The options available to mitigate the world’s energy problems disconcert policy makers and executives alike. Securing new supplies of fossil fuels is difficult and often presents geopolitical risks; new technologies associated with alternative sources of energy, although attractive, involve significant levels of uncertainty and could have unintended consequences.¹ Meanwhile, the prospect of reducing energy demand evokes fears that the consumer’s convenience and comfort would be compromised—an unattractive proposition anywhere and an unacceptable one in the developing world, where globalization and rapid economic growth, fueled by increased energy consumption, are improving the prospects of hundreds of millions of people.

Yet McKinsey research shows that the growth of worldwide energy demand can be cut in half or more over the next 15 years, without reducing the benefits that energy’s end users enjoy—and while supporting economic growth. The key is a concerted global effort to boost energy productivity (the amount of output achieved from each unit of energy consumed).² (A joint research project conducted by the McKinsey Global Institute (MGI) and McKinsey’s global energy and materials practice. For the full report underlying this article, see Curbing Global Energy Demand Growth: The Energy Productivity Opportunity, May 2007, available free of charge...