US sees renaissance in energy efficiency, led by Congress and big business

A forklift driver zooms through a dark warehouse late at night. There are no lights on his machine pointing the way, yet intelligent light bulbs lining the ceiling flash on as they recognize the direction he's heading, then flash off as he passes on his way.

The scene is not science fiction to make FedEx giddy; it is one of the actual faces of energy efficiency in the United States today.

Whether it's intelligent lighting in warehouses nationwide, building codes in Massachusetts, or new federal gas-mileage standards, energy efficiency is enjoying a renaissance. Since conservation first entered the American consciousness in the 1970s – prompted by the energy crisis and the dawn of environmentalism – the nation has become dramatically more energy-efficient. But recent years have, by some measures, represented a high-water mark.

The passage of the federal Energy Independence and Security Act of 2007, which strengthened appliance and auto fuel-efficiency standards, was the biggest energy-efficiency measure "the country has ever adopted," says Kateri Callahan, president of the Alliance to Save Energy in Washington. Since then, the Obama administration has used tax incentives to encourage energy efficiency in homes and businesses. Even businesses themselves, seeing long-term savings, have begun to take the lead without Washington's prompting.

"We're definitely paying more attention to it," says Fred Fendt, the energy efficiency and conservation team leader for Dow Chemical Co. in Midland, Mich. "It's become a part of almost every corporate culture."

The general upward trend in energy efficiency has had a profound impact on the country. Without the advances, the US would consume 50 percent more energy each year than it currently does, according to the Alliance to Save Energy.

Data point to a clear change in energy efficiency beginning in the 1970s. Before that, for example, the amount of energy consumed (in British thermal units) per dollar of US gross domestic product had held fairly steady. In 1973, it stood at 15.41. But by 2010, it had fallen by more than half to 7.41.

Improvements have been across the board.

For its part, Congress has been able to find compromise on regulations to improve energy efficiency because the issue lies at the sweet spot among energy independence, economic security, and the environment, says Ms. Callahan of the Alliance to Save Energy. The very name of Congress's signature Bush-era measure – the Energy Independence and Security Act – speaks to its bipartisan appeal.

"No one wants to waste energy," Callahan says.

For business, the allure has been simple savings.

Hotels are installing smart air-conditioning units that shut off when a guest leaves an outside door open; fast-food chains are retrofitting their insulation; refrigeration warehouses are replacing hot incandescent lights with cooler LED ones.

"Those guys running forklifts, they're not in it for green-energy-save-the-world reasons," says Robert Day, a partner with Black Coral Capital in Boston and a leading figure in clean-tech investing. "They're in it because it makes dollars and cents."

Federal laws and tax incentives have provided a prod, but much of the credit also goes to economic forces. As energy costs have crept higher, businesses have been reevaluating how and when they use electricity and fuel. Suddenly, replacing old light bulbs with intelligent lighting has become a sensible way to cut costs, say energy experts.

The efforts go beyond the marketability of slapping a "green" label on a company. "During the past 10 to 15 years, we've really seen [energy efficiency] emerge, driven by cost issues," says Callahan. "Once you get into it, you see you can save money but also be a good corporate citizen. It's a win-win."

Yet the trends are not uniformly positive. The businesses emerging as leaders are typically large corporations that not only have capital but huge operations that can be streamlined. Many smaller businesses have yet to follow suit.

Moreover, some areas of the country, such as the South, have done little to improve energy efficiency, particularly when compared with regions like the Northeast and West Coast. Mississippi, for instance, has no energy-efficiency codes for appliances or buildings.

Some conservatives in Congress now want to repeal parts of the 2007 energy act, too.

The biggest problem, however, might be among consumers themselves. While appliances – and the houses they're in – have become vastly more energy-efficient, Americans have used those savings to buy bigger houses with more energy-eating appliances, resulting in no net improvement in household energy consumption per capita since 1970.

But there are some signs of change, especially at a time when a troubled economy is compelling many Americans to save money. Next Step Living in Boston helps homeowners maximize energy efficiency. Says owner Geoff Chapin: "Three years ago we were about four people, and now we're 220."