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Energy Efficiency

Energy Efficiency


Energy efficiency is proportion of energy used, rather than wasted, during the production or consumption of energy. Higher efficiency equals less waste; lower efficiency equals more waste. Efficiency can be further divided into conversion efficiency, distribution (or transmission) efficiency, and end-use efficiency. Conversion efficiency is the fraction of useful energy obtained during conversion of energy from one form to another, such as from heat to mechanical motion or electricity. Distribution efficiency is the fraction of a given amount of energy that is successfully sent through a transmission system such as a steam pipe or electric transmission line. End-use efficiency is the fraction of a given amount of energy that is used to accomplish a desired task once it has been delivered to a device, such as heating a home, running a computer, or moving a vehicle.

Most of the energy produced by burning fuels is lost because of low efficiencies in conversion, transmission, and end use. In general, conversion efficiency is very low, transmission efficiency rather high, and end-use efficiency fair to low. Greenhouse-gas emissions from fuel-burning could be greatly reduced by changing technology and human behavior to increase efficiency. Such changes would also have other benefits, such as reducing toxic pollution and environmental destruction associated with mining and drilling. Because energy is so expensive, large efficiency savings can often be realized at low cost or even at a profit.

Historical Background and Scientific Foundations

Energy efficiency was of urgent concern during World War I (1914–1918) and World War II (1939–1945), when many countries dependent on fossil fuels found themselves cut off from easy access to petroleum. For example, gasoline was rationed in all major combatant nations during World War II, including the United States, then the world's largest oil producer.

However, efficiency was not a permanent peacetime concern until fairly late in the twentieth century. In the 1970s, oil embargoes by the Organization of the Petroleum Exporting Countries (OPEC) triggered widespread public awareness that fossil fuels might run out, and not just in some remote future, but relatively soon. It became obvious that dependence on oil imports weakened national security all the time, not just during wars. Also, the destructiveness of coal mining, oil drilling, and the possible environmental side-effects of nuclear power increased public awareness that energy use always exacts an environmental cost.

In the 1980s and early 1990s, scientists became reasonably certain of the reality of global climate change, and in the late 1990s and early 2000s, developing economies such as those of India and China rapidly increased their demands for oil and natural gas, raising fuel prices to historically unprecedented levels.

All these concerns—limited supply, import insecurity, pollution, global warming, and high fuel costs—have conspired to make energy efficiency an abiding interest of citizens, engineers, corporate managers, and politicians in the early twenty-first century. Increased efficiency gets the same job done with less energy; less energy used means less fuel (or other primary energy) purchased, which means longer-lasting supplies, lessened import dependence, lessened pollution, lessened global warming, and lower costs. Although exotic, expensive forms of energy efficiency can be invented—affordable or even profitable opportunities for efficiency exist in almost all departments of energy use: buildings, vehicles, electronics, manufacturing, and more.

There is broad agreement among scientists who study energy usage that increasing energy efficiency is not only one of the most cost-effective ways to combat human-caused global climate change, but that there is no hope of significantly mitigating climate change unless energy efficiency is greatly increased worldwide.According to a 2000 report to the U.S. Congress from the Congressional Research Service, “Increased energy efficiency is generally thought to be the primary way to reduce the nation's growth in CO2 emissions.”

Technical Definitions of Efficiency

The energy efficiency of any system is defined as the ratio of useful energy output to total energy input. For example, if a fifth of the energy contained in the gasoline burned by a vehicle is turned into mechanical energy— ends up actually moving the vehicle—the vehicle's efficiency is 20%. Waste energy ends up as heat that is ejected to the environment from the radiator or out the tailpipe.

The three basic types of efficiency—conversion, distribution, and end-use—refer to different types of energy systems. Conversion systems include power plants, which convert the chemical energy in fuels into electricity and heat, and devices such as batteries, which convert electricity into chemical potential energy when they are charged and back into electricity when they are used to supply current. Drive trains, electrical transformers, and other devices are also conversion systems.

The conversion efficiency of a typical coal-fired power plant, defined as the ratio of the energy in the coal burned to the amount of electricity sent out from the plant, is about 30%. The efficiency of a typical lead-acid automobile battery, defined as the ratio of electricity used in charging the battery to the electricity obtained when discharging it, is 75–85%.

Distribution efficiency is the ratio of the useful energy extracted from a distribution system to the energy put into that system. For example, electricity from a large power plant is fed into a distribution system of high-voltage transmission lines—the grid—but not all that energy comes back out again in the form of useful electricity. Some energy is lost in heating the wires, and some is radiated from the system as radio waves. (So much energy is radiated in this way, in fact, that a fluorescent light bulb will glow in the dark underneath a typical high-voltage transmission line.) Distribution losses consume 8–9% of the electricity that is produced by power plants.

End-use efficiency is the ratio of energy that devices use to do useful work to the energy delivered to those devices. For example, the end-use efficiency of an incandescent (standard) light bulb is about 2%; that is, it turns only about 2% of the electricity it consumes into visible light. The rest is turned into heat. A compact fluorescent light (CFL) bulb has an end-use efficiency of 7–8%. Thus, CFL bulbs make about four times as much visible light for each watt-hour of electricity they consume as do incandescent bulbs (a 16-watt CFL bulb replaces a 60-watt incandescent bulb); their end-use efficiency is four times greater. Yet they still have low end-use efficiency, overall.

Many energy analysts define two other kinds of efficiency in addition to these three classic kinds. The first is extractive efficiency, the efficiency of converting primary energy—coal, oil, or uranium in the ground, for example—into available fuel energy. All energy spent extracting the fuel from the ground, processing it, and transporting it to where it will be burned must be counted as loss in calculating extractive efficiency. Extractive efficiency comes before conversion efficiency in the energy stream.


FOSSIL FUELS: Fuels formed by biological processes and transformed into solid or fluid minerals over geological time. Fossil fuels include coal, petroleum, and natural gas. Fossil fuels are non-renewable on the timescale of human civilization, because their natural replenishment would take many millions of years.

GREENHOUSE GASES: Gases that cause Earth to retain more thermal energy by absorbing infrared light emitted by Earth's surface. The most important greenhouse gases are water vapor, carbon dioxide, methane, nitrous oxide, and various artificial chemicals such as chlorofluorocarbons. All but the latter are naturally occurring, but human activity over the last several centuries has significantly increased the amounts of carbon dioxide, methane, and nitrous oxide in Earth's atmosphere, causing global warming and global climate change.

INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE (IPCC): Panel of scientists established by the World Meteorological Organization (WMO) and the United Nations Environment Programme (UNEP) in 1988 to assess the science, technology, and socioeconomic information needed to understand the risk of human-induced climate change.

RADIO WAVES: Electromagnetic waves that oscillate or vibrate between 3 and 300 billion times per second. Radio waves are physically identical to light waves, except that they do not vibrate as rapidly.

RATIONING: Mandatory distribution of fixed amounts of food, fuel, or other goods in order to conserve a scarce resource.

SOLAR ENERGY: Any form of electromagnetic radiation that is emitted by the sun.

The other non-classical type of efficiency is hedonic efficiency, named from the Greek word hedone for “pleasure.” Hedonic efficiency is the rate at which energy services are converted into human welfare, and comes at the very end of the energy stream. For example, a CFL bulb burning in a room that is occupied 10% of the time has a hedonic efficiency of 10%. If the room is never visited by human beings and does not need to be illuminated at all, the bulb has a hedonic efficiency of 0%. A computer that is left on overnight has a hedonic of efficiency of 0% during that time.

Interactions between Efficiencies

Although conversion and distribution efficiencies are straightforward to calculate, end-use efficiency and hedonic efficiencies are more complex because they depend on how “use” is defined. This, in turn, depends on what human energy users desire in terms of energy services. In the case of a light bulb, energy turned by the bulb directly into heat, not light, is generally considered waste, because light bulbs are generally purchased to produce light, not heat.

Sometimes, however, heat is desired, as in buildings during the winter. In this case, the heat emitted by the light bulb is not, strictly speaking, wasted. Yet most of the money spent on that electricity is wasted, because heating indoor spaces with electricity is generally much more expensive than other common heating options (heating oil, wood stoves, propane heaters, passive solar heat, etc). Waste heat from light bulbs is a very expensive contribution to a building's heat budget.

