Energy & Technology

Lighting Efficiency

Quick Facts

  • Lighting accounts for about 11 percent of energy use in residential buildings and 18 percent in commercial buildings.
  • Both conserving lighting use and adopting more efficient technologies can yield substantial energy savings. Some of these technologies and practices have no up-front cost at all, and others pay for themselves over time in the form of lower utility bills. In addition to helping reduce energy use, and therefore greenhouse gas emissions, other benefits may include better reading and working conditions and reduced light pollution.
  • New lighting technologies are many times more efficient than traditional technologies such as incandescent bulbs, and switching to newer technologies can result in substantial net energy use reduction, and associated reductions in greenhouse gas emissions. A 2008 study for the U.S. Department of Energy (DOE) revealed that using light emitting diodes (LEDs) for niche purposes in which it is currently feasible would save enough electricity to equal the output of 27 coal power plants.


Nearly all of the greenhouse gas (GHG) emissions from the residential and commercial sectors can be attributed to energy use in buildings (see Climate TechBook: Residential and Commercial Sectors Overview). Embodied energy – which goes into the materials, transportation, and labor used to construct the building – makes up the next largest portion. Even so, existing technology and practices can be used to make both new and existing buildings significantly more efficient in their energy use, and can even be used in the design of net zero energy buildings—buildings that use design and efficiency measures to reduce energy needs dramatically and rely on renewable energy sources to meet remaining demand. The Energy Independence and Security Act of 2007 (EISA 2007) calls for all new commercial buildings to be net zero energy by 2030.[1] An integrated approach provides the best opportunity to achieve significant GHG reductions because no single building component can do so by itself and different components often interact with one another to influence overall energy consumption (see Climate TechBook: Buildings Overview). However, certain key building elements can play a significant role in determining a building’s energy use and associated GHG emissions.

Lighting accounts for about 11 percent of energy use in residential buildings and 18 percent in commercial buildings, which means it uses the second largest amount of energy in buildings after heating, ventilation, and air conditioning (HVAC) systems (see Figure 1).[2]

Figure 1: Residential Buildings Total Energy End-Use (2008)

* This chart includes an adjustment factor used by the EIA to reconcile two datasets.

Source: U.S. Department of Energy,2010 Buildings Energy Data Book, Section 2.1.5, 2010.

Adjustments to lighting systems can be straightforward and achieve substantial cost savings. Consequently, addressing lighting can be a simple way to reduce a building’s energy use, and related GHGs, in a cost-effective manner. Reducing energy use from artificial lighting can be achieved in two ways:

  • Conservation

Conservation efforts minimize the amount of time that lights are in use and can include behavioral change, building design, and automation, such as timers and sensors.

  • Efficiency

Efficiency improvements reduce the amount of energy used to light a given space, generally using a more efficient lighting technology.


This section briefly describes some of the most common ways to reduce the amount of energy consumed by lighting systems. The following options illustrate a range of conservation options—from small adjustments in daily habits to larger building design elements—that can reduce the use of artificial lighting:

  • Behavioral Change

Turning off lights when they are not being used reduces energy use, GHG emissions from electricity, and utility bills. This practice may include turning off lights in unoccupied rooms or where there is adequate natural light. Adjusting artificial light output can also provide energy savings; for example, using task lighting (e.g., a desk lamp) rather than room lighting can reduce the number of fixtures in use, and dimmers allow lights to be used at maximum capacity when necessary and at low capacity when less light is needed, such as for safety lighting, mood lighting, or when some daylight is available.[3]

  • Technologies that reduce lighting use

Timers and sensors can reduce light usage to the necessary level; these options use technology to mimic the behavior described above. Sensors come in a variety of models that serve different purposes, and certain types of sensors and light fixtures are more appropriate together than others. For example, lamps that take a long time to start are not suitable for sensors that turn off and on frequently.

  • Occupancy sensors help ensure that lights are only on when they are being actively used. Infrared sensors can detect heat and motion, and ultrasonic sensors can detect sound. Both must be installed correctly to ensure that they are sensitive to human activity rather than other activity in the vicinity (such as ambient noise). Some estimates suggest that occupancy sensors can reduce energy use by 45 percent, while other estimates are as high as 90 percent.[4],[5]
  • Photosensors use ambient light to determine the level of light output for a fixture. For example, photosensors might be used to turn outdoor lights off during daylight hours.
  • Improving building design to maximize natural light

Building designs that incorporate a substantial amount of natural light also reduce the need for artificial lighting; in these cases, artificial light may become a supplement for use during the night or when otherwise needed. Architects and land planners can play a role by designing buildings to include skylights or windows and orienting these toward the south or west. Designers and building occupants can choose light paint colors that maximize reflectance, and they can orient furniture to take advantage of available light.

When addressing GHG emissions through building design, it is important to take a holistic approach that considers not just how design affects natural light, but also the heating and cooling requirements for the building. Increasing the amount of sunlight a building receives may also lead to high levels of heat intake, which can have important implications for the building’s HVAC system. For example, large windows that reduce artificial lighting might also result in heat gain that requires more air conditioning in warm climates, or the same heat gain in a colder climate might reduce the need for additional heating.[6] In some cases, special coatings on windows can help maximize or minimize solar heat gain, depending on the desired effect (see Climate TechBook: Building Envelope). Coordinating window selection, building design, and lighting effectively can result in maximum solar light intake with the desired level of heat intake.

When artificial lighting is necessary, choosing efficient technologies can effectively reduce electricity use and related GHG emissions. In choosing among the available technologies, it is important to consider several factors, including the quality of lighting needed, the frequency of use, and the environment in which the light is being used (e.g., indoor or outdoor). The following types of lighting and fixtures are most common in buildings:

  • Incandescent bulbs

These bulbs emit light when an electrical current causes a tungsten filament to glow; however, 90 percent of the energy used for the bulb is emitted as heat rather than light, making these bulbs the least efficient for most household purposes when evaluating them on a lumen (amount of light emitted) output to energy input basis. Halogen bulbs are a type of incandescent that are slightly more efficient than standard incandescent but less efficient than most other alternatives.

  • Compact fluorescent lamps (CFLs) and fluorescent tubes

These emit light when an electric current causes an internal gas-filled chamber to fill withTabg ultraviolet (UV) light, which is then emitted as visible light through a special kind of coating on the tube.[7] All fluorescent bulbs require a ballast, a component that regulates the current going through the lamp. Ballasts can be integrated into the bulb, as is the case for most CFLs (allowing them to be used interchangeably with most incandescent bulbs) or non-integrated, which require the ballast to be part of the fixture, as is the case for many fluorescent tubes used in schools and offices. Ballasts come in two varieties: magnetic (which are older and less efficient) and electronic (which are newer and much more efficient). Efficiency upgrades for fluorescent tube lights require consideration of the ballasts because they contribute significantly to the overall energy draw of the fixture.

Both CFLs and fluorescent tubes come in a variety of shapes, sizes, and efficiencies (see Figure 2 for a diagram of a typical CFL bulb).[8] They generally use 75 percent less energy than incandescent light bulbs.[9] A CFL produces between 50-70 lumens per watt, compared to the 10-19 lumens per watt for an incandescent bulb.[10] They are also long-lasting products, with a lifetime of 10,000 hours for CFLs and a lifetime of 7,000-24,000 hours for tubes.[11] Incandescent bulbs, by comparison, have a lifetime of 750-2500 hours.[12]

Figure 2: Diagram of a Compact Fluorescent Bulb

Source: U.S. EPA/ DOE Energy Star Program. “Learn About Compact Fluorescent Light Bulbs”

  • High-intensity discharge (HID) lamps

HID lamps come in several varieties with widespread applications. They emit light when a current—also regulated through a ballast—is passed between two electrodes on either end of a gas-filled tube. Mercury, sodium, or metal halide gas can be used, each with different color outputs, lifetimes, and applications. These types of lights are not appropriate for all types of areas and use; for instance, HID lamps have a long start-up period—up to ten minutes—and are best used in areas where lighting must be sustained for several hours (e.g., on sports fields or for street lights). In general, HID bulbs are 75-90 percent more efficient than incandescent bulbs and have a long lifetime, with metal halide and high-pressure sodium bulbs being far more efficient than mercury vapor bulbs.[13]

  • Low-pressure sodium

Though these types of lamps are among the most efficient available for outdoor use, they are only useful for certain applications because of their long start-up time, cool-down time, and poor color rendition.[14] Low-pressure sodium lamps are typically used for street or highway lighting, parking garages, or other security lighting. Because of their niche application, they are not typically considered as a substitute for other types of less efficient bulbs.[15] See Table 1 for a comparison of HID and low-pressure sodium lighting.

Table 1: Characteristics of High-Intensity Discharge and Low-Pressure Sodium Lighting Types


Efficacy (lumens/watt)

Lifetime (hours)


Mercury vapor (HID)




Metal halide (HID)




High-pressure sodium (HID)




Low-Pressure sodium





Source: U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy “High-Intensity Discharge Lighting.”;
“Low-Pressure Sodium Lighting.”

  • Light Emitting Diode (LED)

In light-emitting diodes, electrons and electron holes (atoms that lack an electron) combine, releasing energy in the form of light. This technology has been around for several decades, but many applications of LEDs for lighting have only recently become available commercially as improved color renditions have been developed and costs reduced. LED fixtures use 75-80 percent less electricity than incandescent bulbs, and can have a lifespan 25 times longer than incandescent light bulbs.[16] LEDs produce in the range of 27-150 lumens per watt, depending on the type of LED.10 LEDs have small, very bright bulbs and because of their size, LED fixtures are often found in specialty applications such as decorative lamps as well as functional lamps in difficult-to-reach areas, such as for strip lighting, outside lighting, display lighting, stairway lighting, etc. (see the DOE website for more information about current LED applications). LEDs are more durable than most other lighting alternatives and are more controllable because the light can be focused in a particular direction and the LED can be dimmed.[17] Figure 3 shows the components of a typical LED.

Figure 3: Diagram of a Light Emitting Diode

Source: U.S. EPA/ DOE Energy Star Program. “Learn About LEDs”

The development of LEDs has generated a new field of lighting technology: solid-state lighting. Through the use of LEDs and similar products, researchers are developing an array of lighting options that use solid objects—rather than energy passed through a vacuum or gas—to produce light. The continued development of solid-state lighting will enable an even more widespread, general-use application for these types of products. At the moment, no other lighting technology offers the same level of potential to reduce energy use in the future.[18] The DOE estimates that energy savings in 2030 from solid-state lighting could reach 190 terawatt-hours, the annual electrical output of 24 large power plants (1,000MW). This would result in a 31.4 million metric ton reduction of carbon and $15 billion in energy savings in 2030 alone.[19]

  • Hybrid Solar Lighting

In this emerging technology, a roof-mounted solar collector sends the visible portion of solar energy into light-conducting optical cables, where it is piped to interior building spaces. Controllers monitor the availability of solar light and supplement it as necessary with fluorescent lights to provide the desired illumination levels at each location. Early experiments show that hybrid lighting is a viable option for lighting on the top two floors of most commercial buildings.[20]

This technology has other promising benefits as well. The solar collector on the rooftop can separate visible light from infrared radiation; the visible light can then be used for lighting, and the infrared radiation can be used for other purposes, such as to produce electricity, for hot water heating, or for a space heating unit. Because the energy is split, less heat energy is wasted in lighting—it is instead used for other energy-consuming items within the building.

While hybrid solar lighting systems have been developed and demonstrated in various facilities, they are currently not cost-competitive with most other lighting options. Research is underway with the goal of achieving commercial viability.

Environmental Benefit / Emission Reduction Potential

Through conservation and efficiency measures, GHG emissions associated with lighting can be reduced significantly. At the level of individual households and businesses, conservation and efficiency measures can provide lower utility bills, but widespread adoption at the societal level can result in broader GHG emission reductions and environmental benefits from the reduced demand for electricity. A range of options exists to address lighting efficiency, and using less artificial light altogether or using more efficient technologies can realize substantial environmental benefits. CFLs use 75 percent less energy and LEDs use 75 to 80 percent less energy than incandescent light bulbs; substituting these products for traditional lighting technologies, for example, can reduce net energy use.9,16

Widespread application of efficient lighting technologies will be essential for GHG emission reductions. A 2008 study for the U.S. DOE revealed that replacing LEDs for niche purposes in which LEDs are currently feasible would save enough electricity to equal the output of 27 coal power plants (see Figure 4). Though this represents only one percent of total energy consumption for lighting according to the most recent DOE estimates, savings from LED technology will increase as it is implemented on a more widespread basis.[21] McKinsey & Co’s Pathways to a Lower-Carbon Economy, for example, projects significant energy savings from switching from incandescent and CFL bulbs to LED technology by 2030;[22] this would not only provide GHG emission reductions from lower energy consumption, but it is also cost-effective over the lifetime of the bulbs.

Figure 4: Electricity Saved and Potential Savings of Selected Niche Applications

Source: U.S. Department of Energy (DOE). Energy Savings Estimates of Light Emitting Diodes in Niche Lighting Applications, Figure ES.1, 2008.

Greater GHG emission reductions can be achieved through integrated approaches that consider the entire building as a whole. Improving lighting may increase ambient heat (as in solar heat gain from daylighting) or decrease heat (such as reduced heat loss from inefficient bulbs), and depending on the region, season, and building design, this may relieve pressures on HVAC systems as well.

In addition to the climate benefits of efficiency and conservation in lighting, other benefits may include better reading and working conditions, reduced light pollution, and lower utility bills.


Some conservation efforts to reduce GHG emissions associated with energy use for lighting, such as turning off lights that are not in use, have no cost at all and provide immediate savings from lower utility bills. Newer technologies are more expensive up-front than incandescent light bulbs, but make up for the extra cost in savings within a months, depending on lighting use. For new buildings, incorporating design features that maximize natural light can also be an important, cost-effective element of constructing a net zero energy building.

