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Low Natural Gas Price to Hamper U.S. Energy Efficiency, IEA Says

By: Mathew Carr |

Low natural gas prices will hamper the U.S.’s incentive to continue spending on energy-efficiency projects, according to the International Energy Agency.

Cheaper prices “make it more difficult to sustain and increase ratepayer spending levels as consumers see the energy efficiency surcharge on bills growing even as commodity costs are going down,” the Paris-based adviser to 28 developed nations said today in an e-mailed report. “This combination could create opposition by some utilities and regulators.”

While the amount of energy used in the U.S. per $1,000 of economic output fell 4.8 percent last year, it was still 15 percent above the group’s average, according to the IEA. Programs will combine to more than triple energy savings to 2020 from 2011 levels, making the U.S. one of the most efficient of IEA members, it said.

“Having accomplished a solid decade of often double-digit growth, U.S. energy-efficiency markets have grown from a footnote to a force to be reckoned with,” the IEA said. “Since U.S. energy-efficiency markets derive largely from federal and state policies, they are particularly vulnerable to political and economic developments.”

Next-month gas on the New York Mercantile Exchange fell to an average of $2.83 per million British thermal units last year, down from $4.03 in 2011. The mean cost in the U.K., Europe’s biggest market, was the equivalent of $9.48 in 2012 on the ICE Futures Europe exchange.

The U.S. needed 0.158 metric tons of oil equivalent energy per $1,000 of economic output last year, down from 0.1657 tons in 2011, according to the IEA. That compares with 2011 usage of 0.117 tons in the EU and 0.266 tons in China.

Oil Imports

Improved efficiency and increased domestic crude production will cut U.S. oil imports by almost 50 percent by the end of the decade, the IEA said.

In China, the “complex” administrative system and a diverse array of targets including energy efficiency, carbon intensity and renewable generation present challenges to lawmakers, the agency said.

Efficiency measures saved the equivalent of 570 million tons of oil equivalent, worth $420 billion, in 11 nations from 2005 though 2010, according to the report. Without those measures, consumers in the member countries would be using about two-thirds more energy than currently, it said.

Energy efficiency around the world drew investment of as much as $300 billion in 2011, a level on par with global investments in renewable energy or fossil-fuel power generation, the agency said.