Concerted efforts must be made to improve energy efficiency and reduce the carbon intensity of the world economy.

Economic competitiveness, energy security, and environmental considerations all argue for pursuing cost-effective end-use efficiency opportunities. Such opportunities may be found throughout industry, transportation, and the built environment. To maximize efficiency gains and minimize costs, improvements should be incorporated in a holistic manner and from the ground up wherever possible, especially where long-lived infrastructure is involved. At the same time it will be important to avoid underestimating the difficulty of achieving nominal energy efficiency gains, as frequently happens when analyses assume that reduced energy use is an end in itself rather than an objective regularly traded against other desired attributes.

Recommendations

Promote the enhanced dissemination of technology improvement and innovation between industrialized and developing countries. It will be especially important for all nations to work together to ensure that developing countries adopt cleaner and more efficient technologies as they industrialize.

Align economic incentives—especially for durable capital investments—with long-run sustainability objectives and cost considerations. Incentives for regulated energy service providers should be structured to encourage co-investment in cost-effective efficiency improvements and profits should be de-linked from energy sales.

Adopt policies aimed at accelerating the worldwide rate of decline in the carbon intensity of the global economy, where carbon intensity is measured as carbon dioxide equivalent emissions divided by gross world product, a crude measure of global well-being. Specifically, the Study Panel recommends immediate policy action to introduce meaningful price signals for avoided greenhouse gas emissions. Less important than the initial prices is that clear expectations be established concerning a predictable escalation of those prices over time. Merely holding carbon dioxide emissions constant over the next several decades implies that the carbon intensity of the world economy needs to decline at roughly the same rate as gross world product grows. Achieving the absolute reductions in global emissions needed to stabilize atmospheric concentrations of greenhouse gases will require the worldwide rate of decline in carbon intensity to begin outpacing worldwide economic growth.

Enlist cities as a major driving force for the rapid implementation of practical steps to improve energy efficiency.

Inform consumers about the energy-use characteristics of products through labeling and implement mandatory minimum efficiency standards for appliances and equipment. Standards should be regularly updated and must be effectively enforced

Needed actions

Governments, in a dialogue with the private sector and the S&T community, should develop and implement (further) policies and regulations aimed at achieving greater energy efficiency and lower energy intensity for a great variety of processes, services, and products.

The general public must be made aware, by governments, the media, and NGOs, of the meaning and necessity of such policies and regulations.

The S&T community should step up its efforts to research and develop new, low-energy technologies.

Governments, united in intergovernmental organizations, should agree on realistic price signals for carbon emissions, recognizing that the economies and energy systems of different countries will result in different individual strategies and trajectories, and make these price signals key components of further actions on reducing the carbon emissions.

The private sector and the general public should insist that governments issue clear carbon price signals.

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