Other conservation and efficiency measures require an upfront cost that is later recouped through lower utility bills, including:

  • Installing timers and sensors

The upfront price of timers and sensors varies depending on the type and scale of installation,[23] and overall savings depend on the net reduction in electricity consumption that results from the use of these technologies. Installation can result in net savings through lower utility bills.

  • Replacing incandescent bulbs with CFLs

CFLs are more expensive than incandescent bulbs, but they provide cost savings over the lifetime of the bulb through lower electricity bills. An ENERGY STAR® CFL, for example, saves about $40 over the lifetime of the bulb compared to an incandescent light, and the payback time can be just months, depending on light bulb use.[24],[25]

  • Replacing incandescent or CFL bulbs with LED bulbs

LEDs range from $25 to $60 for small bulbs,[26] but their efficiency and lifetime provide longer term savings. LEDs are currently available for certain types of lighting, such as residential downlights, portable desk lights, and outdoor area lighting.[27] Compared to incandescent bulbs, payback periods for LEDs can range from 1.7-3.4 years, depending on the lighting use. Payback periods for LEDs compared to CFLs can range from 4.5-12.9 years.[28]

As new and emerging technologies, such as hybrid solar lighting, become commercially available, consumers will have more options for lighting indoor and outdoor spaces using less energy, resulting in lower GHG emissions. As these technologies improve and become more widely adopted, their costs are expected to decline.

Current Status

Behavioral changes to conserve energy from lighting are among the most important options for achieving emission reductions from lighting, and many of these opportunities can be realized without adopting new technology at all (for example, by turning off the lights when they are not in use). When artificial lighting is necessary, many efficient lighting products are currently available. Replacing incandescent bulbs with CFLs, for example, is both accessible and affordable. McKinsey & Company’s Pathways to a Low Carbon Economy also projects significant savings over the lifetime of the bulb by switching from outdated florescent tube bulbs to more efficient models.22

In addition to those technologies that are now widely available, a variety of new and emerging highly efficient lighting systems are currently under development to improve the technology and reduce production costs. Some technologies that are promising but not yet commercially viable, include:

  • Hybrid Solar Lighting (HSL)

The technology has existed for decades, but cost considerations have thus far made widespread implementation infeasible. Currently, at least 25 facilities in the United States have installed HSL systems. Researchers are still trying to develop lower-cost systems that are marketable on a wider basis. Most research has been undertaken at the Oak Ridge National Laboratories in conjunction with DOE.[29]

  • Light Emitting Diodes (LEDs)/Solid-state Lighting.

DOE has developed a multi-year strategy to advance the research, development, and deployment of solid-state lighting technology for applications beyond the current niche opportunities for LEDs. DOE’s program includes public- and a private-sector participants, and focus areas include basic and applied research, product development, manufacturing and commercial support, and standards development.[30]

Obstacles to Further Development or Deployment

The obstacles to increasing conservation and improving efficiency for lighting are similar to those faced by buildings broadly. These barriers include upfront cost concerns, market barriers, public policy and planning barriers, and customer barriers, such as behavioral change. Up-front costs pose a particularly notable barrier: while efficient lighting technologies and practices can pay for themselves over time, some of them – particularly cutting edge technologies – have significant up-front costs that consumers, businesses, or municipalities may be unable or unwilling to pay. Payback periods also vary in length, and building occupants may be reluctant to install efficient lighting technologies if they will be vacating the building before they can reap the full benefits of these technologies (while new occupants would realize benefits immediately).

Certain lighting technologies face unique challenges, including the following:

  • Sensors/Lighting Control
    • Sensors are not always able to detect and match the needs of the occupant. This is because sensors react to different wavelengths, such as visible light, ultraviolent radiation, and infrared radiation, and because they are often located far from the area of occupancy. For example, photosensors are often located on the ceiling and cannot necessarily gauge lighting needs closer to the ground.[31]
    • Motion and occupancy sensors are not widely utilized because of logistical difficulties and consumer preference. Implementation in existing structures can be problematic because of the need for new fixtures, other wiring problems, and initial costs. Occupants may also object to automatic switch-off technology if it is poorly installed and is prone to premature switching; this can be remedied by more careful installation.[32]
  • Compact Fluorescent Lamps
    • Skepticism about the quality of CFL bulbs has deterred many consumers. Consumers may install the common spiral or A-shape CFL in an enclosed, recessed fixture without recognizing that only certain CFLs were built with reflectors to withstand the resultant heat, leading to shorter CFL lifespan.[33],[34] Moreover, manufacturers have been able to address other technical problems with early CFL models, including the start-up time, buzzing sounds, and less-appealing color temperature (a measurement that refers to the hue of light). Newer models can start in less than a second, are nearly noiseless, and are available in a variety of color temperatures.
    • Concerns about mercury may be a deterrent to some consumers. CFLs contain a very small amount of mercury in each bulb—less than 1/100 of the amount in an older thermometer.[35] However, as incandescent light bulbs require more energy and because mercury is emitted in the coal-burning process, the use of incandescent bulbs powered by coal-fired electricity generation results in mercury emissions that far exceed those of a CFL, particularly if the CFL is recycled.[36],[37]

Policy Options to Help Promote Lighting Efficiency

Because lighting efficiency can be improved through many different technologies, a broad set of policies is needed to spur the development of new, highly-efficient technologies as well as to promote the adoption of existing efficient ones. Lighting standards are an important policy for driving innovation in lighting efficiency. The Energy Independence and Security Act (EISA) of 2007, for instance, contains mandates for energy efficiency standards for incandescent bulbs; these standards phase out light bulbs that do not meet a certain efficiency standard. Lighting manufacturers have since created more efficient versions of the incandescent bulb, recognizing their popularity and the policy-driven need for efficiency. While these more efficient incandescent bulbs have not approached the level of efficiency that is possible with CFLs, the phase-out of inefficient bulbs from these federal standards and the subsequent development of more efficient technology has illustrated the role federal standards can play in driving innovation.

Other policies can facilitate the adoption of efficient existing lighting technology. Loan programs and tax credits are two examples of policies that can enable people to opt for more efficient lighting as opposed to less efficient lighting options with a lower up-front cost.

Broader building policies can also inspire building owners, managers, and occupants to examine lighting systems and practices in order to reduce both costs and GHG emissions. Such policies include updated building codes, financial incentives, information and education campaigns, lead-by-example initiatives, and research and development assistance. (For more information about each of these options, see Climate TechBook: Buildings Overview.)

Related Business Environmental Leadership Council (BELC) Company Activities

Related C2ES Resources

Climate TechBook: Buildings Overview, 2009

Climate TechBook: Residential and Commercial Sectors Overview, 2009

MAP:Commercial Building Energy Codes

MAP:Green Building Standards for State Buildings

MAP:Residential Building Energy Codes

Corporate Efficiency Project

Further Reading / Additional Resources

DOE, Office of Energy Efficiency and Renewable Energy

Environmental Defense Fund, Make the Switch: How to Pick a Better Bulb

U.S. Environmental Protection Agency (EPA) and U.S. Department of Energy (DOE), ENERGY STAR®

National Institute of Building Sciences’ Whole Building Design Guide

[1] One Hundred Tenth Congress of U.S. Energy Independence and Security Act of 2007. Sec, 422. 2007

[2] U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy. Buildings Energy Data Book. 2010

[3] Fluorescent bulbs, which use devices called “ballasts” to regulate current through the bulb, require special ballasts that can work with dimmers.

[4] A Consumer’s Guide to Energy Efficiency and Renewable Energy. U.S. Department of Energy. Toolbase Services. Tech Set 4: Energy-Efficient Lighting.

[5] California Department of General Services: Green California. Building Maintenance—Lighting and Occupancy Sensors.

[6] U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy. Energy Performance Ratings for Windows, Doors, and Skylights.

[7] The phosphor coating on fluorescent bulbs gives them their distinctive white color.

[8] For more information, please refer to the U.S. Department of Energy (DOE) Energy Savers and U.S Environmental Protection Agency (EPA) and DOE EnergySTAR® programs.

[9] U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy. New Light Bulbs: What’s the Difference?

[10] U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy. Types of Lighting.

[11] U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy. Fluorescent Lighting.

[12] U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy. Incandescent Lighting.

[13] U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy. High-Intensity Discharge Lighting. The Energy Policy Act of 2005 outlawed mercury vapor; these lights are being phased out.

[14] Color rendition is a measure of the quality of color light indicating how colors will appear under different light sources, devised by the International Commission on Illumination (CIE). General Electric. GE Lighting.

[15] U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy. Low-Pressure Sodium Lighting.

[16] U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy. Lighting Choices to Save You Money.

[17] Toolbase Services. LED Lighting.

[18] U.S. Department of Energy. Office of Energy Efficiency and Renewable Energy. Solid-State Lighting.

[19] U.S. Department of Energy. Office of Energy Efficiency and Renewable Energy. Solid-State Lighting Portfolio.

[20] U.S. Department of Energy, Office of Renewable Energy and Energy Efficiency. Hybrid Solar Lighting Illuminates Energy Savings for Government Facilities. 2007

[21] Navigant Consulting, Inc. Energy Savings Estimates of Light Emitting Diodes in Niche Lighting Applications. Prepared for the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy. 2008.

[23] Lighting Controls.

[24] EPA and DOE. ENERGY STAR®: Compact Fluorescent Light Bulbs.

[25] The payback period is the amount of time it takes for the cost savings of the more energy efficient bulb to equal the difference in initial bulb costs. To calculate the cost of switching to CFL bulbs based on the current average price of electricity, please visit the EPA’s CFL Calculator.

[26] Toolbase Services. LED Lighting.

[27] Recessed downlights are the most commonly installed type of lighting fixture in residential new construction. Please see the DOE’s Solid-State Lighting webpage for more information about specific applications.

[29] Maxey, Curt. Hybrid Solar Lighting. June 2008.

[31] Lighting Research Center at the Rensselaer Polytechnic Institute. Recommended Solutions—Photosensor Dimming: Barriers.

[32] Lighting Research Center at the Rensselaer Polytechnic Institute. Recommended Solutions—Automatic Shut-off Controls: Barriers.

[33] U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy. Compact Fluorescent Lighting.

[37] Many convenient collection sites are available across the country—see the EPA’s Lamp/Bulb recycling site for more information.


Saving energy through conserving lighting use and adopting more efficient lighting technologies

Saving energy through conserving lighting use and adopting more efficient lighting technologies

Changing Planet Series

Changing Planet is a three-part series of town hall events intended to encourage student learning and dialogue about climate change by gathering scientists, thought leaders, business people, and university students to discuss the facts of climate science, the dynamics of its impact and to brainstorm solutions. The series is prodiced in partnership between NBC Learn (the educational arm of NBC News), the National Science Foundation (NSF), and Discover magazine.

The first town hall event, Changing Planet: The Impact on Lives and Values, was hosted at Yale University and moderated by NBC News Special Correspondent Tom Brokaw. The discussion explored themes of human health, national security, economic opportunity and competitiveness, moral or religious values, environmental justice, and what climate change means for youth. The panelists were Linda Fisher, Dupont’s chief sustainability officer; Rajendra Pachauri, director of the Yale Climate and Energy Institute and a Nobel Prize laureate; Billy Parish, founder and coordinator of the youth-oriented Energy Action Coalition; and Katherine Hayhoe, associate professor in the Department of Geosciences at Texas Tech University and an expert on the intersection between Christian fundamentalism and climate change.

NBC Learn/Weather Channel Make an Impact highlight

A second Changing Planet: Clean Energy, Green Jobs and Global Competition town hall was hosted at George Washington University on April 12, and focused on the economic advantages of climate change solutions, including clean energy policies and technologies and creation of market green jobs. Tim Juliani, Director of Corporate Engagement, was a panelist and provided our  perspective on the clean energy debate. Other panelists included: Ken Zweibel, a professor at GWU, Phaedra Ellis-Lamkins (head of Green for All),  and Chris Busch (director of Policy and Programs at the Apollo Alliance). NBC News reporter Anne Thompson moderated this event.

Read Discover Magazine's story on Building a Green-Collar Economy with a full transcript of the Changing Planet: Clean Energy, Green Jobs and Global Competition town hall.

The third town hall will be held at Arizona State University in the fall of 2011, and its suggested focus will be “Keeping It Fresh: Our Water Future,” impacts of  how communities are adapting, or preparing to adapt to, changing availability of fresh water..

In addition to the Changing Planet town halls, NBC Learn and NSF worked together to produce a series of 12 online video reports looking at the impact of climate change in various locations around the world. From Bermuda’s tropical seas to the Arctic Ocean, each story follows scientists in the field who are studying the dramatic impacts of rising temperatures in the air, in the water, and on land. The series is narrated by Anne Thompson, Chief Environmental Affairs Correspondent for NBC News. Watch the full video series here.

Geothermal Electricity

Quick Facts

  • Geothermal electricity generation is a commercially proven technology that harnesses the nearly inexhaustible heat of the earth’s core to continuously generate nearly zero-emission renewable electricity at a cost that is competitive with, and in many cases lower than, traditional fossil fuel power generation.
  • Geothermal energy is available twenty-four hours a day, seven days a week, which avoids problems of variability associated with other renewable technologies like wind and solar.
  • While it constitutes 8 percent of U.S. non-hydroelectric renewable electricity generation, geothermal energy currently provides less than 1 percent of total U.S. electricity.[1],[2]
  • Currently, nine states produce electricity from geothermal plants, with more than 80 percent of total geothermal generation capacity in California.[3]
  • While the United States currently has about 3,000 megawatts (MW) of geothermal electric generating capacity, the U.S. Geological Survey estimates the United States possesses 39,000 megawatts MW of geothermal potential, including identified resources and resources that are hidden or undetectable at the surface.[4],[5],[6]


Geothermal energy can be used for electricity generation, heat pumps, or direct applications. This document focuses only on the traditional, commercially available technologies that produce electricity by exploiting the naturally occurring heat of the earth. Enhanced geothermal systems, which utilize advanced, and often experimental, drilling and fluid injection techniques to augment and expand the availability of geothermal resources, are the subject of a separate factsheet (see Climate TechBook: Enhanced Geothermal Systems).

