McKinsey report: Energy Efficiency is Big

McKinsey has just released a report on "Unlocking energy efficiency in the U.S. economy". The central conclusion:
Energy efficiency offers a vast, low-cost energy resource for the U.S. economy – but only if the nation can craft a comprehensive and innovative approach to unlock it. Significant and persistent barriers will need to be addressed at multiple levels to stimulate demand for energy efficiency and manage its delivery across more than 100 million buildings and literally billions of devices. If executed at scale, a holistic approach would yield gross energy savings worth more than $1.2 trillion, well above the $520 billion needed through 2020 for upfront investment in efficiency measures (not including program costs). Such a program is estimated to reduce end-use energy consumption in 2020 by 9.1 quadrillion BTUs, roughly 23 percent of projected demand, potentially abating up to 1.1 gigatons of greenhouse gases annually.
Meeting 2020 emissions targets at a net savings of $700 billion is pretty incredible - Joe Romm is understandably excited.

Of course, "significant and persistent barriers" are not to be overlooked - implementing energy efficiency opportunities invariably runs in to agency problems, market failures, and a host of other challenges - but overall this sounds like great news and a strong argument for pounding the drum on energy efficiency.

Update: Matthew Kahn at Environmental and Urban Economics is not convinced and doubts whether McKinsey would put its money where its mouth is. A few choice quotes:
So, my point is that if McKinsey is so confident about the rate of return they are predicting --- shouldn't they stop giving advice and actually open a business and start selling their product?
Talk is cheap, let's see some new innovative contracts from the smart guys at McKinsey!

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