Energy efficiency has come a long way.

By the end of this year, power consumption in the U.S. is expected to be half of what it was in 1970, as measured per dollar of economic output, according to the American Council for an Energy-Efficient Economy.

The Washington, D.C.-based non-profit group said that energy efficiency may be one of the fastest-growing energy success stories of the last 50 years, but its influence is mostly invisible.

That low profile could put the industry in danger of missing out on needed future investments.

"We're seeing a number of innovations happening simply as a matter of normal, ongoing economic productivity," said John Laitner, director of economic analysis at the energy efficiency group, in a news conference.

"We wanted to underscore that, to suggest that the market has a greater capacity to respond to policy signals and to respond to clear challenges posed by global warming."

Laitner is a co-author of the group's report, titled "The Size of the U.S. Energy Efficiency Market: Generating a More Complete Picture."

In the report, the group said that with the right investments, the U.S. could reduce energy consumption by an additional 25 to 30 percent or more over the next 20 to 25 years.

The council said that $300 billion was invested in energy efficiency in 2004 in the U.S., three times the amount invested in traditional energy infrastructure, but less than a third of the nation's total annual energy expenditures.

Those investments were estimated to have generated approximately 1.7 quads of energy savings in 2004 alone, about the equivalent of the energy required to operate 40 mid-sized coal-fired or nuclear power plants, according to the group.

Laitner said improvements in energy efficiency can be traced back to milestones like the Energy Star program, introduced in 1992.

"We've had appliance standards that have driven changes in the performance of our refrigerators and our other appliances," he said.

"Those Energy Star products are now on the order of $88 billion a year in sales, and they are products that deliver savings while reducing the impact."

He said those programs came about because of both policies and funding for innovative programs.

"It remains and underdeveloped resource," Laitner said of energy efficiency. "It has been a workhorse that can go faster and harder if we choose to develop it."

The group said that total investments in more energy efficiency technologies could increase the annual energy efficiency market by nearly $400 billion by 2030, resulting in an annual efficiency market of more than $700 billion.

That would mean total additional investments over the period of 2008 to 2030 of nearly $7 trillion, according to the group's report.

"There is clearly a movement toward a more entrepreneurial, a more innovative approach," said Laitner.

"Whether we're talking about developers who are learning how to turn wasted energy into useful electricity, for example, or whether we're talking about improved information communication technologies that allow greater transaction of business in ways that enable greater productivity."

Many companies are working on boosting energy efficiency of their products. For instance, Armonk, N.Y.-based IBM (NYSE: IBM) recently unveiled a new water-cooled supercomputer that it says could cut energy consumption in data centers by 40 percent (see IBM cools down its supercomputers).

Smart grid technology is also getting attention, with London's Onzo, Arlington, Va.-based GridPoint and Tendril Networks in Boulder, Colo., all raising capital recently (see Smart tech for energy pulls in funding).

Onzo, which makes consumer units to monitor energy consumption, raised £2 million, while GridPoint, a developer of a smart grid platform for utilities, pulled in $15 million.

Tendril, a manufacturer of wireless sensors and networks for energy efficiency applications, received $12 million.

To keep those investments flowing, the group said the industry needs to raise the visibility of energy efficiency resources, and push for social, political, and economic incentives and mechanisms that promote sustainable energy practices.

The council said 16 states have developed Energy Efficiency Resource Standards that could help drive efficiency initiatives to new heights.

Under the resource standards program, energy utilities agree to meet certain efficiency targets.

"They set their own targets, and, effectively, they have gradually increasing targets that they need to meet in terms of energy saving from programs that they operate to help their customers conserve energy," said Steven Nadel, executive director of the American Council for an Energy-Efficient Economy.

Nadel said his group sees Energy Efficiency Resource Standards as a major policy initiative, but said it's going to have to complement other things.

"Appliance and equipment standards, that's been a very important policy in the past," he said. "The building codes that states set, and there's efforts to update these codes to save 30 or even 50 percent energy use compared to current new buildings."

Carbon cap and trade legislation that's being considered in Congress could also have a big impact on the energy efficiency industry.

"We believe that a significant share of the emissions allowances need to be allocated to energy efficiency," said Nadel.