Further, many buildings are air conditioned to get rid of unwanted heat. To continue the light-bulb example, waste heat from lights adds to the cooling burden of an air-conditioned building: the building owner must not only purchase the energy that the light bulb turns into unwanted heat, but must purchase still more energy to remove that unwanted heat from the building. Typically, an air conditioner consumes about 0.5 units of electrical energy for each unit of heat energy it removes. An air conditioner must therefore consume half a watt of power for each watt of waste heat produced by a light bulb. So, for a 100-watt bulb generating 98 watts of heat, an additional 98/2 = 49 watts of electricity must be purchased to keep the building cool. The actual efficiency of the light bulb is, in this context, found by dividing the 2 watts of visible light (useful, desired function) by the 100 watts purchased to run the bulb plus the 49 watts purchased to get rid of the bulb's waste heat: 2/(100 + 49) = .013. This is a mere 1.3% efficiency, significantly worse than the solitary bulb's 2% efficiency.

This example shows how efficiencies can be connected with each other. Waste in one place (an inefficient light bulb) can lead to further waste in another (the air-conditioning system). By the same token, increased efficiency in one place can lead to increased efficiency in others. Replacing an incandescent bulb with a CFL bulb in an air-conditioned building leads to a total efficiency gain not of 4 times (comparing just the bulbs), but of at least 9 times (taking air conditioning into account).

Energy Conversion along Chains

Consider a situation where a single energy unit of visible light is produced by a light bulb. To make that unit of visible light energy, 100 units of electrical energy must be delivered to the bulb. Assuming that there is 9% loss of electric power between the power plant and the bulb, this means that 109.9 units must be sent out from the power plant to produce the 1 unit of visible light. Because there is 70% loss at the power plant from fuel to electricity, 366 units of fuel energy must be burned to produce those 109.9 units of electrical energy. The efficiency of the total system, fuel to light, is only 1/366 = 0.27%.

However, if a more efficient light bulb is installed, say a CFL bulb that uses 25 units of electrical energy instead of 100 to produce 1 unit of light energy, then only about 27 units of electricity need be delivered to the home. In this case, only 27.5 units need to be transmitted from the power plant, and only 91.5 units of fuel energy need to be produced. The amount of energy saved at the light bulb is 75 units, but the amount saved at the power-plant is 274.5 units. In short, downstream savings (at the user's end) multiply upstream savings (at the production end). Reductions in mining damage, air pollution, and climate change are correspondingly large.

Consider this whole story for a typical improvement in end-use efficiency. If enough end-users install enough efficient appliances, a smaller power plant or fewer power plants can be built, as well as smaller or fewer transmission lines, saving money and land as well as fuel costs. Some of the money saved from these measures may be invested in buying further efficiency improvements.

Impacts and Issues

Because of the extreme cheapness of energy during the early post-World War II era, consumer and industrial concerns about cost focused mostly on capital costs— how much a light bulb, refrigerator, automobile, heating system, or other energy-using object cost, not how much energy it used. This changed permanently with the oil shocks of the 1970s. Since that time, appliances, buildings, and other energy-use sectors have become steadily and significantly more efficient. Automobiles are an exception, due to the vogue for the large, inefficient private vehicles known as sport utility vehicles (SUVs); from 1985 to 2002, the average mileage of U.S. cars declined from 26 to 24 miles per gallon (10.8 to 10.2 km/L).

Widespread increases in efficiency show up as decreases in energy intensity, that is, fuel or primary energy consumption per dollar of gross domestic product (a measure of total economic activity). The energy intensity of an economy is how much energy it uses to get a given amount of business done. As efficiency rises, the economy gets each unit of business done using less primary energy, and energy intensity decreases. Energy intensity may also decrease if an economy shifts the kind of business it is doing to lower-energy activities. For instance, if an aluminum smelting plant is replaced by a telemarketing center, the same amount of business may get done as measured in dollars, but energy intensity will be less.

