Incentivizing Energy Efficiency across the American Economy

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Three major sectors of the American economy — industrial, residential, and commercial — are ripe for tremendous energy savings. McKinsey & Company estimates1 that by 2020, capturing the economy’s full efficiency potential will save $442 billion in energy costs and 300 megatons of CO2e in the industrial sector; $395 billion and 360 megatons of CO2e in the residential sector; and $290 billion and 360 megatons of CO2e in the commercial sector. The total possible savings in energy costs and greenhouse gas emissions are staggering: more than $1.1 trillion and 1,020 megatons of CO2e by the end of this decade.

Moreover, efforts at capturing energy efficiency potential could ripple extensively across the rest of the economy. McKinsey estimates that a $290 billion investment in labor-intensive efficiency measures could create between 500,000 and 750,000 jobs over the next decade. The Center for American Progress makes a similar estimation,2 suggesting that retrofitting just 40% of all commercial and residential buildings in the United States would produce 625,000 jobs over the next decade and $500 billion in investment to upgrade 50 million office buildings and homes. And these statistics do not include new jobs and markets created by the development of next-generation energy-efficient technologies and industries.

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