ASU Center for Organization Research and Design

Profiting from Megawatts: Reducing Absolute Consumption and Emissions Through a Performance-based Energy Economy

by Julia K. Steinberger; Johan van Niel; Dominique Bourg

Jan 1, 2009

Current energy and GHG emissions policies either focus directly on emissions or promote renewable production and the implementation of specific efficiency measures. Meanwhile, the fundamental structure of the energy market based on profits through energy throughput remains largely unchallenged. This policy oversight prevents the transition to an energy economy in which profits are based on energy services delivered at the lowest energy cost: a performance-based energy economy (PBEE). The PBEE applies the combined concepts of the performance economy and energy services to the energy sector. Energy Service Companies (ESCOs) are discussed as an example of PBEE practices. The implications for energy suppliers and consumers as well as the conditions for PBEE diffusion and consequences for technological change are also explored. The expected environmental, social and economic benefits are described. However, absolute consumption and emissions reductions may prove elusive due to the rebound effect. In order to forestall rebound-led increases, complementary policy measures likely to lead to absolute reductions are required.

Profiting from Megawatts: Reducing Absolute Consumption and Emissions Through a Performance-based Energy Economy