Energy analyst vs corporate decision maker vs individual

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Projections of potential and achievable energy efficiency depend on the viewpoint of the analyst and in part allude to the "bottom-up" versus "top-down" debate. Technology-based "bottom-up" models indicate that enormous opportunity exists to improve energy efficiency with current technology at no net cost (the energy savings equal or outweigh the outlays) and that various "market failures" are to blame for the slow adoption of these technologies. Traditional "top-down" macroeconomic models, on the other hand, assume that all economical options are exploited, so by definition, if a technology has not been adopted, it must not be economically efficient. Lovins (1996) analogizes this to not picking up a $100 bill lying on the sidewalk because if it were real, someone would have picked it up already.

Another way of looking at the debate is by asking the question "Where can the energy savings be made?" Research examining personal energy use (Schlumpf et al., 1998) illustrates that there are relatively modest savings that individuals can make on their own without major changes in their lifestyles. Social theory tells us that there is great inertia to such lifestyle changes, and it is believed unlikely that such changes will arise for environmental reasons in the foreseeable future. A similar process occurs for corporate decision-makers deciding on purchases for their organizations. There is a limited set of commercially available options for rational decision-makers to choose from. Therefore, although an energy analyst may envisage large savings waiting to be exploited, actual decision-makers are constrained by what is available to them at the time of decision. This leads into the next section and a discussion of path dependence or shaping the future "shopping list" of technologies of varying efficiencies that can be selected. Of course, even if these technologies are available at reasonable cost there are other factors important in the adoption decision, and this is discussed in the section on social aspects of energy efficiency.

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