Researchers have found Australia's poor investment in energy efficiency is costing tens of billions of dollars in potential economic growth.

A report commissioned by the Climate Institute and US energy giant General Electric says an improvement in energy efficiency of just 1 per cent would add $26 billion to Australia's economy by 2030.

But the report has found Australia is not moving in that direction at all; the country is failing to match the efficiency improvements attained by nations in much less favourable conditions.

With the Prime Minister moving to introduce a costly Emissions Trading Scheme and pushing for improved productivity, Climate Institute chief executive John Connor says the improved energy efficiency is critical to delivering any such promises.

"Our research puts a figure on just how much we are missing out on. The reality is that our current policies are inadequate to address the barriers preventing smarter energy use,” Mr Connor said, “to get to the next level, we need policies like a national energy saving initiative, ambitious performance standards for vehicles and equipment and bipartisan support for a robust long-term signal for low-carbon investment... this is an important contribution to improving Australia's productivity as well as cutting our energy bills and carbon pollution.”

John Connor says people will have to fight for a better environment in the future; “We need to get beyond the idea that energy efficiency means changing light bulbs. In fact, just about every product and process can be streamlined to reduce energy waste... businesses are starting to recognise this, but there's a lot more they can do.”

According to the report Australia stands to save billions if it tightens up its energy use. The researchers found a 1 per cent improvement in energy efficiency would boost gross domestic product per person by 0.1 percentage point and generate an additional $8 billion by 2020, a further $26 billion by 2030.

ClimateWorks Australia said any decision to bring an emissions trading scheme forward should include a "statement of increased ambition" and a continuing role for the independent Climate Change Authority.

A copy of the latest report on energy efficiency and the economy is available here.