NEW YORK - According to a research report by McKinsey & Company, the application of energy efficiency measures across the U.S. economy has the potential to reduce annual non-transportation energy consumption by roughly 23 percent by 2020, eliminating more than $1.2 trillion in waste - well beyond the $520 billion upfront investment (not including program costs) that would be required. The reduction in energy use would also result in the abatement of 1.1 gigatons of greenhouse gas emissions annually - the equivalent of taking the entire U.S. fleet of passenger vehicles and light trucks off the roads.

Such energy savings will be possible, however, only if the United States can overcome significant barriers, noted McKinsey & Company. These barriers are widespread and persistent, and will require an integrated set of solutions to overcome them, including information and education, incentives and financing, codes and standards, and deployment resources well beyond current levels.

The report offers five observations on how best to pursue energy efficiency opportunities of the magnitude identified and within the timeframe considered. Specifically, an overarching strategy would need to:

• Recognize energy efficiency as an important energy resource that can help meet future energy needs while the nation concurrently develops no- and low-carbon energy sources.

• Formulate and launch at both the national and regional levels an integrated portfolio of proven, piloted, and emerging approaches to unlock the full potential of energy efficiency.

• Identify methods to provide the significant upfront funding required by any plan to capture energy efficiency.

• Forge greater alignment between utilities, regulators, government agencies, manufacturers, and energy consumers.

• Foster innovation in the development and deployment of next-generation energy efficiency technologies to ensure ongoing productivity gains.

For more information, visit www.mckinsey.com/clientservice/electricpowernaturalgas/US_energy_efficiency/index.asp.

Publication date: 08/17/2009