What does it really mean to conserve energy?

How many times have you heard something along the lines of: “Turn the lights out! Electricity doesn’t grow on trees...”

Sure, we all know the world consumes too much energy – that’s been becoming increasingly more obvious over the last half-century. But what does that mean exactly? Is it too many air conditioners trying to combat hotter summers? Too many cars on the road? Poor building insulation?

Well, turns out scientist aren’t all that certain. Through careful analytic study, they’re learning more each and every day. Economists at MIT and the University of California, Berkeley recently launched E2e, a new project which will attempt to address global energy consumption and all its complexities.

 “Almost all of the previous work on energy efficiency comes from engineering studies, which look at what’s possible under ideal conditions,” says Michael Greenstone, co-director of the E2e project. “We wanted to ask a slightly different question — what are the actual returns you could expect in the real world?”

Back in 2009, McKinsey & Co, a consulting firm that focuses on solving global issues, released a surprising study proving that countries like the United States can save roughly $680 billion dollars over the next decade through strategies like sealing building ducts and upgrading old appliances.

Economists continue to analyze, challenge, and debate strategy. ”Those engineering studies can’t account for the behavioral changes you might see in response to efficiency improvements,” says Christopher Knittel, an economist with the E2e project. “People could, for instance, start adjusting their thermostat if it becomes cheaper to cool the house.”

A recent study out of Mexico showed that a government-funded program promoting energy-saving refrigerators actually curbed electricity use. However, a similar program involving air conditioners had the exact opposite effect — when people got more efficient ACs, they used them more often, and energy consumption rose.

“The point is that policymakers aren’t going to spend an infinite amount of money trying to save energy or reduce greenhouse gases,” says Greenstone. “So the motivation is to find the places where the return is the greatest. If you could reduce a ton of carbon-dioxide for $100 or two tons for $50, you’d choose the latter.”

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Energy Investments: how diverse is your portfolio?

Today, more and more asset management firms are racing to invest in the next big breakthrough in the energy industry. The American-based Carlyle Group, which specializes in private equity, market strategies, real assets, and fund of funds, has recently formed a six person energy team in hopes of better estimating the growth potential for this industry across the global market.

Carlyle recently ended its decade-long relationship with Riverstone Holdings, the firm which helped Carlyle secure half-a-dozen projects in the energy industry. The new team intends to raise an additional $1.5 billion in private equity.

According to a statement released by Carlyle, “Experts forecast global energy demand to grow dramatically over the next decade. Energy production and infrastructure is expected to grow dramatically in Europe, Africa, the Americas and Asia to meet this demand. [This] will increase the need for capital investment globally."

Carlyle has already invested close to $30 billion in alternative energy funds, but those investments have all been within North America. The new team will scour for opportunities abroad, especially in struggling markets like Europe, Africa, and Latin America.

It’s fairly common in today’s economy for asset management firms to diversify their portfolios with energy projects. Just last year, Kohlberg Kravis Roberts raised approximately $1.25 billion to invest in natural resources. Blackstone Group more than doubled that – over $2.5 billion!

Clearly, the Carlyle Group and others like them are realizing that energy demand isn’t go anywhere anytime soon. People will always need to get from point A to point B. They’ll always need lights to see. Channels to flip through. Food to microwave. What happens when the oil and natural gas run dry, and electricity becomes a premium luxury?  Sure, that may be decades away. Perhaps even a century. But unless we begin investing serious efforts into developing clean renewables, our descendants will pay the price for our hubris.

How is your investment portfolio looking? Have you ever considered investing in a carbon-free, low-cost alternative to the fossil-fuel generator?

Well, if you have, then you’re in luck! NRGLab introduces the SH-Box, the world’s first polycrystalline electrical generator that’s guaranteed to change the world. To learn how you, your family, your community or business can achieve energy independence once and for all, visit www.nrglab.asia.

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