Unlike other sources of renewable energy, such as wind and solar, geothermal power generation can operate steadily nearly twenty-four hours a day, seven days a week. Continual production makes geothermal an ideal candidate for providing nearly zero-emission renewable baseload power.

In 2011, the 15.3 billion kilowatt-hours (kWh)  of geothermal electricity generated in the United States constituted 8 percent of the non-hydroelectric, renewable electricity generation, but only 0.4 percent of total electricity generation.[7],[8] The same year, five states generated electricity from geothermal energy (CA, HI, ID,  NV, and UT), but California alone accounted for 82 percent of U.S. geothermal electric generation.[9] Geothermal plays an important role in some of the states where it is installed. Geothermal facilities satisfy 6 percent of California’s electricity consumption and 2 percent of Hawaii’s. [10],[11]

Despite its current limited application, geothermal energy has a very large potential for expansion. As Figure 1 illustrates, most of the U.S. geothermal potential is in the western states. The U.S. Geological Survey estimates that current technologies could harness nearly 40,000 MW of geothermal resources in America’s West, compared to a current U.S. electric generating capacity of roughly 1 million MW.[12]

Figure 1: Distribution of U.S. Geothermal Resources

Source: Roberts, Billy J. National Renewable Energy Laboratory. October 2009.


Geothermal energy taps into the natural heat of the earth to produce electricity. More specifically, conventional geothermal energy draws on the earth’s hydrothermal resources (underground heated water and steam). After drilling into these reservoirs, geothermal plants extract hot water and steam from the earth’s crust to drive electricity-generating turbines, a process called “heat mining.”[13]

The various techniques currently used to produce geothermal energy include the following (see Figure 2 for illustrations of these techniques):

Dry Steam

Dry steam plants draw steam directly from under the earth’s surface to a turbine that drives a generator. The steam then condenses into water and is reinjected into the geothermal reservoir.

Flash Steam

Flash steam plants extract geothermal water exceeding 350°F under extremely high pressure. Upon surfacing, a sudden reduction in pressure causes a portion of the heated water to vaporize, or “flash,” into steam. That steam turns a turbine, which drives a generator, after which the water is reinjected into the geothermal reservoir.

Binary Cycle

Binary cycle plants operate in areas with substantially lower-temperature geothermal water (225°F). Rather than using hydrothermal resources to drive a turbine, binary cycle plants use the earth’s heated water to vaporize a “working fluid,” any fluid with a lower boiling point than water (e.g., iso-butane). The vaporized working fluid drives a turbine that powers a generator, while the extracted geothermal water is promptly reinjected into the reservoir without ever leaving its closed loop system.

Figure 2: The Three Most Common Techniques Used for Geothermal Electricity Generation

Illustration of a Dry Steam Power Plant - Geothermal steam comes up from the reservoir through a production well.  The steam spins a turbine, which in turn spins a generator that creates electricity.  Excess steam condenses to water, which is put back into the reservoir via an injection well.

Source: U.S. Department of Energy. Geothermal Technology Program. Hydrothermal Power Systems. November, 2010.

Geothermal energy also depends on advanced hard-rock drilling technology. While oil and gas drilling techniques apply to geothermal drilling, temperatures above 250°F found in geothermal reservoirs complicate the process. The high heat increases the probability of well failure due to collapse, mechanical malfunction, and casing failure.[14],[15] Extensive research has gone into understanding the geological characteristics of geothermal reservoirs and how to adapt drilling technologies to these conditions.[16]

Environmental Benefit and Emission Reduction Potential

Environmental benefits from geothermal energy include near-zero greenhouse gas emissions from plant operations and low freshwater use and contamination. Traces of carbon dioxide (CO2) and other greenhouse gases are found dissolved in some hydrothermal reservoirs. Using those hydrothermal resources with dry steam and flash steam geothermal plants does allow these dissolved greenhouse gases to escape into the atmosphere.[17] [18]A geothermal plant will emit only zero to four percent as much CO2 as a traditional coal-fueled power plant per unit of electricity generated.[19] Geothermal plants also emit significantly less conventional air pollutants (nitrogen oxides, sulfur dioxide, and particulate matter) than coal power plants, as these emissions are virtually nonexistent.[20]

A market-based policy to reduce greenhouse gas emissions and spur the deployment of clean energy technology could lead to much more rapid growth in geothermal electricity generation. For example, in its analysis of a 2010 greenhouse gas cap-and-trade proposal, U.S. Energy Information Administration projected that, geothermal electricity generation could grow more than twice as fast with such a policy in place.[21]

Globally, the International Energy Agency (IEA) estimates that geothermal electricity generation provided about 0.3 percent of total electricity in 2010. With current policies, IEA projects that geothermal sources will provide only about 0.5 percent of global electricity by 2035. However, with coordinated international action to keep greenhouse gases emissions in the atmosphere below 450 parts per million, IEA projects that geothermal electricity generation could provide about 1.4 percent of global electricity generation by 2035.[22]


There are at least two categories of costs associated all types of electricity generation: capital costs and operating and maintenance costs. The capital cost for a geothermal plant can vary significantly depending upon the conversion technology, the depth of the wells, and the temperature of the hydrothermal resource. The capital cost of a geothermal plant can range from $1,000 to more than $6,000 per kilowatt (kW) of capacity.[23]

While the capital cost of a geothermal plant can be either comparable to or much higher than that of a traditional fossil fuel power plant, the full cost of generating electricity includes operating and maintenance costs. Unlike a coal or natural gas plant, geothermal facilities do not need to purchase fuel to generate electricity. Accounting for this fact through a levelized cost analysis reveals that geothermal plants can produce electricity for 6 to 9 cents per kilowatt-hour (kWh), a rate competitive with traditional fossil fuel generation.[24] Depending on tax incentives, the EIA expects that the levelized cost of geothermal energy will remain competitive with fossil fuels.[25]

Geothermal plants harnessing high-temperature resources tend to be less expensive than those relying on low-temperature resources. This is because in high-temperature areas, more electricity can be generated from each unit of geothermal water, reducing the number of wells required. Therefore, flash steam geothermal plants, which generate electricity using hotter geothermal fluids and fewer wells, are likely to have lower capital costs than binary geothermal plants, which use cooler geothermal fluids and more wells. This correlation is pictured in Figure 3. The capital costs of flash steam plants range from $1,000 to $2,000 per kilowatt installed, while the capital costs of binary plants range from $2,000 to $6,500 per kilowatt.[26],[27]

With time, experts expect the cost of geothermal energy to drop as firms gain experience installing geothermal plants. Costs will also fall as new drilling technologies improve the exploration and well drilling phase, which constitutes, on average, 37.5 percent of a geothermal plant’s total capital cost.[28]

Figure 3: Relationship between Capital Cost of Geothermal Plants and Resource Temperature

Source: National Renewable Energy Laboratory, 2012. Renewable Electricity Futures Study.

Current Status of Geothermal Energy

From the early 1970s to the early 1990s, geothermal electricity generation saw rapid growth, with an average annual growth rate of more than 16 percent.[29] From the early 1990s until the present, however, geothermal generation has been relatively flat. As of February 2013, the United States possessed about 3,386 MW of installed geothermal capacity.[30] An additional 175 geothermal projects across fifteen states are currently under development.[31] According to the EIA, under current policies geothermal generation is projected to increase much more quickly than total electricity demand, with an annual growth rate of 4.3 percent between 2011 and 2035.[32]

Legislation and government incentives may help jumpstart the expansion of the geothermal industry. In 2012, the U.S. Department of Energy (DOE) provided $62 million for research in geothermal technologies.[33] Geothermal energy also received a production tax credit (PTC) through 2013.[34]

Geothermal energy plays an important role in some countries. Iceland, for example, generates over 80 percent of its electricity from geothermal sources.[35] The United States leads the world in terms of total installed geothermal capacity.[36] Global electric generation from geothermal sources is projected at an annual growth rate of 4.8 to 6.3%, depending on climate and energy policies.[37]

Obstacles to Further Development or Deployment of Geothermal Energy

High-Risk Exploration Phase

The exploratory phases of a geothermal project are marked by not only high capital costs but also a 75-80 percent chance of failure for exploratory well drilling, due to uncertainties regarding reservoir geology.[38] The combination of high risk and high capital costs can make financing geothermal projects difficult.[39]

Investment Uncertainty

Changes in government funding for geothermal generation and uncertainty over future climate-related regulations create uncertainty for potential project developers. Certainty is especially important in geothermal projects, which take an average of ten years to move from exploration to generation.[40] In the past, Congress has allowed the federal Production Tax Credit (PTC) to expire before renewing it. In addition, after years of moderate funding, the 2007 budget contained no provision to continue funding geothermal research. More recent federal budgets have, however, provided some funding to promote geothermal research and development, including $62 million from the DOE’s Energy Efficiency and Renewable Energy (EERE) fiscal year 2012 budget appropriated by the U.S. Congress.[41]

Geographic Distribution and Transmission

Some of the most promising geothermal resources lie great distances from regions of large electricity consumption, or load centers. The need to install adequate transmission capacity can deter investment in geothermal projects. For example, in 2002, MidAmerica Energy abandoned its geothermal project near California’s Salton Sea primarily due to lack of available transmission resources.[42]

Permitting Delays

Delays in permitting can increase the amount of time it takes to bring new geothermal facilities on-line, and increase project costs and developer risk.

Policy Options to Help Promote Geothermal Energy

Price on Carbon

A price on carbon, such as that which would exist under a greenhouse gas cap-and-trade program, would raise the cost of electricity produced from fossil fuels relative to the cost of electricity from renewable sources, such as geothermal energy, and other lower-carbon technologies.

Electricity Portfolio Standard

Electricity portfolio standards generally require that electric utilities obtain specified minimum percentages of their electricity from certain energy sources. Thirty-one states and the District of Columbia have renewable portfolio standards or alternative energy portfolio standards.[43] Congress has also considered federal renewable electricity standards and clean energy standards. Electricity portfolio standards encourage investment in new geothermal power and can guarantee a market for its generation.

Tax Credits and Other Subsidies

The federal Production Tax Credit (PTC) for geothermal electricity generation expires at the end of 2013. The PTC can lower the after-tax, levelized cost of electricity from geothermal by as much as 30 percent.[44] Geothermal developers can also choose to substitute their PTC benefits with the Investment Tax Credit (ITC). The ITC would provide tax credits equivalent to 10 percent of their investment costs in geothermal technologies. The ITC credits will expire at the end of 2016 unless the legislation is renewed.[45]

Development of New Transmission Infrastructure

Improving transmission corridors to areas with geothermal reservoirs would facilitate investment in geothermal energy. Policies to build new transmission to areas with significant renewable energy resources are already proposed for accessing the wind-rich regions of the central plains and the extensive solar resources of the desert in the Southwest United States. Such policies could also promote expanded transmission to reach the geothermal fields of the West.

Related Business Environmental Leadership Council (BELC) Companies


DTE Energy


Johnson Controls


Related Pew Center Resources

Climate Change 101: Technology Solutions, 2011

The Case for Action: Creating a Clean Energy Future. 2010

Deploying Our Clean Energy Future. 2009

Further Reading / Additional Resources

Blodgett, Leslie, and Kara Slack. 2009. Geothermal 101: Basics of Geothermal Energy Production and Use. Geothermal Energy Association.

Geothermal Energy Association. Deloitte. 2008. Geothermal Risk Mitigation Strategies Report. Department of Energy, Office of Energy Efficiency and Renewable Energy Geothermal Program.

Energy Information Administration. Geothermal Explained. 2011.

Fridleifsson, I.B., R. Bertani, E. Huenges, J. W. Lund, A. Ragnarsson, and L. Rybach. 2008. “The Possible Role and Contribution of Geothermal Energy to the Mitigation of Climate Change.” In: O. Hohmeyer and T. Trittin (Eds.) IPCC Scoping Meeting on Renewable Energy Sources, Proceedings, Luebeck, Germany, 20-25 January 2008, 59-80.

Geothermal Technologies Program. 2008. Geothermal Tomorrow 2008. U.S. Department of Energy, Energy Efficiency and Renewable Energy.

Geothermal Technologies Program. 2008. Multi-year Research, Development and Demonstration Plan: 2009-2015 with program activities to 2025. U.S. Department of Energy, Energy Efficiency and Renewable Energy.

Idaho National Laboratory. 2007. The Future of Geothermal Energy. The U.S. Department of Energy National Laboratory operated by the Battelle Energy Alliance.

International Geothermal Energy Association.

Union of Concerned Scientists. 2009. How Geothermal Energy Works.

Salmon, J. Pater, J. Meurice, N. Wobus, F. Stern, and M. Duaime. 2011. Guidebook to Geothermal Power Finance. National Renewable Energy Laboratory.

Williams, Colin, Marshall Reed, Robert Mariner, Jacob DeAngelo and S. Peter Galanis. 2008. Assessment of Moderate-and High-Temperature Geothermal Resources of the United States. United States Geological Survey.

Williams, Eric, Rich Lotstein, Chrisopher Galik and Hallie Knuffman. July 2007. A Convenient Guide to Climate Change Policy and Technology. Duke University.



[1] Energy Information Administration (EIA), Electric Power Annual Report. 2013. Table 3.1.B.

[2] EIA, Electric Power Annual. 2013. Table 3.1.A.

[3] Matek, Benjamin. Geothermal Energy Association. 2013. 2013 Annual US Geothermal Power Production and Development Report.

[4] Ibid.

[5] Williams, Colin, Marshall Reed, Robert Mariner, Jacob DeAngelo and S. Peter Galanis. 2008. Assessment of Moderate-and High-Temperature Geothermal Resources of the United States. United States Geological Survey.

[6] Represents a 50 percent chance of at least this amount.

[7] EIA, Electric Power Annual. 2013. Table 3.1.B.

[8] EIA, Electric Power Annual. 2013. Table 3.1.A.

[9] EIA, Electric Power Annual. 2013. Table 3.19.

[10] Ibid.

[11] EIA, Electric Power Annual. 2013. Table 3.6.

[12] EIA, Electric Power Annual. 2013. Table 4.3.

[13] Tester, Jefferson, et. al. 2006. The Future of Geothermal Energy: Impact of Enhanced Geothermal Systems (EGS) on the United States in the 21st Century. Massachusetts Institute of Technology.

[14] Casing is the pipe that connects the geothermal well to the generation facility, and prevents the mixing of hot geothermal fluids with groundwater at other depths. High temperatures can cause the steel piping to expand or buckle if not properly enforced with cement, a process referred to as “casing failure”.

[15] Geothermal Technologies Program. 2011. Multi-year Research, Development and Demonstration Plan: 2009-2015 with program activities to 2025. U.S. Department of Energy, Energy Efficiency and Renewable Energy.

[16]For an example of this work, see Blankenship, Douglas, David Chavira, Joseph Henfling, Chris Hetmaniak, David Huey, Ron Jacobson, Dennis King, Steve Knudsen, A.J. Mansure, and Yarom Polsky. 2009. Development of a High-Temperature Diagnostics-While-Drilling Tool. Sandia Report 2009-0248.

[17] Kagel, Alysa, Diana Bates, and Karl Gawell. 2007. A Guide to Geothermal Energy and the Environment. Geothermal Energy Association. []. See Williams, Eric, Rich Lotstein, Chrisopher Galik and Hallie Knuffman. July 2007. A Convenient Guide to Climate Change Policy and Technology.

[18] The gases released through geothermal energy production would have eventually entered the atmosphere, regardless of production in the area; however, the timing of their release is material to near-term climate forcing.

[19] Binary plants emit 0 lbs. of CO2 per MWh, flash plants emit 60 lbs. of CO2 per MWh, and dry steam plants emit 88.8 lbs. of CO2 per MWh.

[20] Williams, Eric, Rich Lotstein, Chrisopher Galik and Hallie Knuffman. July 2007. A Convenient Guide to Climate Change Policy and Technology. Duke University.

[21] Energy Information Administration. July 2010. Energy Market and Economic Impacts of the American Power Act of 2010. The text compares EIA’s “Reference” and “APA Basic” cases.

[22] International Energy Agency (IEA). 2011. World Energy Outlook 2012.

[23] Augustine, C.; Denholm, P.; Heath, G.; Mai, T.; Tegen, S.; Young. K. (2012). "Geothermal Energy Technologies," Chapter 7. National Renewable Energy Laboratory. Renewable Electricity Futures Study, Vol. 2, Golden, CO: National Renewable Energy Laboratory; pp. 7-1 – 7-32.

[24] Ibid.

[25] EIA. 2013. Annual Energy Outlook 2013. Available at:

[26] Costs are given in 2009 dollars.

[27] Augustine, et al. 2012

[28]Augustine et al, 2012.

[29] EIA. 2012. Annual Energy Review. See Table 8.2b.

[30] Matek, Benjamin. Geothermal Energy Association. 2013. 2013 Annual US Geothermal Power Production and Development Report.

[31] Ibid.

[32] Energy Information Administration. 2013. Annual Energy Outlook 2013. See Table 16.

[33] U.S. Department of Energy. 2012. Fiscal Year 2012 Agency Financial Report.

[34] HR1: The American Recovery and Reinvestment Act. THOMAS.

[35] Williams, 2008.

[36] Matek, 2013.

[37] IEA. 2012. World Energy Outlook 2012.

[38]Geothermal Technologies Program. 2008. Geothermal Tomorrow 2008. U.S. Department of Energy, Energy Efficiency and Renewable Energy.

[39] Deloitte, 2008.        

[40] Williams, 2007.

[41] U.S. Department of Energy. 2012. Fiscal Year 2012 Agency Financial Report.

[42] See footnote 9 in Tester et. al, 2006.

[43] For more information on state RPSs, see

[44] Owens, Brandon. 2002. An Economic Valuation of a Geothermal Production tax Credit. National Renewable Energy Laboratory.

[45] DSIRE. 2013. Business Investment Tax Credit (ITC).

Focus on conventional methods of generating electricity from the earth's heat

Focus on conventional methods of generating electricity from the earth's heat

Building Envelope

Quick Facts

  • Residential and commercial buildings account for almost 39 percent of total U.S. energy consumption and 38 percent of U.S. carbon dioxide (CO2) emissions.[1]
  • Space heating, cooling, and ventilation account for the largest amount of end-use energy consumption in both commercial and residential buildings. In the commercial sector they are responsible for 34 percent for energy used on site and 31 percent of primary energy use[2]. In the residential sector, space heating and cooling are responsible for 52 percent of energy used on site, and 39 percent of primary energy use.[3]
  • The building envelope – the interface between the interior of the building and the outdoor environment, including the walls, roof, and foundation – serves as a thermal barrier and plays an important role in determining the amount of energy necessary to maintain a comfortable indoor environment relative to the outside environment.


Nearly all of greenhouse gas (GHG) emissions from the residential and commercial sectors can be attributed to energy use in buildings (see Climate TechBook: Residential and Commercial Sectors Overview). Even so, existing technology and practices can be used to construct “net-zero energy” buildings ­ buildings that use design and efficiency measures to reduce energy needs dramatically and rely on renewable energy sources to meet remaining energy demand. The Energy Independence and Security Act of 2007 (EISA 2007) calls for all new commercial buildings to be net-zero energy by 2030. An integrated approach provides the best opportunity to achieve significant GHG reductions from the buildings sector, because many different building elements interact with one another to influence overall energy consumption (see Climate TechBook: Buildings Overview). However, certain key building elements can play a significant role in determining a building’s energy use and associated GHG emissions and merit a more in-depth consideration.

The building envelope is the interface between the interior of the building and the outdoor environment, including the walls, roof, and foundation. By acting as a thermal barrier, the building envelope plays an important role in regulating interior temperatures and helps determine the amount of energy required to maintain thermal comfort. Minimizing heat transfer through the building envelope is crucial for reducing the need for space heating and cooling. In cold climates, the building envelope can reduce the amount of energy required for heating; in hot climates, the building envelope can reduce the amount of energy required for cooling. A substantial part of “weatherization” includes improvements to the building envelope, and government weatherization programs often cite energy and energy bill savings as a primary rationale for these initiatives.


The building envelope can affect energy use and, consequently, GHG emissions in a variety of ways:

  • Design of the building envelope

The overall design can help determine the amount of lighting, heating, and cooling a building will require. Architects and engineers have developed innovative new ways to improve overall building design in order to maximize light and heat efficiency, for example through passive solar heating, which uses the sun’s heat to warm the building when it is cold without relying on any mechanical or electrical equipment.[4] Local climate is an important determinant for identifying the design features that will result in the greatest reductions of energy needs. These may include such things as south-facing windows in cool climates and shading to avoid summer sun in hot climates.[5]

  • Building envelope materials and product selection
  • Embodied energy

Embodied energy refers to the energy required to extract, manufacture, transport, install, and dispose of building materials, including those used in the building envelope. Efforts to reduce this energy use and associated emissions, for example through the substitution of bio-based products, can be made as part of a larger effort to reduce emissions from buildings.

  • Insulation and air sealing

Heat naturally flows from a warmer to a cooler space; insulation provides resistance to heat flow, thereby reducing the amount of energy needed to keep a building warm in the winter and cool in the summer. Insulation is frequently discussed in terms of its ability to resist heat flow, or its R-value. A variety of insulation options exist, including blanket, concrete block, insulating concrete forms, spray foam, rigid foam, and natural fiber insulation.

Adding insulation strategically will improve the efficiency of the building; however, it is only effective if the building is properly sealed. Sealing cracks and leaks prevents air flow and is crucial for effective building envelope insulation. Leaks can generally be sealed with caulk, spray foam, or weather stripping.[6]

  • Roofs

Roof design and materials can reduce the amount of air conditioning required in hot climates by increasing the amount of solar heat that is reflected, rather than absorbed, by the roof. For example, roofs that qualify for ENERGY STAR®[7] are estimated to reduce the demand for peak cooling by 10 to 15 percent.[8] Proper insulation is also important in attics and building cavities adjacent to the roof.

In addition, roofs also offer several opportunities for installing on-site generation systems. Solar photovoltaic (PV) systems can either be installed as a rooftop array on top of the building or a building-integrated photovoltaic system can be integrated into the building as roofing tiles or shingles (see also Climate TechBook: Solar Power).

  • Walls

Like roofs, the amount of energy lost or retained through walls is influenced by both design and materials. Design considerations affect the placement of windows and doors, the size and location of which can be optimized to reduce energy losses. Decisions regarding the appropriate material can be more complicated because the energy properties of the entire wall are affected by the design. Importantly, material selection and wall insulation can both affect the building’s thermal properties.

A building’s thermal mass – i.e., its ability to store heat – is determined in part by the building materials used. Thermal mass buildings absorb energy more slowly and then hold it longer, effectively reducing indoor temperature fluctuations and reducing overall heating and cooling requirements. Thermal mass materials include traditional materials, such as stone and adobe, and cutting edge products, such as those that incorporate phase change materials (PCMs). PCMs are solid at room temperature and liquefy as they absorb heat; the absorption and release of energy through PCMs helps to moderate building temperature throughout the day.

  • Windows, doors, and skylights

Collectively known as fenestration, windows, exterior doors, and skylights influence both the lighting and the HVAC requirements of a building. In addition to design considerations (the placement of windows and skylights affects the amount of available natural light), materials and installation can affect the amount of energy transmitted through the window, door, or skylight, as well as the amount of air leakage around the window components. New materials, coatings, and designs all have contributed to the improved energy efficiency of high-performing windows, doors, and buildings. Some of the advances in windows include: multiple glazing, the use of two or more panes of glass or other films for insulation, which can be further improved by filling the space between the panes with a low-conductivity gas, such as argon, and low-emissivity (low-e) coatings, which reduce the flow of infrared energy from the building to the environment.

In residential buildings, using optimum window design and glazing specification is estimated to reduce energy consumption from 10 to 50 percent below accepted practice in most climates; in commercial buildings, an estimated 10 to 40 percent reduction in lighting and HVAC costs is attainable through improved fenestration.[9]

  • Interactions with other building elements

The building envelope can affect the lighting, heating, and cooling needs of the building. These interactions are important to consider when retrofitting or weatherizing buildings to reduce their energy use in the most cost-effective manner. For example, with a new building it may be more cost-effective to choose a design with a more costly, high-performance building envelope that significantly reduces the need for heating and cooling with a smaller, less-costly HVAC system. For existing buildings, it may be more cost-effective to add insulation to a building than to install a more efficient heating system.

Environmental Benefit / Emission Reduction Potential

Improvements to the building envelope have the potential to reduce GHG emissions from new and existing buildings in the residential, commercial, and industrial sectors. The building envelope can significantly affect the amount of required lighting and HVAC, the two largest end uses of energy in both the residential and commercial sectors. Local climate influences the appropriateness and cost-effectiveness of many decisions pertaining to building envelope design and product selection.

Greater GHG emission reductions can be achieved through integrated approaches that consider the entire building as a whole. Significant improvements in energy efficiency are attainable and can reduce building-related emissions to very low levels or, when coupled with renewable energy sources, to zero.

In addition to the climate benefits, many building envelope improvements also result in a variety of benefits for consumers, including lower energy bills, as well as improved thermal comfort, moisture control, and noise control.


Improvements to the building envelope have the potential to be cost-effective for both new and existing buildings. From a climate perspective, improvements to the building envelope should be pursued because they reduce GHG emissions; from a consumer perspective, improvements to the building envelope should be pursued because they can result in both a more comfortable indoor environment and reduced energy costs. The ENERGY STAR® program provides estimates of cost savings associated with several building envelope elements, for example:

  • Windows

For a typical home, an ENERGY STAR® window will save $126 to $465 per year when replacing single-pane windows and $27 to $111 per year when replacing double-pane windows.[10]

  • Insulation and air sealing

By sealing air leaks and adding insulation from average values to recommended values, the average home in the northern United States can save 12 percent on its total utility bill (19 percent of heating and cooling costs) and the average home in the southern United States can save 11 percent on its total utility bill (20 percent of total costs).[11]

Energy audits can be conducted to identify the most cost-effective ways to improve energy efficiency in existing buildings. New buildings can be cost-effectively built to have lower energy needs, and the Commercial Building Initiative, a public-private collaboration, has a goal of having marketable net-zero commercial buildings beginning in 2025.[12] Importantly, these whole-building efforts include, but are not limited to, improvements to the building envelope.

Obstacles to Further Development or Deployment

In broad terms, the obstacles to improved building envelopes are the same as the obstacles faced by buildings broadly. These barriers include cost concerns, market barriers, public policy and planning barriers, and customer barriers. More narrowly, these obstacles pose different barriers to new and existing buildings, as well as to each of the different building envelope elements. The cost-effectiveness of certain building envelope improvements, such as improved insulation and sealing of air leaks, has not led to widespread implementation. Insulation retrofits, for example, would not only reduce GHG emissions, but they would also reduce energy consumption and consumer energy bills, improve air quality, and reap a variety of public health benefits.[13] These kinds of energy efficiency projects are part of the low-hanging fruit for reducing GHG emissions.

Policy Options to Help Promote Building Envelope Improvements

Like the obstacles to building envelope improvements, the available policy options fall into the same general categorization as buildings overall. Some policy and program interventions focus on improvements to a single building-envelope element, such as insulation. Tax incentives and other programs can change annually. A number of organizations track buildings-related policies; see below for a sample of useful references:

  • Standards and codes

Regulatory policies include mandatory and voluntary building codes passed by states and localities.

