We use a lot of energy in the United States. Unfortunately, we waste far more.

In 2018 alone, we consumed 101.2 quadrillion British thermal units (quads).

But we wasted 68% of it!

This is the issue I’m addressing today.

Nationwide Trends

You can see where all our energy comes from – and what it’s used for – in the chart below. I call it “America’s Energy Flow Chart.”

All the energy sources on the left of the chart are in percentages. It’s interesting to me how quickly renewables are growing.

On the flip side, coal generation is in retreat. It’s being replaced by natural gas-fired power plants and renewables (notably solar and wind power).

But perhaps the most interesting aspect of the chart is the gray area, titled “Rejected Energy.” This is the energy we produce that we end up wasting.

Notice that wasted – or rejected – energy consumes 68.5 quads – more than two-thirds – of all the energy we produce.

That’s why increasing energy efficiency is so important.

If we could reduce the amount of energy we waste by 50%, we could avoid building many new power plants. That would reduce greenhouse gas emissions too.

Last year, Americans consumed more energy than in any previous year. As I mentioned, total energy consumption was 101.2 quads.

That’s a 3.6% increase over 2017’s energy usage. The largest increases in supply came from natural gas, solar and wind.

Over the last 10 years, renewable energy production doubled. Wind energy increased fivefold and solar energy increased 48-fold.

Natural gas use increased 10.7% over 2017. It’s displacing coal, which dropped 5% last year.

Oil use increased 2%, primarily due to increased use by the industrial sector. Interestingly, oil use was flat in the transportation sector.

Increased efficiency in automobile engines contributed to the drop in demand for oil. And the growing popularity of electric vehicles is also starting to make a dent in oil demand.

Today, EVs number more than 1.2 million globally. But by 2025 we could see 36 million or more.

What does the increasing EV presence have to do with energy efficiency? As it turns out… a lot.

Today, the majority of the vehicles on the road have an internal combustion engine. On average, they convert just 20% of the energy in gasoline or diesel fuel to power the car.

But an EV converts 80% of its input energy into making the wheels go round. It’s ultimately far less wasteful.

How to Improve Energy Efficiency

Since we currently waste two-thirds of the energy we produce, there’s plenty of opportunity for increased efficiency.

One would think that utilities would be all over energy efficiency. But they aren’t. They don’t really have any incentive to invest in more efficient operations.

Twenty-seven states have energy efficiency policies. But it’s clear that many states don’t see the value of energy efficiency and clean energy sources.

Regardless, energy efficiency is here to stay, and will be a big part of our power picture for years to come.

Do you have any ideas of your own on how to improve this issue? Share them with me by clicking the comment button below.

Good investing,

Dave