How to sell the energy efficiency market value proposition

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Sean Penrith is the executive director of Earth Advantage Institute. 

In the last five years, companies have realized that the quickest way to achieve a cleaner energy footprint is by reducing consumption.

Since 2007, over $6.5 billion in venture capital and private equity has been invested in energy efficiency enterprises. One of the most iconic structures in the world, the nearly 80-year-old Empire State Building in New York City, is getting a $550 million renovation to improve its energy efficiency by as much as 38 percent. The building will reduce its carbon footprint by 105,000 metric tons over the course of the next 15 years; it has already offset carbon equivalent to 750 acres of pine forests. Aside from the huge reduction in carbon emissions, the compelling part of this story is the fact that the retrofit has a return on investment of only 3 years. When fully realized, the building will save $4.4 million a year in energy. This massive market advantage is practically absent from many energy efficiency conversations today.

Commercial buildings in the United States account for roughly 18 percent of total energy use in the country. When combined with residences, that number is closer to 40 percent. According to U.S. Department of Housing and Urban Development, 418,000 permits were issued in 2011 for single-family homes and that number is predicted to grow in 2012. According to the American Housing Survey, there are over 130 million single-family homes in the United States. While more than two-thirds of homebuilders are incorporating at least some of the green building standards necessary to improve a home’s energy efficiency, there is clearly a long way to go before every home is green.