CLIMATE: Making Sense and Making Money

The document challenges the assumption that climate protection is a financial burden, asserting that energy-efficiency investments often yield returns exceeding 100% per year. It identifies eight categories of market failures—including capital misallocation, organizational failures, and perverse regulatory incentives—that cost the American economy approximately $300 billion annually. By shifting focus from theoretical economic models to empirical business evidence, the authors demonstrate that 'whole-system engineering' and 'barrier-busting' policies can reduce carbon emissions while increasing GDP and competitiveness. The report highlights that high energy prices are not the only driver of efficiency, citing Seattle's success in saving electricity faster than Chicago despite lower prices. It concludes that a market-transformation approach can stabilize the climate and foster economic growth globally, particularly in developing nations.

• Conventional climate-economic models overestimate the cost of carbon abatement because they assume that most cost-effective energy-efficiency investments have already been made, ignoring real-world market barriers.
• Significant energy-saving opportunities exist that can provide annual rates of return approaching or exceeding 100%, yet these are blocked by regulatory, organizational, and informational failures.
• Whole-system engineering and lifecycle costing can make it cheaper to achieve large energy savings than small ones by creating synergies that reduce both operating and capital costs.
• High energy prices are not a prerequisite for rapid energy efficiency gains; the ability to respond to price signals through informed markets is more critical.
• The transportation sector is particularly inefficient due to being highly socialized and centrally planned, with hidden costs of hundreds of billions of dollars per year for U.S. road vehicles.
• Energy efficiency and renewables offer a highly profitable development path for the Global South, as these regions are often three times less energy-efficient than the North.
• The report claims that over half of the climate threat can be mitigated through money-saving energy use, with another quarter abated by carbon-sequestering farming and forestry practices.
• Nuclear power is characterized as the costliest way to displace fossil fuels, meaning investments in it represent an opportunity cost that can actually worsen climatic threats.

APA

LOVINS, A. B., & LOVINS, L. H. (1997). CLIMATE: Making Sense and Making Money. RMI. https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_C97-13_ClimateMSMM.pdf

Chicago

LOVINS, AMORY B., and L. HUNTER LOVINS. CLIMATE: Making Sense and Making Money. RMI, 1997. https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_C97-13_ClimateMSMM.pdf.

Wikipedia

{{cite report |last1=LOVINS |first1=AMORY B. |last2=LOVINS |first2=L. HUNTER |title=CLIMATE: Making Sense and Making Money |publisher=RMI |date=13 November 1997 |url=https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_C97-13_ClimateMSMM.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{lovins1997climate, author = {LOVINS, AMORY B. and LOVINS, L. HUNTER}, title = {{CLIMATE: Making Sense and Making Money}}, institution = {RMI}, year = {1997}, month = nov, url = {https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_C97-13_ClimateMSMM.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }