After all these years and despite so many accomplishments, measures that save energy remain U.S. climate policy’s bastard child.
Even defenders of energy efficiency sell it short. The latest instance was last Friday’s NY Times column, Give Me Laundry Liberty or Give Me Death!, by the paper’s resident polemicist, the economist Paul Krugman.
Electricity Savings’ top role in reducing electric-sector emissions is especially critical because no other sector (transport, industry, etc.) cut emissions more than marginally.
Krugman rightly savaged Congressional Republicans for contesting U.S. Energy Department efficiency standards for washing machines and other major energy-consuming appliances. His column reminds us that today’s G.O.P. never passes up an opportunity to force fossil fuels on the American public.
As Krugman noted, Republicans’ depiction of Democrats as enemies of freedom is exactly backwards: “Regulations ensuring that the appliances on offer are reasonably efficient reduce people’s cognitive burden — you might even say they increase our freedom,” by unshackling consumers from the task of weeding out inefficient (and expensive-to-run) appliances from efficient ones.
But consider what Nobel economics laureate Krugman left out: The only U.S. sector that has cut carbon emissions by more than token amounts since 2005 is electricity, furnishing a whopping 92 percent of the overall drop in emissions in 2023 since 2005. (See bar graph further below.) And energy savings, measured as kilowatt-hours that didn’t need to be generated because electricity savings curbed demand, accounted for 40 percent of electricity-sector carbon reductions — besting the 36 percent from power generators’ shift from coal to less-carbon-intensive fossil gas, and far surpassing the combined 24% share from growth in wind and solar electricity. (See pie-chart above. Details follow at end of post.)
Why are electricity savings undervalued?
Since 2005, the U.S. economy has grown by 40 percent in real (inflation-adjusted) terms. Yet over the same 18 years, U.S. electricity generation barely budged, rising just 5 percent. That is an immense change from mid-(20th)-century, when electricity usage typically grew each year by 6 or 7 percent, practically doubling every decade. This wrenching apart of electricity growth from economic growth has enabled the increased penetration of fossil gas-fired electricity and the rapid increase in wind and solar electricity to bite deeply into coal-fired power generation rather than simply add to it.
Yet energy savings are downgraded in energy and climate discourse. It’s not hard to see why.
First, energy saving is invisible. There are no ribbon-cuttings for energy-efficient buildings or appliances, no medals for low-energy lifestyles. Super-efficient houses or office buildings occasionally are singled out for praise, but what’s the visual — a low-electricity or gas bill? Or, worse, Jimmy Carter’s White House cardigan, which 1970s media held up for ridicule?
Second, saving energy lacks powerful lobbies. There’s no energy-saving counterpart to the American Gas Association, the American Wind Energy Association, the Solar Energy Industry Association, the National Coal Association, and certainly not the American Petroleum Institute, which was represented at the Mar-a-Lago dinner last week at which ex-president Trump pressed the fossil fuel industry for a billion dollars in campaign contributions. Only the American Council for an Energy-Efficient Economy and the Natural Resources Defense Council persistently advocate for energy effiicency, and they do so as tech experts and champions of the greater good rather than as arm-twisting lobbyists, and certainly not as bundlers of campaign cash.
Lime-green bars show CO2 emissions from electricity generation. The sole other sector with substantially lower 2023 emissions, “Other” Petroleum, shown in yellow, shrank due to natural gas’s increasing industrial-market share.
Energy efficiency and savings also suffer from a measurement problem. Implicit in measuring their climate contribution is a counterfactual: what would energy requirements and emissions have been without the energy savings?
For this post as well as predecessor posts in 2016 and 2020 I used as a baseline U.S. electricity generation if the 1975-2005 ratio between electricity growth and GDP growth had persisted. I think that was reasonable, but who’s to say? The avoided kWh’s I computed for the pie chart depend on a measuring convention that is subject to argument.
(Note that “offshoring” — the compositional shift of the U.S. economy toward services and away from manufacturing, with imports from China and other Asian countries furnishing the lost production — has also contributed to reducing the link between electricity and domestic economic activity; however, its numerical impact only accounts for a fraction of the flattening of U.S. electricity consumption over the paste two decades.)
Energy Efficiency’s Respect Deficit Is Consequential
Undervaluing energy efficiency means that energy-saving policy measures get short-changed. Efficiency standards for appliances, vehicles and buildings are insufficiently supported, enacted and enforced, leaving them vulnerable to being watered down or blocked altogether.
That’s the obvious part. More consequential is the cultural and political fallout. The short shrift accorded energy savings contributes to downplaying the demand side of energy and climate. This in turn has contributed to the unfortunate narrowcasting of climate campaigns to campaigns to block supply expansions. Measures that would curb consumption get disregarded, even though they are arguably more enduring and effective in curbing climate-damaging emissions than campaigns to halt drilling or pipelines, which largely relocate supply expansions elsewhere.
A major casualty of this narrowcasting is sidelining of carbon pricing as a serious policy contender. That’s not to say that the U.S. would necessarily have robust carbon pricing if energy savings were given their due. Rather, the marginalizing of energy savings and of carbon pricing are mutually reinforcing.