Historical Savings

Energy intensity has declined in much of the industrialized world over the last several decades. In the United States, energy intensity declined by 46% from 1975 to 2005. This was mostly due to efficiency increases rather than to shifting to services that replaced manufacturing. In the early 2000s, U.S. energy intensity was declining by about 2.5% per year.

Efficiency improvements have appeared in lighting, refrigeration, air conditioning, and heating. Buildings, for example, have realized higher efficiency through using better insulation, sealing air leaks, orienting windows and shading to harvest (or exclude) solar energy as appropriate to the seasons and to local climate, and other measures. Industries have become more efficient by using techniques such as cogeneration, where waste heat from one process is used for another, such as space heating, that requires a lower intensity of heat, rather than being vented directly to the environment. Yet despite the dramatic gains in efficiency that have already occurred, only a fraction of the possible efficiency gains have yet been realized.

Potential Savings

An analysis of the global potential for energy efficiency as a way of mitigating global climate change was released by the United Nations in 2007. The report said that greenhouse emissions could be reduced even more. To reduce rising global greenhouse-gas emissions to 2007 levels by 2030, the report said, would require the world to spend only 0.3–0.5% of projected 2030 global gross domestic product. According to the U.N. Climate Change Secretariat, Yvo de Boer, “Energy efficiency is the most promising means to reduce greenhouse gases in the short term.” The secretariat also claimed that most of the cost-effective efficiency opportunities are in developing countries.

However, the report was criticized as being conservative. The UN's own Intergovernmental Panel on Climate Change (IPCC) has stated that to avoid possibly catastrophic global warming, emissions must be reduced by 80% from today's levels: simply holding them steady at 2007 levels will not mitigate enough climate change.

Further, even if it is true that the opportunities for efficiency improvements are greater in developing countries, they are still very great in the developed countries. Energy expert Amory B. Lovins, who was a prominent and early champion of end-use efficiency in the 1970s, claimed in 2005 that efficiency improvements in vehicles, electrical usage, and other areas could save half of U.S. gas and oil usage and 75% of U.S. electricity usage for less than it would cost to supply the energy itself (i.e., at a profit). Globally, the potential for efficiency savings was even greater, in agreement with the UN's statements, because many countries still had higher energy intensities than the United States.

Primary Source Connection

Energy efficiency refers to technologies or programs that are designed to use less energy to perform the same task or work. By reducing energy consumption, energy efficient devices or systems also reduce the production of greenhouse gases, particularly carbon dioxide (CO2), which is involved in energy production. One example of energy efficiency is the use of technology to produce an automobile that is more fuel efficient while delivering the same performance. Energy efficiency and CO2 reduction have been the primary goals of the energy policy of the United States since the 1970s.

This article, by the National Council for Science and the Environment (NCSE), details the use of federal energy efficiency standards over the last several decades. NCSE is a non-profit group that is dedicated to improving the use of science in environmental policy making.


Energy efficiency is increased when an energy conversion device, such as a household appliance, automobile engine, or steam turbine, undergoes a technical change that enables it to provide the same service (lighting, heating, motor drive) while using less energy. Energy efficiency is often viewed as a resource option like coal, oil or natural gas. It provides additional economic value by preserving the resource base and reducing pollution.


“New energy infrastructure investments in developing countries, upgrades of energy infrastructure in industrialized countries, and policies that promote energy security, can, in many cases, create opportunities to achieve GHG [greenhouse gas] emission reductions compared to baseline scenarios. Additional co-benefits are country-specific but often include air pollution abatement, balance of trade improvement, provision of modern energy services to rural areas and employment (high agreement, much evidence).”

SOURCE:Metz, B., et al. “IPCC, 2007: Summary for Policymakers.” In: Climate Change 2007: Mitigation of Climate Change. Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. New York: Cambridge University Press. 2007.

Energy security, a major driver of federal energy efficiency programs in the past, is now somewhat less of an issue. On the other hand, worldwide emphasis on

environmental problems of air and water pollution and global climate change have emerged as important drivers of support for energy efficiency policies and programs. Also, energy efficiency is seen as a technology strategy to improve the competitiveness of U.S.-made appliances, cars, and other energy-using equipment in world markets. The Clinton Administration views energy efficiency as the flagship of its energy policy for global climate change and other environmental reasons.

