Consumers Could Save $1 Trillion With Better Energy Efficiency Information

Policy changes and consumer education could help Americans save money while saving the environment.

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Over the past seven years, carbon emissions have fallen by 13 percent in the United States.

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More detailed information about the energy efficiency of household appliances and energy use data could help consumers save more than $1 trillion overall on their energy bills over the next 15 years, according to a report by the American Council for an Energy-Efficient Economy.

Energy efficient technologies currently available could further reduce the amount of energy the nation is projected to use by 20 percent, the report noted, shaving thousands off energy bills over the long term while also reducing pollution.

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"Imperfect information may be the most widespread barrier to energy efficiency," the report said. "A much more effective [appliance labeling program] would group products into categories based on efficiency (e.g. one to five stars)—an easy-to-understand approach that also motivates consumers to purchase highly rated products."

The report cited the increasing fuel efficiency in the auto industry as a good model for addressing broader energy efficiency issues, noting that "American cars can now go much farther on a gallon of gasoline, due in large part to uniform vehicle testing and labeling, fuel economy standards, and tax incentives."

"The report is spot on—existing technologies and anticipated technologies could be realized without significant support from the federal government or mandated programs," says Natalie Joubert, vice president of policy at the Consumer Energy Alliance, adding that more consumer education is crucial to furthering the goal of increasing energy efficiency.

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"Labeling programs such as EnergyStar have a certain saturation in the market, but there's much more that can be done to reach out to consumers," Joubert says.

The ACEEE offered more than a dozen other policy recommendations in its report, including the need to revise the corporate tax system to discourage energy waste. Currently, businesses are taxed on their profits and virtually all expenses are deductible—including energy costs—while capital expenses are depreciated.

That discourages investment in more energy efficient equipment, the report noted, since many companies are reluctant to replace equipment until it's fully depreciated.

Energy waste in the federal government was also highlighted in the report. The U.S. federal government is the largest single consumer of energy in the world, the report noted, with the annual tab for energy skirting the $15 billion mark. Many government facilities are old and technologically out of date and improving the energy of these facilities could significantly cut down on energy costs and ultimately save taxpayer money, according to the ACEEE report.

On a more micro level, another suggested policy change addressed the renter-landlord relationship. While the landlord usually purchases equipment such as heating and cooling systems, the tenant usually pays the tab for using it, providing little incentive for landlords to purchase potentially more expensive energy-efficient systems that ultimately reduce the energy use—and energy costs—of their tenants. A similar situation occurs with homebuyers and builders. Because homebuyers are the ones who ultimately pay the monthly utility bills, builders have limited incentive to improve the efficiency of the house, especially when it means additional construction costs.

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But making homes, rental properties and even businesses more energy efficient doesn't necessarily have to break the bank. According to CEA's Joubert, there's a misconception that energy efficient upgrades are expensive for consumers, when in fact, energy efficient building materials and appliances have become increasing affordable and accessible over time. Furthermore, consumers don't have to fork over big bucks to buy a top-of-the-line heating and cooling system to reduce their energy costs, she says. Simple things like installing window films to seal drafty windows can make a big difference, according to Joubert.