Efficient energy use, sometimes simply called energy efficiency, is using less energy to provide the same level of energy service.
For example, insulating a home allows a building to use less heating and cooling energy to achieve the same temperature. Another example would be installing fluorescent lights and/or skylights instead of incandescent lights to attain the same level of illumination. A 13 watt fluorescent light bulb outputs the same amount of visible light as a 60 watt incandescent bulb, so you are getting more light for less energy.  Efficient energy use is achieved primarily by means of a more efficient technology or process rather than by changes in individual behaviour.
Energy efficient buildings, industrial processes and transportation could reduce the world's energy needs in 2050 by one third, and help controlling global emissions of greenhouse gases, according to the International Energy Agency.
Energy efficiency and renewable energy are said to be the twin pillars of sustainable energy policy.
Making homes, vehicles, and businesses more energy efficient is seen as a largely untapped solution to addressing global warming, energy security, and fossil fuel depletion. Many of these ideas have been discussed for years, since the 1973 oil crisis brought energy issues to the forefront. In the late 1970s, physicist Amory Lovins popularized the notion of a "soft energy path", with a strong focus on energy efficiency. Among other things, Lovins popularized the notion of negawatts—the idea of meeting energy needs by increasing efficiency instead of increasing energy production.
Energy efficiency has proved to be a cost-effective strategy for building economies without necessarily growing energy consumption, as environmental business strategist Joel Makower has noted. For example, the state of California began implementing energy-efficiency measures in the mid-1970s, including building code and appliance standards with strict efficiency requirements. During the following years, California's energy consumption has remained approximately flat on a per capita basis while national U.S. consumption doubled. As part of its strategy, California implemented a three-step plan for new energy resources that puts energy efficiency first, renewable electricity supplies second, and new fossil-fired power plants last.
Still, efficiency often has taken a secondary position to new power generation as a solution to global warming in creating national energy policy. Some companies also have been reluctant to engage in efficiency measures, despite the often favorable returns on investments that can result. Lovins' Rocky Mountain Institute points out that in industrial settings, "there are abundant opportunities to save 70% to 90% of the energy and cost for lighting, fan, and pump systems; 50% for electric motors; and 60% in areas such as heating, cooling, office equipment, and appliances." In general, up to 75% of the electricity used in the U.S. today could be saved with efficiency measures that cost less than the electricity itself. The same holds true for homeowners, leaky ducts have remained an invisible energy culprit for years. In fact, researchers at the US Department of Energy and their consortium, Residential Energy Efficient Distribution Systems (REEDS) have found that duct efficiency may be as low as 50-70%. The US Department of Energy has stated that there is potential for energy saving in the magnitude of 90 Billion kWh by increasing home energy efficiency. One way to combat duct inefficiency is by getting an AC tune-up.
Other studies have emphasized this. A report published in 2006 by the McKinsey Global Institute, asserted that "there are sufficient economically viable opportunities for energy-productivity improvements that could keep global energy-demand growth at less than 1 percent per annum"—less than half of the 2.2 percent average growth anticipated through 2020 in a business-as-usual scenario. Energy productivity, which measures the output and quality of goods and services per unit of energy input, can come from either reducing the amount of energy required to produce something, or from increasing the quantity or quality of goods and services from the same amount of energy.
The Vienna Climate Change Talks 2007 Report, under the auspices of the United Nations Framework Convention on Climate Change (UNFCCC), clearly shows "that energy efficiency can achieve real emission reductions at low cost."
Perfect efficiency is not possible, but by one metric, rejected energy, the United States lost 57.07 quadrillion BTUs out of the total 99.2 quadrillion BTUs it generated in 2008.
Modern energy-efficient appliances, such as refrigerators, freezers, ovens, stoves, dishwashers, and clothes washers and dryers, use significantly less energy than older appliances. Current energy efficient refrigerators, for example, use 40 percent less energy than conventional models did in 2001. Following this, if all households in Europe changed their more than ten year old appliances into new ones, 20 billion kWh of electricity would be saved annually, hence reducing CO2 emissions by almost 18 billion kg. In the US, the corresponding figures would be 17 billion kWh of electricity and CO2. According to a 2009 study from McKinsey & Company the replacement of old appliances is one of the most efficient global measures to reduce emissions of greenhouse gases. Modern power management systems also reduce energy usage by idle appliances by turning them off or putting them into a low-energy mode after a certain time. Many countries identify energy-efficient appliances using an Energy Star label.
The impact of energy efficiency on peak demand depends on when the appliance is used. For example, an air conditioner uses more energy during the afternoon when it is hot. Therefore, an energy efficient air conditioner will have a larger impact on peak demand than off-peak demand. An energy efficient dishwasher, on the other hand, uses more energy during the late evening when people do their dishes. This appliance may have little to no impact on peak demand.
A building’s location and surroundings play a key role in regulating its temperature and illumination. For example, trees, landscaping, and hills can provide shade and block wind. In cooler climates, designing buildings with an east-west orientation to increase the number of south-facing windows minimizes energy use, by maximizing passive solar heating. Tight building design, including energy-efficient windows, well-sealed doors, and additional thermal insulation of walls, basement slabs, and foundations can reduce heat loss by 25 to 50 percent.
Dark roofs may become up to 39 C° (70 F°) hotter than the most reflective white surfaces, and they transmit some of this additional heat inside the building. US Studies have shown that lightly colored roofs use 40 percent less energy for cooling than buildings with darker roofs. White roof systems save more energy in sunnier climates. Advanced electronic heating and cooling systems can moderate energy consumption and improve the comfort of people in the building.