  • U.S. Department of Energy (DOE) Building Energy Codes Program – provides state-by-state information on residential and commercial building codes.
  • Financial incentives

Financial incentives include tax credits, rebates, low-interest loans, energy-efficient mortgages, and innovative financing, all of which address the barrier of first costs. Many utilities also offer individual incentive programs, because reducing demand, especially peak demand, can enhance the utility’s system-wide performance.

  • Weatherization Assistance Program – provides low-income families with weatherization services, including insulation, air sealing, and windows.
  • Database of State Incentives for Renewables and Efficiency (DSIRE) – tracks federal and state incentives for renewable and energy efficiency programs, including summary maps and tables, as well as a searchable database.
  • Information and education

While many businesses and homeowners express interest in making energy-efficiency improvements for their own buildings and homes, they often do not know which products or services to ask for, who supplies them in their areas, or whether the actual energy savings will live up to claims. A variety of programs provide useful information on building envelope improvements and other energy efficiency measures.

  • ENERGY STAR® – a joint program of the U.S. Environmental Protection Agency (EPA) and DOE provides information on and standards for energy efficient products and practices.
  • Energy Savers – a government program that provides information on ways to save energy at home, while driving, and at work.
  • Lead-by-example programs

A variety of mechanisms are available to ensure that government agencies lead by example in the effort to build and manage more energy-efficient buildings and reduce GHG emissions.

  • Research and development (R&D)

R&D programs provide funding and support for advanced building materials and practices. Government funding is important because the fragmented and highly competitive market structure of the building sector and the small size of most building companies discourage private R&D, on both individual components and the interactive performance of components in whole buildings.

Related Business Environmental Leadership Council (BELC) Company Activities

Related C2ES Resources

Climate TechBook: Buildings Overview, 2009

Climate TechBook: Residential and Commercial Sectors Overview, 2009

MAP:Commercial Building Energy Codes

MAP: Green Building Standards for State Buildings

MAP: Residential Building Energy Codes

Additional Resources

DOE, Office of Energy Efficiency and Renewable Energy. 2009 Buildings Energy Data Book, 2009

Whole Building Design Guide

[1] U.S. Department of Energy (DOE). 2009 Buildings Energy Data Book. Prepared for U.S. Department of Energy Office of Energy Efficiency and Renewable Energy by D&R International, Ltd. Silver Spring, MD. October 2009.

[2] Primary energy use defined as, “energy used at the source (including fuel input to electric power plants)”. Ibid.

[3] Ibid.

[4] For more information on passive solar design, see the DOE’s site on Passive Solar Home Design, The National Renewable Energy Laboratory also provides case studies of passive solar homes in a variety of climates,

[5] The DOE has developed the Building America Best Practices Series that includes five climate-specific sets of building best practices that focus on reducing energy use and improving housing durability and comfort. Learn more at; also see the Whole Building Design Guide on Passive Solar Heating

[7] ENERGY STAR® is joint program of the U.S. Environmental Protection Agency (EPA) and U.S. Department of Energy (DOE) that provides information on and standards for energy efficient products and practices. For more information, see

[8] For more information on ENERGY STAR® qualified roof products, visit

[9] Ander, G. D. “Windows and Glazing.” Whole Building Design Guide, updated 18 June 2010.

[10] For more information on ENERGY STAR® windows, see

[11] See ENERGY STAR® Methodology for Estimating Energy Savings from Cost-Effective Air Sealing and Insulating.

[13] Levy, J. I., Y. Nishioka, J. D. Spengler. “The Public Health Benefits of Insulation Retrofits in Existing Housing in the United States.” Environmental Health: A Global Access Science Source 2: 4 (2003). 


The interface between the building's interior and the environment, e.g., walls and windows

The interface between the building's interior and the environment, e.g., walls and windows

Regulatory Reality vs. Rhetoric

First there was the warning about a construction moratorium – all new major stationary sources would come to an immediate halt because of EPA’s new source review requirements for greenhouse gas emissions (GHGs). Soon after the alarm went out about the approaching regulatory “train wreck” that would result from a series of EPA rules impacting electric utilities. A large number of power plants would shut down, the reliability of our energy supply would be sacrificed, and consumers would face skyrocketing costs.

There was only one problem with these warnings – they were made before anybody knew what the actual regulations would require. Now that EPA has issued several of these rules, it is useful to revisit these doomsday scenarios and see if the reality of the proposals matches the rhetoric before the fact.

All Energy Sources Entail Risk, Efficiency a No-Brainer

At the moment, our attention is riveted by the events unfolding at a nuclear power plant in Japan. Over the past year or so, major accidents have befallen just about all of our major sources of energy: from the Gulf oil spill, to the natural gas explosion in California, to the accidents in coal mines in Chile and West Virginia, and now to the partial meltdown of the Fukushima Dai-ichi nuclear reactor. We have been reminded that harnessing energy to meet human needs is essential, but that it entails risks. The risks of different energy sources differ in size and kind, but none of them are risk-free.

Transportation Modes

Quick Facts

  • Transportation activity and vehicle ownership is expected to grow significantly worldwide over the next several decades. The transportation sector, however, offers some of the greatest potential to alter the growth path in energy consumption, as illustrated by the expected effects of increased fuel economy and greenhouse gas standards for vehicles on overall energy consumption in the United States.
  • In the United States, passenger or light-duty vehicles are the largest source of energy consumption and greenhouse gas emissions within the transportation sector. Medium- or heavy-duty vehicles make up many commercial vehicle fleets; these fleets consume large quantities of fuel because of intensive use and the low fuel economy of their vehicles.
  • Aircraft emissions in the United States are a small percentage of total transportation sector emissions, but are expected to grow significantly over the long term. Emissions from marine transportation are a very small percentage of current transportation sector emissions in the United States, with little growth expected over the next 30 years.


The transportation sector consists of cars and light-duty trucks (also referred to as passenger vehicles), medium- and heavy-duty trucks, buses, trains, ships, and aircraft. Energy use and, as a result, greenhouse gas emissions from each mode are determined by four major elements: the fuels used and their carbon content, the efficiency of each vehicle, the distance traveled, and the overall efficiency in transportation system operations. (See Transportation Overview)

Of the various transportation modes, passenger vehicles consume the most energy (see Figure 1). Despite major efforts to shift away from petroleum, oil accounted for over 95 percent of the energy used in transportation in 2011, although biofuels accounted for almost 10 percent of energy used for light-duty vehicles.[1]

Figure 1: Transportation Energy Use by Mode (2011)

* Commercial light trucks are medium-duty trucks weighing between 8,500 and 10,000 pounds.

Source: U.S. EIA. 2013. "Annual Energy Outlook 2013." U.S. Energy Information Administration. April. Accessed August 15, 2013.

Over the next 30 years, analysts expect energy use for rail, aircraft, buses, and freight trucks to grow at higher average annual rates than energy use for light-duty vehicles, which is expected to decline due to federal fuel economy and greenhouse gas standards; see Figure 2.

Figure 2: Average Annual Growth in Transportation Energy Use by Mode (2011-2040)

Overall transportation energy use is expected not to change from 2011 to 2040. Light-duty vehicle energy use is expected to decrease due to the recent fuel economy and greenhouse gas standards.

Source: U.S. EIA. 2013. "Annual Energy Outlook 2013." U.S. Energy Information Administration. April. Accessed August 15, 2013.

This factsheet gives a brief overview of the various transportation modes and discusses efficiency improvements available for each.

Passenger Vehicles

Light-duty vehicles, or passenger vehicles, are defined as cars or light-duty trucks with a gross vehicle weight of less than 8,500 pounds. They are the largest source of energy consumption and greenhouse gas emissions within the transportation sector.

Figure 3: Passenger Vehicle Statistics in the United States (1980-2011).

Annual statistics for cars and light trucks: vehicle sales and registrations, vehicle miles traveled (VMT), average new vehicle fuel economy, and federal fuel economy standards.

Source: ORNL. 2013. "Transportation Energy Data Book Edition 32." Oak Ridge National Laboratory. Accessed August 14, 2013.  

Technology options to reduce fuel consumption and greenhouse gas emissions from passenger vehicles can include the following:

  • Technology improvements for conventional vehicles: The technological improvements for passenger vehicles can be grouped according to application: engine efficiency, transmission, and other improvements such as vehicle weight reduction, aerodynamic improvements, and reduced rolling resistance. One significant engine efficiency improvement, the hybrid electric vehicle, has been on the road for over a decade. There is a range of hybrids available today, and they are expected to make up about 10 percent of annual passenger vehicle sales by 2040.[2] In 2011, hybrids made up about 3 percent of the U.S. passenger vehicle market.[3]
  • Plug-in technology: All-electric vehicle, plug-in hybrid, and extended range electric vehicle technologies can eliminate or significantly reduce gasoline consumption. All-electric vehicles are very efficient vehicles that can only be powered by batteries. Extended range electric vehicles offer considerable improvements in fuel economy over conventional hybrids because a battery-powered electric motor can run the vehicle on its own, which is more energy efficient than an internal combustion engine or hybrid vehicle drivetrain. Once the battery is depleted, the vehicle’s internal combustion engine can power the vehicle, giving it a range comparable to that of a conventional vehicle. A plug-in hybrid operates like a conventional hybrid, but with a larger battery pack that is capable of powering the vehicle on its own. Key hurdles for electric vehicles include the development of batteries with higher capacity and longer durability, reducing upfront cost, and deploying needed charging infrastructure. Many electric vehicle models are now available and over 100,000 were sold in the United States between 2011 and mid-2013.[4] The EIA expects electric vehicles to make up 3.8 percent of the passenger vehicle market in 2040.[5]
  • Hydrogen fuel cells: Hydrogen fuel cell vehicles use fuel cells to produce electricity, which is then used to power the vehicle. Fuel cells promise a two- to three-fold increase in vehicle efficiency over conventional internal combustion engine vehicles and emit only water vapor in use. Similar to electric vehicles, storing enough hydrogen to obtain sufficient vehicle range before refueling is a challenge. Fuel cells also require a convenient refueling infrastructure, which does not exist today. Durability and costs of fuel cells and hydrogen production also remain challenges. (See Climate TechBook: Hydrogen Fuel Cell Vehicles)
  • Biofuels: Until electric vehicles were widely introduced in 2011, biofuels had been the primary focus of use and research for alternative fuels in the passenger vehicle market. Biofuels used currently include ethanol, biodiesel, and other fuels derived from biomass. To obtain significant reductions in greenhouse gas emissions using biofuels in passenger vehicles, a transition to advanced biofuels (e.g., cellulose for drop-in biofuels) with significantly lower greenhouse gas emission profiles will be required. (See Climate TechBook: Biofuels Overview)

Medium- and Heavy-Duty Vehicles

Medium-duty vehicles have a gross vehicle weight of 8,500 to 26,000 pounds, such as large pick-up trucks and SUVs, small buses, cargo vans, and short-haul trucks. Heavy-duty vehicles have a vehicle weight over 26,000 pounds and are used in both long-distance and local transport. Heavy-duty vehicles include long-haul trucks, large buses, and other vehicles. Medium- or heavy-duty vehicles (e.g., freight and delivery trucks) make up many commercial vehicle fleets; these fleets consume large quantities of fuel because of intensive use and the relatively low fuel economy of their vehicles. (See Climate TechBook: Medium- and Heavy-Duty Vehicles)

Table 1: Medium- and Heavy-Duty Trucks in the United States (2011).

Vehicle classes are defined by vehicle weight. Since Class 3 starts at 10,001 pounds, medium-duty vehicles that weigh between 8,500 and 10,000 pounds are not included here. Class 7-8 vehicles weigh more than 26,000 pounds.


Number of Registered Vehicles

Average Annual Miles per Vehicle

Average Fuel Economy (mpg)

Class 3-8 Single-Unit Trucks




Class 7-8 Combination Trucks




Source: ORNL. 2013. "Transportation Energy Data Book Edition 32." Oak Ridge National Laboratory. Accessed August 14, 2013.

Technology options to reduce fuel consumption and greenhouse gas emissions include the following:

  • Idle reduction: A significant amount of fuel use could be avoided by reducing vehicle idling – an average tractor-trailer spends six hours each day idling to generate electricity for AC and heating systems.[6] Idle reduction technologies include several options. For example, auxiliary power units in vehicles or electrical outlets at truck stops  allow drivers to “plug in” their vehicles to operate the necessary systems. Hybrid drivetrains, similar to those used in passenger vehicles, can also help reduce idling, especially for vehicles used locally in stop-and-go traffic. In the case of buses, idle reduction technologies and strategies have the co-benefit of improving air quality in areas of heavy bus use, such as schools.
  • Vehicle efficiency improvements: Most medium- and heavy-duty vehicles have turbo-charged,[7] direct-injection diesel engines, which are the most energy-efficient internal combustion engines available. State-of-the-art turbo-charged diesel engines achieve 46 to 47 percent efficiency, versus only 25 percent for spark-ignited gasoline engines, which are used in most passenger vehicles in the United States. Options for improving medium- and heavy-duty vehicle efficiency include engine improvements, transmission enhancements, improved aerodynamics and changes in systems and logistics. Overall, existing technology improvements could reduce fuel use by new long-haul tractor-trailers by 18 to 50 percent, with the 50 percent reduction requiring about 5 years of savings to pay off.[8]
  • Low-carbon fuels: These modes can also benefit from alternative fuel use. Lower-carbon fossil fuels, such as natural gas, can reduce conventional air pollutants as well as greenhouse gas emissions.[9] For diesel-powered trucks, blends of up to 20 percent biodiesel can be used in engines without any modification. (See Climate TechBook: Biodiesel)


Aircraft emissions in the United States are about 8 percent of total transportation sector emissions,[10] and are expected to grow significantly in the long term. Business-as-usual projections for aircraft energy consumption growth in the United States are estimated at 0.5 percent per year from 2011 to 2040.[11]

Table 2: U.S. Certificated Air Carrier Fuel Consumption and Travel (2011)


Domestic operations

International operations

Aircraft-miles (millions)



Fuel consumed (million gallons)



Seats per aircraft



Aircraft-miles flown per gallon



Energy Intensity (Btu/passenger-mile)



Energy Intensity (Btu/vehicle-mile)



Source: U.S. BTS. 2013. "Table 4-8: Certificated Air Carrier Fuel Consumption and Travel." Bureau of Transportation Statistics. Accessed August 15, 2013.; ORNL. 2013. "Transportation Energy Data Book Edition 32." Oak Ridge National Laboratory. Accessed August 14, 2013.

