels of, or exceeding, a 2 percent annual 

reduction in electricity consumption, which is the amount 

envisioned in NRDC’s proposal to establish new carbon 

pollution standards for existing power plants. States can 

achieve this savings through efficiency programs and new 

appliance standards and building codes, so there is no need to 

achieve the full 2 percent from efficiency programs alone. Also:

n		 Utilities are scaling up customer-funded investments in 

electric efficiency programs nationwide, increasing from 

$2.7 billion in 2007 to nearly $7 billion in 2011, with a 

corresponding surge in energy savings.5

 

n	 More states are adopting significant energy-savings goals: 

22 states have targets higher than a 1 percent annual 

total load reduction (six are above 2 percent) and/or a 

requirement to pursue all cost-effective energy efficiency 

(see figure 3).6 

n	 Several states ramped up very quickly, going from zero 

or near zero to as much as 1 percent total annual load 

reduction in just three to four years. Some good examples 

are noted in figure 4. 

Even better news is that we are in no danger of tapping out 

energy efficiency as a resource. For instance, states with 

a long history of achieving high levels of energy and cost 

savings continue to increase them and make progress. Two 

good examples are Vermont and California, which more than 

doubled energy-efficiency savings between 2006 and 2010, 

with Vermont reaching 2.32 percent in total annual reductions 

in consumption, and California achieving 1.79 percent.7 Other 

regions and states, including the Pacific Northwest and New 

York, also have decades-long histories of significant costeffective energy savings with ever-increasing targets.

Figure 3: State Energy-Efficiency Savings Targets

Source: ACEEE 2012 Energy Efficiency Scorecard

States requiring that utilities implement all cost effective energy 

efficiency and/or that it be higher than 1 percent of their total annual 

electricity demand. National average in 2010 was 0.49 percent.

Oregon and Nevada saved more than 1 percent of their total annual 

electricity demand in 2010 despite lower policy requirements.
PAGE 4 | Scaling Up Energy Efficiency: Saving Money, Creating Jobs, and Slashing Emissions

Efficient Building Codes and Appliance

Standards Make Targets Easier to Reach

The targets and reported savings discussed in this paper 

are primarily from customer-funded efficiency programs. 

However, implementing more stringent residential and 

commercial building codes and appliance standards could 

roughly double those levels over time, making it easier to 

meet the goal in NRDC’s proposal to reduce emissions from 

existing power plants. Building codes are an important state 

policy for overcoming market barriers to greater efficiency 

in new buildings and those being renovated. Unfortunately, 

these codes are not evenly adopted or enforced nationwide. 

Meanwhile, America is seriously underinvesting in research 

and development that could help lay the foundation for 

more efficient building and appliance standards, even 

though standards are proven to be significant contributors 

to overall energy savings as has been demonstrated in the 

Northwest region (see figure 5) and in California. 

reaching our Energy-Efficiency and

Emission-Reduction Goals

Studies show the possibilities for reductions in electricity 

consumption are huge, available everywhere, and well within 

Figure 4: Efficiency Program Savings 

as Percent of Total Annual Load

Coal

18% Based on Estimate of 2010 Actual

Resource Dispatch/Contribution

1.4

1.2

1

0.8

0.6

0.4

0.2

0

2006 2007 2008 2009 2010 2011

% Total Annual Load

AZ

IL

OH

6,000

5,000

4,000

3,000

2,000

1,000

0

1978 1982 1986 1990 1994 1998 2002 2006 2010

Cumulative Savings (MWa)

■ Federal Standards

■ State Codes

■ NEEA Programs

■ BPA and Utility Programs

2006 2007 2008 2009 2010 2011

6,000

5,000

4,000

3,000

2,000

1,000

0

1978 1982 1986 1990 1994 1998 2002 2006 2010

Cumulative Savings (MWa)

■ Federal Standards

■ State Codes

■ NEEA Programs

■ BPA and Utility Programs

Figure 5: Since 1978 Utility and BPA Programs, Energy 

Codes and Federal Efficiency Standards Have Produced 

More than 5,000 MWa of Savings

Modified from: Northwest Power and Conservation Council

the range called for in NRDC’s innovative proposal to cut 

emissions from existing power plants. Energy-efficiency 

investments already have avoided the need for hundreds of 

large plants, and several states have proven we can quickly 

expand the infrastructure needed to contribute to largescale decreases in emissions. Serious commitments to more 

stringent building codes and appliance standards that are 

evenly adopted and enforced nationwide can roughly double 

those savings over time, proving that customer-funded 

efficiency programs are not the only available route to 

boosting energy efficiency in the immediate future. 

These tools, combined with regulatory reform addressing 

investment barriers, can help us dramatically expand energy 

efficiency now to combat climate change, save money, create 

jobs, and clean the air we breathe. 

Endnotes

1 McKinsey & Company, Unlocking Energy Efficiency in the U.S. Economy, July 2009, http://www.mckinsey.com/client_service/electric_power_and_natural_gas/latest_thinking/unlocking_energy_efficiency_in_

the_us_economy.

2 Northwest Power and Conservation Council, Sixth Northwest Conservation and Electric Power Plan, February 2012.

3 Tom Eckman, Progress Toward the 6th Plan’s Regional Conservation Goals, Northwest Power and Conservation Council, September 2011.

4 ISO New England, ISO on Background: Energy-Efficiency Forecast, December 12, 2012, http://www.iso-ne.com/nwsiss/pr/2012/ee_forecast_slides_final_12122012.pdf.

5 Consortium for Energy Efficiency, State of the Energy Efficiency Program Industry: Budgets, Expenditures and Impacts 2011, March 14, 2012.

6 American Council for an Energy-Efficient Economy, The 2012 State Energy Efficiency Scorecard, October 2012; Regulatory Assistance Project, RAP State Energy Efficiency Policy Inventory, 2011.

7 American Council for an Energy-Efficient Economy, The 2012 State Energy Efficiency Scorecard, October 2012.

For more information, please contact Sheryl Carter at scarter@nrdc.org

Natural Resources Defense Council, www.nrdc.org

Read more about NRDC’s plan for using the Clean Air Act to 

sharply reduce carbon pollution from existing power plants:

http://www.nrdc.org/air/pollution-standards/