Part of the power of carbon taxing is that it operates on both the demand and supply sides of the fossil-fuel and emissions equation. (Another part is that carbon pricing complements virtually every other emissions-reducing policy or program.) Downgrading the demand aspect of our energy and climate miasma does a disservice to carbon pricing — and our climate.
Calculation Details
Calculations for this post were made in CTC’s carbon-tax model spreadsheet (2.2 MB downloadable Excel file). See Clean Electricity tab and Graphs tab. Pie-chart shares are derived by comparing 2023 and 2005 generation for solar (including distributed solar), wind and fossil gas and applying industry-average CO2 emission factors for coal and gas. Electricity-savings slice was computed by subtracting actual 2023 U.S. electricity generation from hypothetical 2023 generation if the average 1975-2005 ratio between electricity growth and GDP growth had continued through 2023, and then ascribing a per-kWh CO2 emission factor calculated as the mean of gas and coal CO2/kWh.
In crediting electricity with 92% of all 2005-2023 U.S. CO2 reductions (from fossil-fuel burning), I divided electricity-sector reductions of 983 million metric tons (“tonnes”) of CO2 by the total reduction of 1,064 million tonnes. However, the denominator is deflated by including “negative reductions” from passenger vehicles (14 million tonnes) and gas for industry (206). Even removing those sectors from the denominator, electricity accounted for 77% of total gross reductions (983 divided by 1,284). Note that these figures are shown in the Outcomes tab of CTC’s carbon-tax model.
Carbon Footprint
The Strategic Case for Nature-Based Carbon Investments
Nature-based carbon investments deserve consideration when they address a specific business dependency and produce outcomes you can measure. Imagine Moonbucks, a global coffee roaster planning next season’s espresso blend. It is considering natural Grade 4 coffee from Jimma, in southwestern Oromia, Ethiopia. Its sourcing decisions affect the roasting schedule and the cash tied up in coffee purchases. Moonbucks needs to understand which measures could protect that supply, what they would cost and how it would judge the results.
1. Define the sourcing problem before choosing a project
Moonbucks needs a dependable component for its espresso blend. Its procurement team wants continuity of volume and an agreed cup profile. Replacing a shipment at short notice could require new sample approval and changes to the blend, and given the schedules for cultivation, processing, and freight delivery, is practically impossible. Moonbucks needs to get this right, and its initial concern is inconsistent deliveries. It commissions an assessment of the supplying farms and post-harvest chain. The questions cover land condition, harvest availability and whether drying or storage problems are affecting saleable lots.
This distinction changes the investment brief. A tree-planting proposal cannot be assumed to fix drying problems. Better storage cannot restore eroded land. The team must establish which problem exists before selecting the response.
CCC’s guide to finding nature-based solutions in your supply chain explains where to look. Here, the next task is to turn a broad concern into a testable proposal.
2. Develop nature-based carbon investments around the actual supply chain
The assessment would trace Moonbucks’ purchases back through the exporter and supplying producer groups. Which farms supply the contracted lots? Who controls land-management decisions? How long does the buyer expect to maintain the purchasing relationship?
Furthermore, Jimma natural Grade 4 cannot be treated as interchangeable with every Ethiopian coffee. Moonbucks would need to test any substitute against its own blend and quality requirements.
Suppose Moonbucks’ assessment identifies an opportunity to maintain shade trees and restore vegetation along exposed streambanks. The IPCC describes agroforestry as a way to store carbon in vegetation and soil, with potential benefits for erosion control and water quality.1 Moonbucks would need local advice on species, growing conditions and maintenance before deciding how these measures fit its sourcing plan.
The proposal now has a defined sourcing connection and a candidate intervention. The next steps are to test its effect on production, assess carbon eligibility and build the financial case.
3. Compare the proposal with other ways to protect supply
WBCSD’s Nature-based Solutions Blueprint recommends comparing nature-based options with other responses across their benefits and costs.2 For Moonbucks, that means evaluating the landscape proposal alongside drying improvements, storage controls and alternative sourcing arrangements.
The product’s natural-process designation matters. Moonbucks should examine the drying and dry-milling chain alongside land conditions. Its team would check storage practices, contamination risks and incoming-lot quality to see whether problems arise before or after the coffee leaves the farms.
The revised proposal might combine land stewardship with separate post-harvest controls. Each component needs its own purpose and budget. A sustainability label should not obscure which activity is expected to solve which problem.
The project develops as the evidence improves. Its scope should follow the diagnosis rather than preserve the first idea unchanged.
4. Establish what the carbon outcome could count toward
Moonbucks’ sustainability team now tests the proposed carbon case separately from the sourcing case. Is the objective a measurable change in Moonbucks’ value-chain emissions, verified credits for separate voluntary use, or distinct outcomes under carefully defined arrangements?
Scope 3 covers value-chain emissions. A purchasing relationship alone does not prove that a farm intervention can be included in Moonbucks’ inventory. The team needs an applicable accounting method, defensible boundaries and evidence supporting attribution.
