the energy costs of specific appliances and equipment is often not readily available; and access to capital for such investments is limited. Drivers for greater efficiency—that is, for overcoming these barriers—could include rising energy costs, growing environmental awareness, improved and publicized building codes and appliance efficiency standards, and state and local utility programs.

In the transportation sector, barriers that limit energy efficiency include the lack of clear signals about future oil prices (expectations for future prices strongly affect technology and investment decisions) and the lack of sufficient production capability to manufacture energy-efficient vehicles across vehicle platforms.

The barriers to deployment in the industrial sector include the technical risks of adopting a new industrial technology; high investment costs for industrial energy efficiency improvements; intra-firm competition for capital, which may favor improvements in products and processes over energy efficiency; the lack of specialized knowledge about energy efficiency technologies; and unfavorable provisions of the tax code.

These barriers are formidable, and sustained public and private support will be needed to overcome them. Particular attention must be paid to infrastructure, industrial equipment, and other long-lived assets in order to ensure that energy efficiency technologies and systems are put into place when these assets are constructed or renewed.

Meanwhile, there are several drivers for greater efficiency. They include expected increases in energy prices and concern about availability of fuels and electricity; more stringent air-quality standards, which raise the prices of pollution allowances; demand charges and demand-response incentives; collateral benefits such as higher product quality and productivity; and corporate sustainability initiatives.

In general, substantial energy savings in all sectors will be realized only if efficient technologies and practices achieve wide use. Experience demonstrates that these barriers can be overcome with the aid of well-designed policies. Many policy initiatives have been effective, including efficiency standards (vehicle and appliance) combined with U.S. Department of Energy R&D on efficient equipment; promotion of combined heat and power, largely through the Public Utilities Regulatory and Policy Act of 1978; the ENERGY STAR® product-labeling program; building-energy codes; and utility- and state-sponsored end-use efficiency programs. These initiatives have already resulted in a nearly 13-quad-per-year reduction in primary energy use.



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