A number of options are available to limit the growth in aviation greenhouse gas emissions. These include improved navigation systems in the near to medium term and advanced propulsion systems, lightweight materials, improved aerodynamics, new airframe designs, and alternative fuels over the medium to long term.

In the near term (to 2025), the most promising strategies for improving the efficiency of aircraft operations are improvements to the aviation system: advanced communications, navigation, surveillance, and air traffic management, as opposed to changes to aircraft themselves. These improvements have the potential to decrease aircraft fuel consumption and improve aviation operations by shortening travel distances and reducing congestion in the air and on the ground.

Over the longer term (out to 2050), efficiency improvements can be achieved by aircraft technologies including more efficient engines, advanced lightweight materials, and improved aerodynamics. Since aircraft have a much longer lifetime than on-road vehicles (30 to 40 years compared to an average of 14 years for a passenger vehicle in the United States), the fleet-wide penetration of advanced technologies will take a number of years. Early aircraft retirement programs might be able to push more rapid fleet turnover, but the potential benefits of such a program are uncertain.

The potential for fuel switching on jet aircraft is limited in the near future, compared to on-road vehicles. The only feasible options that will reduce greenhouse gas emissions are “drop-in” replacements to petroleum-based jet fuels, which include hydroprocessed renewable jet fuel (from plants or algae) and thermochemically produced Fischer-Tropsch fuels (from biomass or fossil fuel feedstocks, if produced with carbon capture and storage). These fuel production processes are being demonstrated by major carriers today, but are not being produced at commercial scale. Over the longer term, these fuels face numerous challenges with respect to production, distribution, cost, and the magnitude of greenhouse gas benefits.

Marine Transportation

Emissions from marine transportation are about 2 percent of current U.S. transportation emissions, with little domestic growth expected over the next 30 years. On the other hand, due to increases in economic activity and international trade, international marine emissions are estimated to increase by at least 50 percent over 2007 levels by 2050.

Table 3: Domestic Marine Statistics (2011)

Number of Vessels


Ton-miles (billions)


Tons shipped (millions)


Average length of haul (miles)


Source: Department of Energy (DOE), Transportation Energy Data Energy Book 32, 2013.

The majority of marine vessels used for commercial operations are powered by highly efficient diesel engines.[12] These engines generally have a longer lifetime than those used in on-road transportation (30 years or more); thus, technical improvements to new engines might not reduce this sector’s emissions in the shorter term.

Immediate reductions in greenhouse gas emissions from marine vessels are available by simply reducing speed. However, reducing speed also reduces shipping capacity. To maintain shipping supply, shippers would have to perform more trips or increase ship utilization (the load factor). Although more trips could increase greenhouse gas emissions, reductions in shipping supply from reduced speeds can also be countered by increasing port efficiency and optimizing land-side intermodal transportation systems, allowing for faster ship turnaround times.

Additional optimization of shipping logistics, routing, and maintenance could reduce greenhouse gas emissions from shipping. These improvements include increased ship utilization (increased load factor), improved and more consistent maintenance practices, optimized ship control, and route planning optimized for current weather conditions and ocean currents.

Technological mitigation options for new ships, aside from alternative fuels and power, include larger ship sizes, hull and propeller optimization, more efficient engines, and novel low-resistance hull coatings. Improvements in engine design include a more flexible design utilizing a series of smaller diesel-electric engines, all optimized for a single speed, that power an electric drive.

Most alternative energy sources currently in use or under development for application in other sectors could be applied in the marine sector as well. Substituting marine diesel oil or liquefied natural gas for heavy fuel oil (i.e., residual fuel oil) currently used in ships can achieve greenhouse gas reductions. Other alternative fuel and power sources, such as biofuels, solar photovoltaic cells, and fuel cells, are longer-term options.

Other Modes

Rail transportation and buses constitute a very small percentage of current transportation sector emissions in the United States, yet growth rates of energy consumption within these modes are expected to be higher than the growth rates of other modes, with the exception of freight trucks. In the future, these modes could make use of technological advances in other sectors, such as improvements in diesel engine efficiency, hybrid technologies, and alternative fuels. For example, many metropolitan transit systems are transitioning to natural gas buses. In 2011, natural gas accounted for 20 percent of fuel consumed by transit buses.[13]

Global Context

Transportation activity and vehicle ownership is expected to grow significantly worldwide over the next several decades. The transportation sector, however, offers some of the greatest potential to alter the growth path in energy consumption, as illustrated by the expected effects of increased fuel economy and greenhouse gas standards for vehicles on overall energy consumption in the United States. Many non-OECD economies are predicted to experience rapid growth in energy consumption as transportation systems are modernized and the demand for personal motor vehicle ownership increases due to higher per capita incomes. Non-OECD transportation energy use is expected to increase by an average of 2.3 percent per year from 2010 to 2040, compared with a decrease by an average of 0.1 percent per year for transportation energy consumption in the OECD countries.[14]

Policy Options

A range of policy options is available for reducing greenhouse gas emissions from these various modes of transportation. Policies can include pricing policies, fuel economy or greenhouse gas emission standards, and funding for technology research and development.

  • Pricing policy options include feebates,[15] carbon pricing, low-carbon fuel subsidies, fuel taxes based on distance traveled, and more.
  • In the United States and worldwide, strengthening fuel economy and greenhouse gas standards has been the main mechanism for improving the efficiency of passenger vehicles. Vehicle fuel economy standards can be expressed in miles per gallon (mpg) or kilometers per liter (km/l). Vehicle emissions standards limit greenhouse gas emissions from a vehicle and are typically expressed as grams of CO2 equivalent per mile (gCO2e/mi).
  • The U.S. Environmental Protection Agency has two programs – SmartWay Tractors and Trailers and the SmartWay Transport Partnership – which are both designed to help truck owners and freight transport operators choose the most efficient vehicles and save energy and lower operating costs through improved logistics.[16]
  • Policies to address greenhouse gas emissions from international aviation and marine shipping are especially challenging, because they are produced along routes where no single nation has regulatory authority. Two broad policy options are available for controlling emissions from international transportation: continuing work under the International Civil Aviation Organization and International Marine Organization to construct an international agreement for addressing these emissions; or assigning responsibility for these emissions to parties for inclusion in national commitments to reducing greenhouse gas emissions.

Related Business Environmental Leadership Council (BELC) Company Activities

Related C2ES Resources

Plug-in Electric Vehicle Dialogue Initiative, 2011-present

Primer on Federal Surface Transportation Authorization and the Highway Trust Fund, 2011

Reducing Greenhouse Gas Emissions from U.S. Transportation, 2011

Federal Vehicle Standards

Greenhouse Gas Emissions from Aviation and Marine Transportation: Mitigation Potential and Policies, 2009

Comparison of Actual and Projected Fuel Economy for New Passenger Vehicles, 2012

Further Reading / Additional Resources

U.S. Department of Energy, Alternative and Advanced Vehicles

U.S. Department of Transportation, National Transportation Statistics


[1] U.S. EIA. 2013. "Annual Energy Outlook 2013." U.S. Energy Information Administration. April. Accessed August 15, 2013.

[2] Ibid.

[3] Ibid.

[4] Green Car Reports. 2013. 100,000th Plug-In Electric Car In U.S. Sold Today (More Or Less). May 20. Accessed August 15, 2013.

[5] U.S. EIA. 2013.

[6] By government mandate, long-haul truckers must rest for 10 hours after driving for 11 hours. During the rest periods, truckers might park at truck stops for several hours and idle their engines to provide their sleeper compartments with air conditioning or heating or to run electrical appliances such as refrigerators or televisions.

[7] In turbo-charging, the intake air is compressed with some of the exhaust gas energy, which would otherwise be wasted. Thus, more air can be taken in and more engine power can be produced from a given engine size.

[8] Greene, David, and Steven Plotkin. 2011. Reducing Greenhouse Gas Emissions from U.S. Transportation. Arlington, Virginia: Center for Climate and Energy Solutions.

[9] Ibid.

[10] U.S. EPA. 2013. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2011. Washington, DC: U.S. Environmental Protection Agency, 2-26. Accessed July 19, 2013.

[11] U.S. EIA. 2013.

[12] These engines commonly achieve efficiencies near 50 percent, which is higher than most diesel engine applications, since ships typically operate at steady state under high load conditions.

[13] APTA. 2013. "2013 Public Transportation Fact Book." American Public Transportation Association. April. Accessed August 15, 2013.

[14] U.S. EIA. 2013. "International Energy Outlook." U.S. Energy Information Administration. July 25. Accessed August 15, 2013.

[15] A feebate can be formulated in terms of fuel economy (fuel consumption per unit distance) or greenhouse gas emissions. The manufacturer (or the purchaser) pays a fee for any vehicles produced (or purchased) that are less efficient than the target level for fuel economy or greenhouse gas emissions. The purchasers of any vehicle produced or sold that is more efficient than the target receive a rebate. The value of the fee or rebate can increase in proportion to the divergence from the targeted value. The feebate changes the initial purchase price of a vehicle, which can have a larger impact on consumer decisions than the savings from higher fuel economy alone.

[16] U.S. EPA. 2013. SmartWay. Accessed August 15, 2013.  


Overview of the emissions and energy use associated with different transportation modes, including cars and light-duty trucks, medium- and heavy-duty trucks, buses, trains, ships, and aircraft

Rising Oil Prices: It’s About More Than What You Pay At The Pump

For many Americans, U.S. oil dependence has become a concern for reasons ranging from climate change and environmental protection to national security and the economic impact of higher gas prices. But there are other important impacts of our oil dependence, including how foreign oil contributes to the U.S. trade deficit and how rising oil prices decrease American jobs – both particularly salient issues on the current U.S. political agenda.  

A recent article from Daily Finance shines light on the 2010 trade deficit, more than half of which is from petroleum-related products. In 2010, the U.S. petroleum-related trade deficit was $256.9B, which represents a 29.6 percent jump from the 2009 petroleum trade deficit. This rise is largely due to increased prices, as the consumption of petroleum-related products in the United States grew by only 1.9 percent from 2009 to 2010 while the price per barrel of oil grew 31.1 percent to $74.66. An issue currently receiving a lot of attention in Washington, the $61B worth of cuts to the national budget sought by the U.S. House of Representatives, is equal to only one fourth of the country’s 2010 petroleum-related trade deficit.

Numbers that large can be hard to put into perspective, so let’s look at how this affects the average American. The graph below shows the U.S. petroleum-related trade deficit per capita (left axis), which is closely related to oil prices (right axis). In 2010 the petroleum-related trade deficit per capita was $832 and has ranged from $600 to $1200 in the past several years. This translates into each American household sending roughly $2,155 out of the U.S. economy in 2010 to pay for oil.



Rising oil prices not only increase the trade deficit, they decrease the number of jobs in America. As energy prices rise, businesses and consumers must spend more on energy and thus have less to spend elsewhere. In his presentation at our recent conference on state and federal roles in climate policy, Mark Doms, Chief Economist at the Department of Commerce, explained that when the price of oil goes up by just $10 per barrel, it translates into a loss of tens of thousands of jobs per month, or up to a quarter of a million U.S. jobs per year. Instead of losing jobs in order to maintain our use of oil, we should focus on creating jobs by investing in domestically produced alternative fuels and vehicles. 

In June 2008, oil prices spiked to $145 per barrel, and Americans paid for it at the pump as gas prices reached $4 per gallon. We could be headed into a similar situation, as oil prices rose above $105 per barrel earlier this month and are expected to continue to rise in 2011 and 2012. Because we rely on oil, a resource that is concentrated in the Organization of the Petroleum Exporting Countries or OPEC, we face oil prices that are much higher than a competitive market would yield. This makes U.S. gasoline susceptible to price shocks, and American consumers pay more at the pump than they would in a competitive market.

Here we have highlighted two other important reasons why Americans should care about rising oil prices: they increase the U.S. trade deficit and can decrease domestic jobs. As oil prices continue to rise, these negative economic trends will also worsen. In order to mitigate the impacts of rising oil prices, we need to work towards a clean energy economy and promote the use of domestic alternative fuels and energy efficiency. This would decrease our oil dependence, making the United States less susceptible to rising oil prices while also creating more jobs here at home.

Monica Ralston is is the Innovative Solutions intern

Cogeneration / Combined Heat and Power (CHP)

Quick Facts

  • Cogeneration, also known as combined heat and power (CHP), refers to a group of proven technologies that operate together for the concurrent generation of electricity and useful heat in a process that is generally much more energy-efficient than the separate generation of electricity and useful heat.
  • The typical method of separate centralized electricity generation and on-site heat generation has a combined efficiency of about 45 percent whereas cogeneration systems can reach efficiency levels of 80 percent.
  • In the United States, cogeneration has a long history in the industrial sector. Globally, industry sites in the chemicals, metal, oil refining, pulp and paper, and food processing sectors represent more than 80 percent of total global electric CHP capacity.
  • Cogeneration is widely deployed outside the United States, with Denmark, the Netherlands, and Finland leading the world in cogeneration deployment as a fraction of total national electricity generation.    
  • In 2008, cogeneration accounted for 9 percent of total U.S. electricity generating capacity. A recent study by the Oak Ridge National Laboratory calculated that increasing that share to 20 percent by 2030 would lower U.S. greenhouse gas emissions by 600 million metric tons of CO2 (equivalent to taking 109 million cars off the road) compared to “business as usual.”


