By Arnold Kling
The McKinsey Global Institute likes to beat that drum.
They argue that in the U.S. and other developed economies, there is a big opportunity to save energy in lighting. In China and developing regions, the opportunity is more efficient heating and cooling.
My guess is that if developing countries were to adopt more efficient heating and cooling, their demand for heating and cooling would rise, offsetting some of the efficiency savings. Not that this would be a bad thing.
They suggest that there are market failures: fuel subsidies; lack of consumer information; and high turnover in the commercial sector. The latter problem is supposedly that the builder of an office building cannot necessarily get enough higher rent in exchange for energy efficiency.
These market failures seem like pretty small beans to me, when contrasted with the hard mandates that McKinsey is proposing.