Investments in Energy efficiency
According to a recent study by McKinsey, a consultancy, the world could save over half of the greenhouse gases, and get an investment return of 17% if it were to invest heavily in energy efficiency (an easy step to take, as compared to investments in alternative energy sources, for example). They estimate "that investment in energy efficiency of about $170bn a year worldwide would yield a profit of about 17 per cent, or $29bn", according to an article from Financial Times.
"It estimated the energy saved from such efficiency measures would be equivalent to 64m barrels of oil a day, while the cost would amount to about 0.4 per cent of GDP. Diana Farrell, director of the McKinsey Global Institute, said: “It shows just how much deadweight loss there is in the economy in energy use.”
She said the most inefficient sector was heavy industry in China, with the second residential housing in the US, where homes are large, poorly insulated and equipped with a range of appliances that are often themselves inefficient or poorly used, such as air-conditioning systems left on unnecessarily.
Mindy Lubber, president of Ceres, a coalition of institutional investors that commissioned the report ahead of a meeting on clean technology investment at the UN on Thursday, said: “This is the message financial leaders need to hear: there is huge opportunity [in energy efficiency] and those moving money around are going to make the difference in this.
“Efficiency is the fastest, cheapest way to reduce greenhouse gases and could bring large profits to the global economy,” she said.
Companies and individuals have shown little willingness to invest in energy efficiency in the past. But McKinsey said rising energy prices were providing a spur to both business and households. Ms Lubber said institutional investors were seeking more energy-efficient property portfolios.
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