Cogeneration is a system of commercially available technologies that decrease total fuel consumption and related GHG emissions by generating both electricity and useful heat from the same fuel input. Cogeneration is often called combined heat and power (CHP), since most cogeneration systems are used to supply electricity and useful heat. However, the heat energy from electricity production can also be used for cooling and other non-heating purposes, so the term “cogeneration” is more inclusive. Cogeneration is a form of local or distributed generation as heat and power production take place at or near the point of consumption. For the same output of useful energy, cogeneration uses far less fuel than does traditional separate heat and power production, which means lower greenhouse gas (GHG) emissions as fossil fuel use is reduced.

While this document focuses on the GHG emission reductions, cogeneration offers other benefits that include:

  • Reducing other air pollutants (e.g., SO2, NOX, Hg)
  • Providing on-site electricity generation that is resilient in the face of grid outages thus providing power for critical services in emergencies and avoiding economic losses
  • Avoiding or deferring investments in new electricity transmission and distribution infrastructure and relieving congestion constraints on existing infrastructure.
  • Using existing industrial and commercial sites for incremental power generation rather than building new power plant capacity at greenfield sites

The largest potential for increased utilization of cogeneration is in the industrial sector. In the United States, the industrial sector is responsible for approximately one third of the country’s total energy consumption.[1]  The industrial sector’s direct GHG emissions account for 20 percent of the U.S. total, and an additional 9 percent of U.S. GHG emissions come from centrally generated electricity consumed in the industrial sector.[2] Direct industrial emissions come from on-site combustion of fossil fuels and from non-energy related process emissions.

While the greatest potential for increasing cogeneration is in the industrial sector, the technology is also increasingly available for smaller-scale applications in residential and commercial facilities. Cogeneration systems appeal to business operations requiring a continuous supply of reliable power such as data centers, hospitals, universities, and industrial operations.  District heating and cooling (DHC) in cities and large institutions is one established use of cogeneration (and one widely employed in Europe) in the residential and commercial sectors. District heating can meet low and medium temperature heat demands, such as space heating and hot tap water preparation, by using waste heat from electricity generation to heat water that is transported through insulated pipes. District cooling takes advantage of natural cooling from deep water resources as well as the use of waste heat to cool water via absorption chillers. About 85 urban utilities and 330 campuses in the United States use district energy to reduce costs and GHG emissions, increase efficiency, and improve reliability.[3]     


Separate heat and power (SHP) refers to the widespread practice of centrally generating electricity at large-scale power plants and separately generating useful heat onsite for applications such as industrial processes or space and water heating. SHP leads to energy losses in both processes. In the United States, conventional coal and natural gas power plants are, on average, 33 and 41 percent efficient, respectively, in converting the energy in their fuel into electricity; although, the efficiency rates vary by technology with new natural gas combined cycle plants capable of greater than 50 percent efficiency.[4] Typical SHP has a combined efficiency of about 45 percent while cogeneration systems that combine the power and heat generation processes can be up to 80 percent efficient.[5] Because cogeneration takes place on-site or close to the facility it also results in less energy lost during the transmission and distribution process (usually about 9 percent of net electricity generation).[6]    

Figure 1 provides a helpful comparison of illustrative CHP and SHP systems and shows the energy inputs each would require to ultimately produce the same amount of useful energy. 

Figure 1: CHP versus Separate Heat and Power (SHP) Production

Source: U.S. EPA: Combined Heat and Power Partnership, “Efficiency Benefits.”
Note: This figure shows an example where cogeneration uses only 100 units of fuel to produce an amount of electricity and useful heat that would require 154 units of fuel via separate heat and power production.

Cogeneration systems can be powered by a variety of fuels, including natural gas, coal, oil, and alternative fuels such as biomass. In recent years, natural gas has been the predominant fuel for CHP systems, but biomass and ”opportunity fuels” (i.e., wastes or by-products from industrial processes, agriculture, or commercial activities) are expected to gain a larger share with growing environmental and energy security concerns.[7],[8]  Some cogeneration technologies can operate with multiple fuel types, making the system less vulnerable to fuel availability and volatile commodity prices.    

Cogeneration is appropriate in situations where a facility has a continuous demand for heating or cooling as well as demand for electrical or mechanical power. Cogeneration systems can provide electricity or mechanical power (e.g., for driving rotating equipment like compressors, pumps, and fans) and heat energy that can be used for: steam or hot water; process heating, cooling and refrigeration; and dehumidification.[9]

Cogeneration Process
There are two types of cogeneration—“topping cycle” and “bottoming cycle.” The most common type of cogeneration is the “topping cycle” where fuel is first used to generate electricity or mechanical energy at the facility and a portion of the waste heat from power generation is then used to provide useful thermal energy. The less common “bottoming cycle” type of cogeneration systems first produce useful heat for a manufacturing process via fuel combustion or another heat-generating chemical reaction and recover some portion of the exhaust heat to generate electricity. “Bottoming-cycle” CHP applications are most common in process industries, such as glass and steel, that use very high temperature furnaces that would otherwise vent waste heat to the environment. The following description of cogeneration systems focus on “topping cycle” applications.

Each cogeneration system is adapted to meet the needs of an individual building or facility. System design is modified based on the location, size, and energy requirements of the site. Cogeneration is not limited to any specific type of facility but is generally used in operations with sustained heating requirements. Most CHP systems are designed to meet the heat demand of the energy user since this leads to the most efficient systems. Larger facilities generally use customized systems, while smaller-scale applications can use prepackaged units.  

Cogeneration systems are categorized according to their prime movers (the heat engines), though the systems also include generators, heat recovery, and electrical interconnection components. The prime mover consumes (via combustion, except in the case of fuel cells discussed below) fuel (such as coal, natural gas, or biomass) to power a generator to produce electricity, or to drive rotating equipment. Prime movers also produce thermal energy that can be captured and used for other on-site processes such as generating steam or hot water, heating air for drying, or chilling water for cooling. There are currently five primary, commercially available prime movers: gas turbines, steam turbines, reciprocating engines, microturbines, and fuel cells.

Steam turbines and gas, or combustion, turbines are the prime movers (heat engines) best suited for industrial processes due to their large capacity and ability to produce the medium- to high-temperature steam typically needed in industrial processes.[10]

Gas Turbines
Gas turbines typically have capacities between 500 kilowatts (kW) and 250 megawatts (MW), can be used for high-grade heat applications, and are highly reliable.[11]Gas turbines operate similarly to jet engines—natural gas is combusted and used to turn the turbine blades and spin an electrical generator. The cogeneration system then uses a heat recovery system to capture the heat from the gas turbine’s exhaust stream. This exhaust heat can be used for heating (e.g., for generating steam for industrial processes) or cooling (generating chilled water through an absorption chiller). About half of the CHP capacity in the United States consists of large combined cycle systems that include two electricity generation steps (the combustion turbine and a steam turbine powered by heat recovered from the gas turbine exhaust) that supply steam to large industrial or commercial users and maximize power production for sale to the grid. Figure 2 shows how a simple-cycle gas turbine cogeneration system recovers heat from the gas turbine’s hot exhaust gases to produce useful thermal energy for the site.

Figure 2: Gas Turbine or Engine with Heat Recovery Unit

Source: U.S. EPA – Combined Heat and Power Partnership: Basic Information.
Note: Figure 2 shows a gas turbine cogeneration system, with the heat recovery unit capturing exhaust heat from the turbine, and converting that to thermal energy for other uses.

Steam Turbines
Steam turbines systems can use a variety of fuels, including natural gas, solid waste, coal, wood, wood waste, and agricultural by-products. Steam turbines are highly reliable and can meet multiple heat grade requirements. Steam turbines typically have capacities between 50 kW and 250 MW and work by combusting fuel in a boiler to heat water and create high-pressure steam, which turns a turbine to generate electricity.[12]The low-pressure steam that subsequently exits the steam turbine can then be used to provide useful thermal energy, as shown in Figure 3. Ideal applications of steam turbine-based cogeneration systems include medium- and large-scale industrial or institutional facilities with high thermal loads and where solid or waste fuels are readily available for boiler use.

Figure 3: Steam Boiler with Steam Turbine

Source: US EPA – Combined Heat and Power Partnership: Basic Information.
Note: Figure 3 shows how a cogeneration system that is primarily heat based, can also be used to generate electricity.

Reciprocating Engines
In terms of the number of units, reciprocating internal combustion engines are the most widespread technology for power generation, found in the form of small, portable generators as well as large industrial engines that power generators of several megawatts; however, because of their small size, reciprocating engines account for only a small share (about 2 percent) of total U.S CHP capacity.[13]Spark ignition (SI) engines are the most common types of reciprocating engines used for CHP in the United States. SI engines (available in capacities up to 5 MW) are similar to gasoline-powered automobile engines, but they generally run on natural gas, though they can also run on propane or landfill and biogas. 

Reciprocating engines start quickly, follow load well, have good efficiencies even when operating at partial load, and generally have high reliabilities.[14]Reciprocating engines are well suited for CHP in commercial and light industrial applications of less than 5 MW. Smaller engine systems produce hot water. Larger systems can be designed to produce low-pressure steam. Multiple reciprocating engines can be used to increase system capacity and enhance overall reliability.

Microturbines are small, compact, lightweight combustion turbines that typically have power outputs of 30 to 300 kW. A heat exchanger recovers thermal energy from the microturbine exhaust to produce hot water or low-pressure steam. The thermal energy from the heat recovery system can be used for potable water heating, absorption cooling, dessicant dehumidification, space heating, process heating, and other building uses. Microturbines can burn a variety of fuels including natural gas and liquid fuels. 

Fuel Cells
Fuel cells are an emerging technology with the potential to serve power and thermal needs with very low emissions and with high electrical efficiency. Fuel cells use an electrochemical or battery-like process to convert the chemical energy of hydrogen into water and electricity. The hydrogen can be obtained from processing natural gas, coal, methanol, and other hydrocarbon fuels. As a less mature technology, fuel cells have high capital costs, an immature support infrastructure, and technical risk for early adopters. However, the advantages of fuel cells include low emissions and low noise, high power efficiency over a range of load factors, and modular design. A variety of fuel cell technologies are under development, with some targeted for small commercial markets, and other technologies focused on larger, industrial CHP applications. 

Environmental Benefit / Emission Reduction Potential

Cogeneration offers multiple environmental benefits. Since less fuel is burned per unit of useful energy output, cogeneration reduces GHG emissions and decreases air pollution compared to SHP systems. Currently installed cogeneration systems avoid the equivalent of 1.8 percent of annual U.S. energy consumption and annual CO2 emissions of 248 million metric tons (equal to 3.5 percent of total U.S. GHG emissions in 2007).[15],[16]A recent study by the Oak Ridge National Laboratory (ORNL) calculated that increasing cogeneration’s share of total U.S. electricity generation capacity to 20 percent by 2030 (which ORNL estimated would require deploying 156 GW of new cogeneration capacity compared to about 85 GW today) would lower U.S. GHG emissions by 600 million metric tons of CO2 (equivalent to taking 109 million cars off the road) compared to “business as usual.”[17]

While the ORNL analyzed an ambitious goal for expanding cogeneration by 2030, a 2009 study by McKinsey & Company sought to estimate the cost-effective potential for expanding cogeneration by 2020 (i.e., the potential to make NPV-positive investments in cogeneration).[18]McKinsey estimated that the potential exists in the United States for an additional 50.4 GW of cogeneration capacity by 2020, which would avoid an estimated 100 million metric tons of CO2 per year compared to “business as usual.” McKinsey found that the cost-effective incremental cogeneration capacity consisted primarily (70 percent) of large-scale (greater than 50 MW) industrial cogeneration systems. Figure 4 shows McKinsey’s estimates of the composition of cost-effective cogeneration potential for 2020.

Figure 4: McKinsey’s Estimates of Cost-Effective Cogeneration Potential for 2020 by Sector[19]


Cogeneration systems are major investments. For example, the capital cost of a 50 MW gas turbine cogeneration system might be on the order of $45 million, and such a cogeneration system might take 6-18 months to construct.[20] A 1 MW reciprocating engine cogeneration system (e.g., for a hospital) might have a capital cost of roughly $1.6 million.[21] The cost of a cogeneration system depends on the level of complexity of features beyond the basic prime mover – such as the heat recovery or emissions monitoring systems (as well as location, labor, and the financial carrying costs during construction). Generally, with the same fuel and configuration, costs for cogeneration systems per kilowatt of capacity decrease as size increases. Given the efficiency gains from cogeneration, some analysts estimate that GHG emission reductions can be achieved at a “negative cost” via cogeneration in many instances since cost savings from reduced expenditures on fuel (due to the higher efficiency of cogeneration compared to separate heat and power generation) will outweigh the capital and other costs of cogeneration projects.[22]

Current Status of Cogeneration

Cogeneration currently accounts for roughly 12 percent of total U.S. electricity generation and comprises about 9 percent (85 gigawatts at about 3,300 sites) of total generating capacity.[23] Figures 5-8 show how existing cogeneration capacity is distributed across different applications, system technology types, and fuel inputs. Only about 12 percent of existing cogeneration capacity is deployed at commercial or institutional facilities (as opposed to industrial or manufacturing facilities). Nearly three quarters of cogeneration capacity uses natural gas for fuel, and gas-fired combustion turbines and combined cycle systems dominate cogeneration capacity even though nearly half of all cogeneration sites use reciprocating engines (the reciprocating engines are much smaller in terms of capacity than the other systems). Large cogeneration systems (100 megawatts or more in capacity) account for roughly 65 percent of total cogeneration capacity.[24]

Figure 5: Existing Cogeneration Capacity by Application[25]

Figure 6: Existing Cogeneration Sites by System Type[26]

Figure 7: Existing Cogeneration Capacity by System Type[27]

Figure 8: Existing Cogeneration Capacity by Fuel Type[28]


Current U.S. cogeneration capacity is largely concentrated in states with large industrial heat consumption (see Table 1), such as for petrochemical and petroleum refining operations. Texas alone has one fifth of the total U.S. cogeneration installed capacity, and the top five states in terms of installed capacity account for half of the U.S. total.[29] State air pollution regulations that use output-based standards and state-level incentives for cogeneration also promote cogeneration in certain states.

