Energy efficiency is the process of converting energy into a useful form. Generally, efficiency is measured in terms of the amount of useful energy that is produced for the same amount of energy input. This ratio is known as the efficiency ratio.
The United Nations released a report in 2007 on energy efficiency. The report said that greenhouse gas emissions could be reduced in the short term by improving energy efficiency. The report also suggested that further improvements in greenhouse gas reduction could be made.
Energy efficiency is one of the most promising solutions to the problem of climate change. It reduces pollution, decreases global warming, and provides additional economic value. It has become an abiding interest of citizens in the early twenty-first century.
Among the most important benefits of energy efficiency are decreased air pollution, lower CO2 emissions, and longer-lasting supplies. It can also help improve the resilience of communities.
The economic theory behind energy efficiency assumes that consumers will make rational decisions. However, studies have shown that market failures exist. In particular, lack of information can prevent rational decision-making.
In addition, the principal-agent problem can lead to perverse incentives for investments in energy efficiency. For example, consumers may prefer gasoline cars over electric ones for non-energy reasons. They might not have access to credit or financing to purchase energy-efficient appliances.
Energy-efficient buildings and appliances can help reduce the need for fossil fuels. In addition, they can improve the likelihood that we will be able to switch to renewable energy sources.