SBTi’s FLAG Guidance (forest, land and agriculture), version 1.2, says purchased credits used as offsets cannot meet near-term FLAG or energy and industry targets. Eligible land-based removals are subject to accounting requirements.3 Moonbucks needs to test its proposal against those rules before including an outcome in its targets.
For Moonbucks’ Jimma proposal, maintaining existing trees and establishing new vegetation could involve different carbon questions. Specialists must examine the baseline and additionality, meaning what changes because the project proceeds. They must also assess measurement and the risk that stored carbon is lost. CCC’s MRV and additionality article introduces those tests.
Until that work is complete, Moonbucks should not budget an assumed Scope 3 reduction or credit-sale receipt. Direct emissions reductions remain the priority.
5. Build a financial case that survives weaker assumptions
Moonbucks’ finance team would now build a multi-year budget. UNEP’s State of Finance for Nature 2023 compares current finance with the investment needed to meet climate, biodiversity and land-restoration goals.4 The company would cost its proposed activities, farmer participation and ongoing monitoring. Verification, where required, is a separate expense. Maintenance and responsibility for replacing failed plantings must remain visible after the initial establishment budget ends.
Operational benefits need equally careful treatment. If fewer rejected lots reduce emergency purchasing, count that saving once. Do not add “supply resilience” as another financial benefit when it represents the same avoided cost.
Moonbucks should compare a base case with slower benefits, higher implementation costs and no carbon revenue. It should also distinguish production outcomes from quality and shipment outcomes. A single good harvest would not prove that the landscape intervention caused better delivery performance.
A project can remain worth funding even when its carbon case needs more work. That decision must rest on the operational evidence and the company’s objectives, without unsupported environmental claims.
6. Fund a pilot with a clear expansion decision
Moonbucks’ first approval would fund a bounded pilot, rather than commit the entire sourcing program. Before spending, Moonbucks would agree on participating farms, responsibilities and the evidence needed at review.
Its scorecard could track farmer participation, implementation costs and plant survival, alongside accepted coffee volumes and lot-quality results. Carbon measurements would follow the selected method. Farm-level traceability must connect the intervention to the actual sourcing relationship.
Suppose Moonbucks’ review later finds that storage changes explain most quality improvements, while the land measures need longer observation. Those findings would shape the next decision: expand the proven component, adjust the landscape work or pause further spending. They would not justify crediting all improvements to tree planting.
This gives nature-based carbon investments a practical place in a multi-year strategy. Funding increases as the evidence supports it, and the project can change direction before a larger commitment.
Discuss a sourcing opportunity with CCC
Carbon Credit Capital’s nature-based supply-chain investment service uses its Dual-Value Model to examine supply-chain economics alongside potential sustainability outcomes.
Schedule a consultation to discuss your sourcing exposure and the questions to resolve before allocating capital.
Sources
- Intergovernmental Panel on Climate Change (IPCC), Climate Change 2022: Mitigation of Climate Change, Chapter 7, Agriculture, Forestry and Other Land Uses, section 7.4.3.3 (Agroforestry).
- World Business Council for Sustainable Development (WBCSD), Nature-based Solutions Blueprint, 5 June 2024.
- Science Based Targets initiative (SBTi), Forest, Land and Agriculture Science-Based Target-Setting Guidance, version 1.2, March 2026, section 3.1.4, pp. 37–38.
- United Nations Environment Programme (UNEP), State of Finance for Nature 2023, 2023.
Carbon Footprint
How to buy plastic credits, and what to check before you do
A plastic credit funds the collection of plastic waste in places where no formal system exists to collect it. Each credit represents a measured, independently audited quantity of plastic taken out of the environment or returned to use, tracked on a public registry.
![]()
Carbon Footprint
EU carbon credit claims after 27 September 2026
EU carbon credit claims changed on 27 September 2026, the day the Directive (EU) 2024/825 began to apply across the European Union. The change is narrow. It changes how a company can talk about the credits it buys. A product can no longer be called neutral on the strength of compensation alone; however, every specific, evidenced statement about what a company measured, reduced, and funded stays fully available.
![]()
-
Climate Change1 year ago
Guest post: Why China is still building new coal – and when it might stop
-
Greenhouse Gases2 years ago嘉宾来稿:满足中国增长的用电需求 光伏加储能“比新建煤电更实惠”
-
Greenhouse Gases1 year ago
Guest post: Why China is still building new coal – and when it might stop
-
Climate Change2 years ago嘉宾来稿:满足中国增长的用电需求 光伏加储能“比新建煤电更实惠”
-
Renewable Energy1 year agoSending Progressive Philanthropist George Soros to Prison?
-
Greenhouse Gases1 year ago
嘉宾来稿:探究火山喷发如何影响气候预测
-
Climate Change2 years agoAnalysis: China’s CO2 falls 1% in Q2 2024 in first quarterly drop since Covid-19
-
Climate Change1 year ago嘉宾来稿:探究火山喷发如何影响气候预测
