Energy Efficiency 101

Energy efficiency improvements face some challenges with respect to both adoption, due to the energy efficiency gap, and efficacy, due to the rebound effect. These concepts are explained in the next section.The Energy Efficiency GapEven though consumers can often save money from investing in energy-efficient devices, research suggests that consumers do not tend to do so, leaving many apparent cost-saving investments on the table. This phenomenon is referred to as the “energy efficiency gap,” since investment in energy efficiency should theoretically be higher than it is today.In addition to the gap from a consumer perspective, which focuses on costs to individuals, there is also an efficiency gap from a societal perspective, which considers both private costs and external costs (such as the environmental costs of energy production). Society would generally benefit from investing in energy efficiency improvements when the sum of private and environmental costs of an energy-efficient inv...