Cogeneration projects multiplied in the United States following the passage of the Public Utilities Regulatory Policies Act (PURPA) in 1978. PURPA required utilities to interconnect with and purchase electricity from “qualified facilities” like cogeneration systems thus giving industrial and institutional users access to the grid and the ability to sell back excess electricity. Shortly after enactment of PURPA, Congress also created federal tax credits for CHP investments. Following the enactment of PURPA and the CHP tax credits, cogeneration grew dramatically with capacity increasing more than three-fold in two decades (from about 20 gigawatts in 1978).[30] 2006 through 2009 saw much lower levels of cogeneration deployment than historical growth rates owing in part to higher natural gas prices and economic uncertainty.[31] One factor affecting the growth of CHP was the change to PURPA regulations that resulted from the Energy Policy Act of 2005. As instructed by the act, the Federal Energy Regulatory Commission (FERC) issued new rules that no longer required utilities to buy electricity from larger “qualified facilities” when those facilities have access to competitive electricity markets, and FERC issued rules to ensure that new CHP “qualified facilities” were not mainly electricity-generating facilities taking advantage of the incentives offered to CHP facilities (so-called “PURPA machines”).[32]

Table 1: Cogeneration Installed Capacity by State, 2006[33]



Total Capacity (MW)

% of U.S. Total









































Rest of U.S.




Recent federal legislation, including the Energy Improvement and Extension Act of2008 (EIEA) and the American Recovery and Reinvestment Act of 2009 (ARRA), encourages wider deployment of cogeneration with tax incentives for cogeneration projects (the CHP investment tax credit and accelerated depreciation) and substantial funding for select CHP projects.[34]

Globally, cogeneration is in widespread use, especially in the European Union (EU). Five EU countries rely on cogeneration for between 30 to 50 percent of their total power generation, andcogeneration has contributed to 57 million metric tons of CO2e, or 15 percent, of Europe’s overall GHG emission reductions from 1990 to 2005.[35],[36] Globally, industry sites in the chemicals, metal, oil refining, pulp and paper, and food processing sectors represent more than 80 percent of total global CHP capacity.[37]Cogeneration currently accounts for approximately 13 and 5 percent of total electricity generation capacity in China and India, respectively.[38] The International Energy Agency (IEA) projects that by 2030, Chinese and Indian cogeneration penetration could rise to 28 and 26 percent, respectively, with adequate policy and market incentives.[39] In China, cogeneration has significant growth potential given the country’s large industrial base. IEA projected that under aggressive international efforts to reduce GHG emissions, global industrial cogeneration could quadruple from 2005 to 2050 as compared to merely doubling under “business as usual.”[40]

Obstacles to Further Development or Deployment of Cogeneration

  • Capital Constraints

Cogeneration systems are large capital investments. Firms may be unwilling to undertake such significant capital investments even when they may offer positive returns. Another cost consideration for firms is business uncertainty. If a firm is not confident that it will continue operations for many years at a given facility, it may not invest in the high upfront costs of cogeneration since a project’s economic viability can depend on cost savings realized over several years. In addition, there can be costs associated with manufacturing downtime and siting and permitting issues.Also, seamless integration of components beyond the basic equipment can necessitate specialized parts and increase the cost of a cogeneration system.[41]

  • Utility Business Practices  

Many cogeneration systems maintain their connection to the utility grid for supplemental power needs beyond their self generation capacity and/or for standby and back-up service during routine maintenance or unplanned outages. Utility charges for these services (standby rates) can significantly reduce the money-saving potential of cogeneration.[42] However, cogeneration and other types of distributed energy allow the grid to function more efficiently by reducing baseload and peak demand, as well as reducing the need for transmission and distribution upgrades and construction. Pricing arrangements between utilities and cogeneration system operators that fairly account for utilities’ obligation to supply backup power as well as the benefits to the grid of cogeneration (e.g., avoided costs of building new generation and transmission capacity) can encourage cogeneration investments.   

  • Utility Interconnection

The economic viability of cogeneration systems depends on their ability to safely, reliably, and economically interconnect with the existing grid. Interconnection standards, including technical specifications as well as application processes and fees, between utilities and cogeneration systems are often state mandated and vary regionally. This lack of uniformity makes it difficult for manufacturers of cogeneration technologies to produce modular components and can make cogeneration system deployment more complicated and expensive. Improved interconnection policies could increase deployment of cogeneration systems.[43],[44]

  • Environmental Permitting Regulations

By generating both electricity and heat onsite, cogeneration can increase a facility’s onsite air emissions even as it reduces total emissions associated with the facilities heat and electricity consumption. Current environmental permitting regulations do not always recognize this overall emissions reduction benefit. For example, the Clean Air Act’s New Source Review (NSR) requires large, stationary sources to install best available pollution control equipment during construction or major modifications that increase onsite emissions. In some circumstances NSR requirements can discourage installation of CHP systems even when they would improve environmental outcomes.[45] The adoption of output-based emission standards, which allows cogeneration systems to benefit from their increased efficiency, is one way to encourage more cogeneration systems.   

  • Need for Further Research, Development, and Demonstration (RD&D)

To improve the performance of cogeneration technologies and reduce investment costs, further RD&D is warranted, specifically in the areas of: high-temperature CHP, small-scale systems (e.g., improving the efficiency of micro-turbines and their cost through improved manufacturing techniques), fuel cell research, heat & cold storage system optimization and integration, and medium-scale systems (e.g., increased demonstration of medium-scale turbines in various industrial settings).[46]

Policy Options to Help Promote Cogeneration

  • Price on Carbon

Policies that set a price on GHG emissions, such as a GHG cap-and-trade program (see Climate Change 101: Cap and Trade), can encourage investment in energy-efficient technology such as cogeneration. Carbon pricing policies (e.g., cap and trade allowance allocation) can be designed so as not to create disincentives for cogeneration.[47]

  • Renewable Portfolio and Energy Efficiency Resource Standards

Renewable Portfolio Standards and Energy Efficiency Standards require that energy providers meet a specific portion of their electricity demand through renewable energy and/or energy efficiency measures. Such policies specify eligible energy sources and technologies that count towards the requirements. More than a dozen states allow cogeneration to count toward renewable/alternative energy and efficiency standards.[48]  

  • Financial Incentives for Cogeneration

Certain states already offer investment tax credits (ITC), which are a form of subsidy to help offset the upfront capital cost of investments, for cogeneration, and the federal government also offers a 10 percent ITC for cogeneration (enacted in 2008) and accelerated depreciation.[49] Some states offer production incentives, which provide a financial benefit based upon the annual useful energy output of the cogeneration system.

  • Interconnection Standards

Coordination among state and federal regulators, utilizes, and stakeholder groups regarding best practices in cogeneration interconnection with the electric grid can help ensure cogeneration interconnection contributes to a safe and reliable grid and minimize the cost and complexity facing cogeneration technology providers and users designing and deploying systems for interconnection.

  • Environmental Permitting

Cogeneration is more readily deployed when environmental regulations do not penalize cogeneration systems that increase onsite air emissions (by using more fuel onsite to generate both electricity and heat) while also decreasing net air emissions by having higher efficiency (and thus less total fuel use) than separate heat and power generation.[50]

  • Research, Development, and Demonstration (RD&D)

Continued and increased funding for programs such as the Department of Energy’s Industrial Technologies Program (ITP)[51] would support RD&D for cogeneration technologies to improve reliability and efficiency and reduce costs. ITP’s public-private partnerships help future deployment of both integrated energy systems and component technologies (for upgrading and retrofits).

  • Technical Assistance for Potential Cogeneration Users

Many companies (especially small and medium-sized businesses) that would benefit from cogeneration systems are not aware of their financial or technical options. Expanding programs that work with companies such as the U.S. Environmental Protection Agency’s Combined Heat and Power Partnership,[52] the National Institute of Standards Manufacturing Extension Partnership,[53] and DOE’s Industrial Assessment Centers and CHP Regional Application Centers[54] would help further promote cogeneration.

Related Business Environmental Leadership Council (BELC) Company Activities

Air Products



Dow Chemical Company




Related C2ES Resources

The U.S. Electric Power Sector and Climate Change Mitigation, 2005

Corporate Energy Efficiency Project

Further Reading / Additional Resources

American Council for an Energy Efficient Economy (ACEEE), “Combined Heat and Power (CHP)

Gas Technology Institute (GTI)

Hedman, Bruce, ICF International, “CHP: The State of the Market,” presentation to the U.S. EPA Combined Heat and Power Partnership 2009 Partners Meeting, 1 October 2009.

International Energy Agency, “Combined Heat and Power: Evaluating the Benefits of Greater Global Investment,” 2008.

McKinsey & Company

Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost?, 2007

Unlocking Energy Efficiency in the U.S. Economy, 2009

New York State Energy Research and Development Authority (NYSERDA), “Combined Heat and Power Program Guide.”

Oak Ridge National Laboratory, Combined Heat & Power: Effective Energy Solutions for a Sustainable Future, 2008

U.S. Combined Heat and Power Association (USCHPA)

U.S. Department of Energy

Case Studies Database

Combined Heat and Power (CHP) Regional Application Centers (RACs)

Industrial Distributed Energy

U.S. Environmental Protection Agency

Catalog of CHP Technologies

CHP Partnership Program

[1]U.S. Energy Information Administration (EIA), Annual Energy Review 2009, Table 1.2a: Energy Consumption by Sector, Selected years 1949 – 2008.

[2]U.S. Environmental Protection Agency (EPA), Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2007, Table ES-7, 2009.

[3]Environmental and Energy Study Institute, “The Role of District Energy/Combined Heat and Power in Energy and Climate Policy Solutions,” 2009.

[4]EIA, Electric Power Annual, 2010, see Table 5.3and Table 5.4. New natural gas combined cycle plant efficiency estimate comes from EIA’s Assumptions to the Annual Energy Outlook 2010 (see table 8.2).

[7]ORNL, 2008.

[8] For more information on “opportunity fuels,” see Resource Dynamics Corporation, 2004, Combined Heat and Power Market Potential for Opportunity Fuels, prepared for the Department of Energy.

[9]ORNL, 2008.

[13]ORNL, 2008.

[14]Part-load efficiency refers to the efficiency when equipment is running below its rated level of output.

[18]McKinsey & Company, Unlocking Energy Efficiency in the U.S. Economy, 2009. NPV refers to net present value, which, for a cogeneration project in McKinsey’s analysis, is the discounted value of future cost savings (e.g., from avoided electricity generation by utilities) net of incremental costs associated with cogeneration (e.g., up-front capital and installation costs, ongoing maintenance costs, and fuel costs).

[20]EPA, “Catalog of CHP Technologies: Gas Turbines,” 2008, see Table 3.

[23]ORNL, 2008.

[24]ORNL, 2008.

[25]ORNL, 2008.

[26]ORNL, 2008.

[27]ORNL, 2008.

[28]ORNL, 2008.

[29]ORNL, 2008.

[30]ORNL, 2008.

[31]Hedman, Bruce, ICF International, “CHP: The State of the Market,” presentation to the U.S. EPA Combined Heat and Power Partnership 2009 Partners Meeting, 1 October 2009.

[33]ORNL, 2008.

[35]Denmark, Finland, Russia, Latvia, and the Netherlands, IEA, “Combined Heat and Power,” 2008. 

[37]IEA, Energy Technology Perspectives 2008: Scenarios & Strategies to 2050, 2008.

[40]IEA, Energy Technology Perspectives 2008: Scenarios & Strategies to 2050, 2008.

[41]The necessitated tailoring of cogeneration systems due to a lack of factory-integrated components requires extensive project engineering, which adds to the costs and increases risk of assimilation errors.  Site-specific priorities determine the design-basis for sizing a CHP system.  NYSERDA, “Public Policy Issues and Hurdles to Implementing CHP in NYS.”

[42]ACEEE, “Standby Rates.”

[43]California Energy Commission (CEC), “Exploring Feed-in Tariffs for California.”

[44]The Economist, “Building the Smart Grid,”4 June 2009.

[45]ORNL, 2008.

[47]For example, investing in cogeneration will increase a facility’s direct GHG emissions even though it will reduce total emissions due to the improved efficiency of cogeneration. For a discussion of how to avoid creating disincentives for cogeneration under cap and trade, see Colvin, Michael, “Combined Heat and Power and Cap & Trade,” California Public Utilities Commission, presentation materials for ARB public meetings, 9 September 2009. 

[48]For more information on such state policies, see C2ES’s “Renewable and Alternative Energy Portfolio Standards.”

[49]For more information on the federal ITC for cogeneration and relevant state incentives, see the Database of State Incentives for Renewables and Efficiency (DSIRE).

[50]For more information on this topic, see EPA’s Output-Based Regulations: A Handbook for Air Regulators, 2004.

[51]DOE, Industrial Technologies Program web site.

[52]EPA, Combined Heat and Power Partnership web site.

[53]Manufacturing Extension Partnership web site.

[54]See the CHP Regional Application Centers web site


The combined genration of electricity and useful heat can substantially improve efficiency and lower GHG emissions compared to separate heat and power generation.

The combined genration of electricity and useful heat can substantially improve efficiency and lower GHG emissions compared to separate heat and power generation.

What's The Car Of 2035?

This blog post also appeared on Edmunds Auto Observer

In movies like the iconic Demolition Man, we’re led to believe the future will be filled with cars well advanced from those on the road today (in the case of the Sylvester Stallone action flick, our cars will instantly fill with foam upon a collision). But what do the real experts think about the cars we’ll be driving in the future? For example, will our cars drive themselves like Google’s modified Toyota Prius?

We answer some of these questions in our recently released report that focuses on reducing the U.S. transportation sector's greenhouse gas emissions and oil use. The report details options available to automakers for building the cars of the future. It doesn’t attempt to predict the makeup of the car market in the future – that’s up to the consumer. Instead, the report highlights that many combinations of vehicles could significantly reduce oil use and greenhouse gas emissions in the future.

Syndicate content