Energy Efficiency Is an Imperative for Climate Change Adaptation

There are two common ways climate change enters the public discourse in the United States: heated political rhetoric or targeted campaigns for increased investment in renewable energy. The problem is that while shifting away from fossil fuels is critical, energy efficiency—a significant opportunity to combat greenhouse gas (GHG) emissions—is often overlooked. Redefining the relationship between commercial buildings and energy is fundamental for tackling climate change because these facilities are not only contributing about 40% of the GHG emissions in the United States, but also are strikingly inefficient. Here are two reasons energy efficiency can move the needle on the fight against climate change and circumvent the political boondoggle.

Energy Efficiency Makes Economic Sense

The bottom line is that customers adopt technology and behavior changes that reduce costs or generate new revenue. Energy efficiency is straightforward. Take a simple scenario for a commercial building owner—the improvement in equipment performance (say a more efficient air conditioning unit) results in lower utility bills. The benefits are magnified when you start to consider the effects on the climate associated with energy efficient technologies.

In July 2016, a Guidehouse report was published for the U.S. Department of Energy. It provides a deep dive into the specifics of how the economic benefits of energy efficiency could be a revenue stream for deeper climate mitigation strategies. The report states that, “Given that energy costs account for the majority of lifecycle air conditioning costs, energy efficiency improvements can more than offset increases in upfront purchase costs to consumers that could result from switching to hydrofluorocarbon alternatives (refrigerants with lower global warming potential).” 

Energy Efficiency Provides a Robust Sustainability Strategy

Corporations are facing significant demand from shareholders and customers to address climate change. In fact, in late July, major corporate shareholders sent a collective letter to the U.S. Securities and Exchange Committee (SEC) demanding clarity on the material risks of climate change: “Based on our experience with these issues, we (45 investors representing $1.1 trillion in assets under management) believe it is critical for the SEC to improve reporting of material sustainability risks in issuers’ SEC filings, both because such disclosure is mandated by current law and because we need it to make informed investment and proxy voting decisions.”

There are two sides to the relationship between energy and climate change. The transformation of supply with renewables is important and will help shift the economy away from the fossil-fuel based generation people have relied on for hundreds of years. Let’s not forget the demand side of the equation. Changes in the way people operate equipment, utilize innovative technologies (such as automation and software), and direct behavioral modification can reduce carbon emissions while benefiting the economy. Guidehouse Insights captures this dynamic relationship between energy supply and demand with ongoing thought leadership on the concept of the Energy Cloud—this is the transition from one-way power flow to a dynamic network of networks supporting two-way energy flows at the periphery of the grid. Buildings have a huge role to play in this new reality, as commercial buildings represent new business opportunities, tackle climate risk, and see broad business results. Energy efficiency can be the foundation of this new reality.