Energy-efficiency programs are a kind of darling of energy policy experts. They claim to reduce carbon emissions and save money at the same time. Who could argue with that? And to date, market forces have identified plenty of attractive opportunities to reduce the amount of energy consumed per unit of GDP. That’s a big part of why energy demand growth has slowed in many developed markets.
But to reach global climate goals, most forecasters say we need to do much more than pick the low-hanging fruit. In fact, the International Energy Agency is betting on additional efficiency gains to account for one-third of needed carbon reductions through 2040. Yet, governments increasingly seem unwilling to place the same bets. In the U.S., governments and utilities spend just $3 billion annually on residential efficiency programs—a drop in the bucket compared with the $250 billion households spend on fuels like electricity and natural gas every year.
High expectations on the one hand, but few resources funneling into a limited number of programs on the other. Why the disconnect?
Here’s one possible answer: A mounting body of evidence suggests that many government-backed programs fail to deliver on the promise of a win-win—spelling big problems for efforts to confront climate change…