Lawrence Berkeley National Laboratory

We review the relationship between energy efficiency improvement measures and productivity in industry. We propose a method to include productivity benefits in the economic assessment of the potential for energy efficiency improvement. The paper explores the implications of how this change in perspective might affect the evaluation of energy-efficient technologies for a study of the iron and steel industry in the U.S. It is found that including productivity benefits explicitly in the modeling parameters would double the cost-effective potential for energy efficiency improvement, compared to an analysis excluding those benefits. We provide suggestions for future research for this important area.