Report Finds Increasing Energy Efficiency in Buildings by 30 Percent Would Free $275 Billion

Energy efficiency is a good business decision for businesses, homeowners and the government, says John Mandyck, chief sustainability officer, UTC Climate, Controls & Security, at the recent Energy Efficiency Global Forum 2013 in Washington, D.C.

United Technologies Corp., in collaboration with the Rhodium Group, analyzed the impact of a 30 percent improvement in U.S. building efficiency by 2030 in a new report, “Unlocking American Efficiency: The Economic and Commercial Power of Investing in Energy Efficient Buildings”. According to the findings, improving energy efficiency in buildings by 30 percent would create a $275 billion market for advanced technology, engineering and design services, and construction activity in the U.S. alone—that’s larger than the total U.S. advertising market.

The energy savings would generate $34 billion per year for American businesses, net of investment expenses, that could be passed on to consumers or used to hire more employees or invest in R&D or expanded production. Households would save an additional $23 billion per year that they could use to save for the future, invest in education, or spend on consumer goods or personal services. And federal, state and local governments in budget-constrained times would save more than $8 billion annually, equivalent to funding the National Science Foundation or nearly all of the annual budget for the U.S. Environmental Protection Agency.

“Energy efficiency has played an important role in American productivity and environmental protection. Now building efficiency is a pivotal investment strategy to free an estimated $65 billion in annual cash flow for households, businesses and governments across the country,” Mandyck says. “Improving the energy efficiency of buildings increases the productivity of existing assets, guards against future energy price hikes and offers some of the most attractive rates of return available today.”

In the residential sector, the report determined that achieving a 30 percent efficiency improvement in existing residential buildings would require investing $115 billion in energy-efficient technology and design. This investment would more than pay for itself in energy cost savings, additionally generating an estimated improvement in average household cash flow of $163 a year, equal to the average annual household spend on fresh vegetables.

The 32-page report, which addresses America’s efficiency opportunity, raising household income, the global market opportunity and policy recommendations, was prepared by the Rhodium Group, which combines policy experience, quantitative economic tools and on-the-ground research to analyze global trends.

“The first step in improving energy efficiency in buildings is letting building owners, tenants and investors know the scale of the opportunity at hand. Americans spent an estimated $432 billion to power their homes, stores and offices in 2011. That’s on par with what U.S. businesses spend on employee health insurance and more than they pay in payroll taxes,” Mandyck adds.

Smart policy can serve as a catalyst for the investment in building-efficiency solutions and includes such things as building labels and codes, effective standards, efficiency finance, portfolio standards and regulatory reform.

Learn more about UTC Climate, Controls & Security or download the report.