New Technology Can Unlock $1.6 Trillion in Energy Savings

Optimizing energy use could unlock between $900 billion and $1.6 trillion in savings globally in 2035, according to a new report by the McKinsey Global Institute.

The savings, which roughly equal the current GDP of Canada or Indonesia, the document noted, would mostly come from depressed demand as energy-efficient automobiles, electronics and other items become part of the day-to-day lives of the billions living on earth, Oil Price reported. Adopting renewable energy sources alone would trigger $140 billion to $350 billion in power cost cuts.

Though the benefits of going green are numerous, both to the purse and planet, the report warned of severe sociopolitical consequences if government and non-government actors did not do enough to balance the effects of sophisticated technologies that replace manufacturing jobs.

Oil companies have accelerated their adoption of automated techniques over the past three years as a steep drop in oil prices prompted massive layoffs all over the world.  After the 2014 crash, oil producing nations no longer had the funds to pay their citizens that they had employed through their state-run corporations, and oil multinationals could not sustain operations at rock-bottom prices.

“Resource exporters whose finances rely on resource endowments will need to find alternative sources of revenue,” the report said of countries that risk total collapse as peak oil demand approaches. From then on, it will be economic freefall for those who remain maladjusted. Private actors in the energy arena will need to focus on agility to outmaneuver competitors while “navigating a future with more uncertainty,” McKinsey said.

“Companies that focus on the fundamentals—increasing throughput and driving down capital costs, spending, and labor costs—and that look for opportunities in technology-driven areas may have an advantage."