Proper placement of windows and skylights and use of architectural features that reflect light into a building, can reduce the need for artificial lighting. Increased use of natural and task lighting have been shown by one study to increase productivity in schools and offices. Compact fluorescent lights use two-thirds less energy and may last 6 to 10 times longer than incandescent light bulbs. Newer fluorescent lights produce a natural light, and in most applications they are cost effective, despite their higher initial cost, with payback periods as low as a few months.
Effective energy-efficient building design can include the use of low cost Passive Infra Reds (PIRs) to switch-off lighting when areas are unnoccupied such as toilets, corridors or even office areas out-of-hours. In addition, lux levels can be monitored using daylight sensors linked to the building's lighting scheme to switch on/off or dim the lighting to pre-defined levels to take into account the natural light and thus reduce consumption. Building Management Systems (BMS) link all of this together in one centralised computer to control the whole building's lighting and power requirements.
Smart meters are slowly being adopted by the commerial sector to highlight to staff and for internal monitoring purposes the building's energy usage in a dynamic presentable format. The use of Power Quality Analysers can be introduced into an existing building to assess usage, harmonic distortion, peaks, swells and interruptions amongst others to ultimately make the building more energy-efficient. Often such meters communicate by using wireless sensor networks.
In industry, when electricity is generated, the heat which is produced as a by-product can be captured and used for process steam, heating or other industrial purposes. Conventional electricity generation is about 30 percent efficient, whereas combined heat and power (also called cogeneration) converts up to 90 percent of the fuel into usable energy.
Advanced boilers and furnaces can operate at higher temperatures while burning less fuel. These technologies are more efficient and produce fewer pollutants.
Over 45 percent of the fuel used by US manufacturers is burnt to make steam. The typical industrial facility can reduce this energy usage 20 percent (according to the US Department of Energy) by insulating steam and condensate return lines, stopping steam leakage, and maintaining steam traps.
Electric motors usually run on a constant flow of energy, but an adjustable speed drive can vary the motor’s energy output to match the load. This achieves energy savings ranging from 3 to 60 percent, depending on how the motor is used. Motor coils made of superconducting materials can also reduce energy losses. Motors may also benefit from voltage optimisation.
Many industries use compressed air for sand blasting, painting, or other tools. According to the US Department of Energy, optimizing compressed air systems by installing variable speed drives, along with preventive maintenance to detect and fix air leaks, can improve energy efficiency 20 to 50 percent.
Using improved aerodynamics to minimize drag can increase vehicle fuel efficiency.
Reducing vehicle weight can significantly also improve fuel economy, which is why composite materials are widely used in car bodies.
More advanced tires, with decreased tire to road friction and rolling resistance, can save gasoline. Fuel economy can be improved over three percent by keeping tires inflated to the correct pressure. Replacing a clogged air filter can improve a cars fuel consumption by as much as 10 percent.
Fuel efficient vehicles may reach twice the fuel efficiency of the average automobile. Cutting-edge designs, such as the diesel Mercedes-Benz Bionic concept vehicle have achieved a fuel efficiency as high as , four times the current conventional automotive average..
Another growing trend in automotive efficiency is the rise of hybrid and electric cars. Hybrids, like the Toyota Prius, use regenerative braking to recapture energy that would dissipate in normal cars; the effect is especially pronounced in city driving. plug-in hybrids also have increased battery capacity, which makes it possible to drive for limited distances without burning any gasoline; in this case, energy efficiency is dictated by whatever process (coal-burning, hydroelectric, etc) created the power. Plug-ins can typically drive for around 40 mile purely on electricity without recharging; if the battery runs low, a gas engine kicks in allowing for extended range. Finally, all-electric cars are also growing in popularity; the Tesla Roadster sports car is the only high-performance all-electric car currently on the market, and others are in design.
Energy conservation is broader than energy efficiency in that it encompasses using less energy to achieve a lesser energy service, for example through behavioural change, as well as encompassing energy efficiency. Examples of conservation without efficiency improvements would be heating a room less in winter, driving less, or working in a less brightly lit room. As with other definitions, the boundary between efficient energy use and energy conservation can be fuzzy, but both are important in environmental and economic terms. This is especially the case when actions are directed at the saving of fossil fuels.
Energy efficiency and renewable energy are said to be the “twin pillars” of a sustainable energy policy. Both strategies must be developed concurrently in order to stabilize and reduce carbon dioxide emissions. Efficient energy use is essential to slowing the energy demand growth so that rising clean energy supplies can make deep cuts in fossil fuel use. If energy use grows too rapidly, renewable energy development will chase a receding target. Likewise, unless clean energy supplies come online rapidly, slowing demand growth will only begin to reduce total carbon emissions; a reduction in the carbon content of energy sources is also needed. A sustainable energy economy thus requires major commitments to both efficiency and renewables.
If the demand for energy services remains constant, improving energy efficiency will reduce energy consumption and carbon emissions. However, many efficiency improvements do not reduce energy consumption by the amount predicted by simple engineering models. This is because they make energy services cheaper, and so consumption of those services increase. For example, since fuel efficient vehicles make travel cheaper, consumers may choose to drive further and/or faster, thereby offsetting some of the potential energy savings. This is an example of the direct rebound effect.
Estimates of the size of the rebound effect range from roughly 5% to 40%. Rebound effects are smaller in mature markets where demand is saturated. The rebound effect is likely to be less than 30% at the household level and may be closer to 10% for transport. A rebound effect of 30% implies that improvements in energy efficiency should achieve 70% of the reduction in energy consumption projected using engineering models.
Since more efficient (and hence cheaper) energy will also lead to faster economic growth, there are suspicions that improvements in energy efficiency may eventually lead to even faster resource use. This was postulated by economists in the 1980s and remains a controversial hypothesis. Ecological economists have suggested that any cost savings from efficiency gains be taxed away by the government in order to avoid this outcome.