How to Save Money for All Americans: Efficiency

As the new administration takes steps to roll back efficiency standards — regulating many commonplace technologies such as home appliances, fridges and freezers, and cars and trucks — federal data analyzed by RMI shows that efficiency measures have lowered costs for most Americans for decades.

On average, this century’s efforts to boost energy efficiency have saved Americans $1,000 annually. These savings extend a decades-long track record of waste reduction for the US economy. While national energy demand has remained steady since 2000, EIA data shows, GDP has grown by roughly 60 percent in real terms over that time. This trend — using less energy to make more wealth — stretches back to the 1970s. To generate a dollar of GDP today, the US economy consumes just a third of the energy it needed in the early 1970s.

Nationwide savings come from a vast mix of small but cumulative improvements in many of our commonly used technologies. Consider the light bulb. A regular LED bulb runs on less than a tenth of the electricity needed by an older incandescent. For a homeowner who chooses to swap out all their bulbs, the 90 percent reduction in electricity repeats every month, into the future.

Small gains add up. If all the houses in a city make a similar switch, overall demand for power can fall, thus reducing both energy consumption today and the need to build new energy infrastructure in the future. Technological innovation has delivered similar efficiency gains to many essentials of Americans’ daily lives, from air conditioners and washing machines, to cars and computers. Larger design improvements have also helped across the system, from efficient buildings to smart supply chains.

Reducing waste remains popular across political lines. Historically, both red and blue states rank among the top savers from energy efficiency efforts. Annual avoided costs from efficiency approach or exceed $1,500 per person in a dozen states, an even mix of blue and red, including Texas, Nevada, and Georgia.

Yet recent federal efforts to roll back standards suggest efficiency benefits are at risk of being politicized further. Five red states — politically all more conservative voting, including West Virginia, the Dakotas, and Nebraska — failed to see efficiency savings, due in part to pursuing less ambitious goals and/or investing relatively less in supportive policy.

The value of efficiency is only growing as the United States reckons with a new era of growth for electricity demand. Due to the growth of AI and data centers, as well as the electrification of vehicles and industry, US electricity demand is poised to rise. From grid-enhancing technologies  to virtual power plants, a suite of efficiency-boosting technologies offer a cost-effective way to minimize costly, new power plants — and a reminder that energy saved is more valuable than energy generated.