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New Study Links Technology to Dramatic Energy Efficiency

Published Wednesday, February 6, 2008

A new study has found that technology leads to a dramatic increase in energy efficiency and is actually a net saver of energy by a 10:1 ratio across the economy. The American Council for an Energy-Efficient Economy (ACEEE) found a direct correlation between gains in energy productivity and investments in information and communications technology (ICT).

The ACEEE found that today it takes less than half the energy to produce a dollar of economic output as it did in 1970 and that energy efficiency gains have increased significantly since 1996. The report was published as leading technology CEOs laid out a new energy initiative and called on policymakers to better leverage technology to solve the nation's energy challenges.

"Whether it is making our buildings smarter, reducing heating and cooling costs, harnessing the power of the sun, virtualization or enabling telecommunications, technology is a driving force in making our country more energy efficient," said Mike Splinter, the President and CEO of Applied Materials, Inc. and Chair of the Technology CEO Council. "Many of our nation's companies have demonstrated that through technology they can do more business with less energy. Now we must ensure that we maximize the energy efficiency and environmental benefits that technology brings to our economy and that those benefits are shared by all."

"We have enormous opportunities to reduce energy use while still increasing productivity," said Michael Dell, Chairman and CEO of Dell. "Companies like ours will use renewable energy and power-saving software to lower our power consumption and costs, and we'll continue to develop smart technologies that maximize energy use. We need officials here in Washington to support policies that spur the development of those technologies."

The ACEEE report, entitled, "Information and Communication Technologies: The Power of Productivity," was commissioned by the TCC. Key findings within the ACEEE study include:

  • For every extra kilowatt-hour of electricity that has been demanded by ICT technologies, the U.S. economy increased its overall energy savings by a factor of about 10. Thus, these productivity gains have led to huge net savings in both energy and economic costs. The extraordinary take away from this finding is that ICT is a net saver of energy across our economy.
  • In fact, the study notes that data for the past 37 years indicate that the pace of energy efficiency gains has increased significantly since 1996. Whereas U.S. energy intensity declined 1.8 percent per year between 1970 and 1995, it declined at a much more rapid rate of 2.4 percent between 1996 and 2006.
  • Since 1970, the United States has dramatically improved the amount of energy it takes to generate economic activity. Today, it takes less than half the energy to produce a dollar of economic output as it did in 1970. U.S. energy consumption per dollar of economic output has declined from 18 thousand Btus in 1970 to less than 9 thousand Btus by the end of 2008. Through that energy efficiency we have met approximately 75 percent of our new demand for energy.
  • "This analysis clearly demonstrates the untold story behind energy efficiency - that information technology enables tremendous energy savings in many applications throughout society," said Paul S. Otellini, President and CEO of Intel Corporation. "What we see is a one-two punch: Our industry is improving the energy-efficiency of its own products, while those products drive even greater savings across the entire economy."

Maximizing Energy Efficiency

In tandem with the ACEEE report, the TCC released its own report, entitled, "The Smarter Shade of Green: How Innovative Technologies are Saving Energy, Time and Money," focusing on specific technology initiatives that are making our economy energy efficient.

Among the findings in the TCC study is how virtualization is leading to dramatic energy efficiency. Virtualization enables businesses to run multiple systems and operations on remote computers, reducing the energy demand. To date, 1.2 million servers have been virtualized, which is equal to saving 8.4 billion kilowatt hours of electricity a year, according to the Gartner Data Center Conference. This is more than the heating, ventilation and cooling electricity consumed in New England in a year.

"IT energy efficiency and data center power consumption have emerged as a top priority among CIOs and within the corporate boardroom," said Joe Tucci, EMC Chairman, President and Chief Executive Officer. "We know our customers need energy-efficient information management and our information infrastructure portfolio helps them meet their need for performance and availability while lowering energy consumption. Server virtualization and more efficient disk drive and flash technologies are extremely energy efficient when implemented in power-intensive data centers." "Like all technology companies with global manufacturing capabilities, Micron Technology is concerned with energy-efficiency both in our operations as well as in the products we design," said Steve Appleton, Micron Chairman and Chief Executive Officer. "As a semiconductor manufacturer, Micron has an exemplary environmental record, and we are certainly factoring energy-efficiency into our technology development. For example, Micron has introduced its Aspen Memory family of energy-efficient products specifically designed to lower server power consumption. By implementing Micron's new Aspen Memory modules, data centers could reduce system memory power consumption by more than 20 percent."

The evidence from the ACEEE and TCC reports suggests that we have yet to optimize the full range of opportunities for gains in energy and economic productivity. Such an accomplishment will require a set of smart policies to further catalyze the optimal development of information and communications technologies so as to maximize energy and economic productivity.

In its report, TCC also laid out a policy principles for U.S. energy policy:

  • Private-sector leaders need to lead. Companies that talk green need to walk green and not wait for government mandates or bailouts.
    • All businesses should develop holistic energy-efficiency strategies that include robust deployment of efficiency-enhancing information and communications technologies.
    • Corporate energy strategies should set high goals and give maximum flexibility to achieve these goals.
    • Business leaders should develop multi-sector initiatives to develop best practices, share information and results and encourage excellence.
  • Government must lead by example. As the nation's largest user of energy, government must expand its own use of energy-efficient technologies, including smart ICT solutions.
    • Government energy strategies should set high goals and give maximum flexibility to achieve these goals.
    • The President should select a federal agency as the "Center of Energy Efficiency Excellence," the preeminent model for system-wide deployment of the best solutions.
  • Government should encourage innovation and recognize excellence.
    • Government should invest in research initiatives seeking newer and more transformative ICT solutions that further drive energy efficiency and innovative renewable energy sources.
    • National educational programs to expand awareness, Presidential awards for excellence in applying ICT to energy efficiency and extension agent programs to help small and medium-sized businesses are all valuable.
  • Governments at all levels should use policy levers to encourage efficiency and discourage inefficient uses of energy.
    • Trade and tariff barriers, capital depreciation and tax incentives all influence market behavior.

John "Skip" Laitner, ACEEE's Director of Economic Policy Analysis, said that "achieving greater levels of energy productivity requires that we start asking the right set of questions about the relationship between ICT systems and total energy use. Rather than focusing exclusively on the energy consumed by ICT, we should instead recognize the ways in which these technologies have helped our production processes become dramatically more efficient."

To view a copy of the reports, go to

Technology CEO Council companies generate over $350 billion in annual revenues and employ over 850,000 workers. Founded in 1989 and formerly known as the Computer Systems Policy Project, its members - beside Mr. Splinter; Mr. Dell; Mr. Otellini; Mr. Tucci; and, Mr. Appleton - include Mark V. Hurd, Chairman, President and CEO of Hewlett-Packard Company; Samuel J. Palmisano, Chairman, President and CEO, IBM Corporation; Greg Brown, CEO, Motorola, Inc.; Joseph McGrath, President and CEO of Unisys Corporation; and, William Nuti, President and CEO of NCR Corporation.

About the Technology CEO Council The Technology CEO Council is a CEO policy advocacy group focused on ensuring U.S. competitiveness through technology leadership. The CEOs visit Washington twice annually to meet with lawmakers about policy issues of importance to the high-tech industry and work throughout the year to promote education, analysis and recommendations. For more information, please visit