13 McKinsey Analysis: $100 Bills on the Floor? McKinsey: Many projects have a negative cost of abating CO2 emissions Internal rate of return (IRR) of many energy efficiency projects is > 10% This implies that Companies are not making profitable investments – can this be? Ignorance, not SOP, dont have $, dont disrupt production, no managerial time
14 Economists Vs. McKinsey Companies make all profitable investments! Consumers dont – landlord vs. tenant, time horizon, ignorance, etc. California spends $700 million/yr to get efficiency increases – payback in 3 years Energy efficiency is not easy, simple or cheap – major investment in time & talent Need to pay utilities for conservation
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