From 1975 through 1985, high energy prices served as a strong catalyst to improved energy efficiency. However, the sharp drop in oil and other energy prices that began in 1986 has dampened the impact of prices on energy efficiency improvements.

Federal policies and programs have also made a significant contribution to improved energy efficiency. One such program is DOE's energy efficiency R&D program, which employs a “technology-push” strategy. That is, it produces new, ever-more efficient technologies that form a basis for new products and services in the private sector. In contrast, EPA's energy star programs employs a “market-pull” strategy wherein businesses, institutions, and consumers are encouraged to buy more energy-efficient equipment.

The role of energy prices and the environmental benefits of energy efficiency often lead to a discussion about barriers and market failures. However, the resultant debate over the effectiveness of market forces to stimulate energy efficiency and the merit of federal policies and programs that support energy efficiency is not the focus of this report. Instead, this paper is focused on the projected contribution of energy efficiency to reducing CO2 emissions.

Energy efficiency is proposed as a cost-effective and reliable means for reducing the nation's growth in CO2 emissions due to fossil fuel use. Recognition of that potential has led to high expectations for the control of future CO2 emissions through even more energy efficiency improvements than have occurred through past programs, regulation, and price effects. Thus, in a recent context of low energy prices and rising fossil fuel use, the Clinton Administration has proposed increased government support for energy efficiency programs as its primary initiative to reduce emissions of CO2 and other “greenhouse gases” that may cause global climate change.

However, there is a debate over [projected] estimates of the future potential for energy efficiency to curb the growth of CO2 emissions through 2010. This paper discusses this debate, which is centered on differences between key reports by the Department of Energy (DOE) and the Energy Information Administration (EIA). A DOE report by five of its research laboratories projects that further gains in energy efficiency could be the largest future contributor to CO2 emissions reduction. However, EIA has criticized the DOE report's assumptions about the character of future energy efficiency measures, economic growth rates, future government R&D policies, and market adoption of energy efficiency measures.

The paper also describes a debate over the analysis of actual CO2 emission reductions from past energy efficiency measures. In this case, methodological issues are at the core of disagreements between the General Accounting Office (GAO) and the Environmental Protection Agency (EPA) about the best way to assess emission savings from EPA's various energy efficiency programs.

Finally, the paper notes that federal efforts to curb global climate change through increased energy efficiency may be affected by a number of issues being debated by Congress, including program appropriations, new tax incentives, and legislation on electricity restructuring.

Energy Use Impact on Global Climate Change

Wherever energy efficiency and conservation measures reduce fossil fuel use, they will reduce carbon dioxide (CO2) emissions, as well as pollutants that contribute to water pollution, acid rain, and urban smog. Human activities, particularly burning of fossil fuels, have increased atmospheric CO2 and other trace gases. If these gases continue to accumulate in the atmosphere at current rates, many experts believe global warming could occur through intensification of the natural “greenhouse effect,” that otherwise moderates Earth's climate. Excess CO2 is the major contributor to this effect. The influence of human-induced emissions on the “greenhouse effect” is a subject of continuing research and controversy.

U.S. use of fossil energy (coal, oil, natural gas) currently produces about one-fourth of the world's CO2 emissions. Since 1988, the federal government has accelerated programs that study the science of global climate change and created programs aimed at mitigating fossil fuel-generated carbon dioxide (CO2) and other human-generated emissions. The federal government has funded programs for energy efficiency as a CO2 mitigation measure at DOE, EPA, the Agency for International Development (AID), and the World Bank. The latter two agencies have received funding for energy efficiency-related climate actions through foreign operations appropriations bills.

Efforts to study greenhouse gas emissions and to devise programs to reduce them accelerated after the 1992 United Nations Conference on Environment and Development (UNCED) concluded with the signing of the Rio Declaration, Agenda 21 (an action program), and the Framework Convention on Climate Change (UNFCCC). Agenda 21 promotes the development, transfer, and use of improved energy-efficient technologies, the application of economic and regulatory means that account for environmental and other social costs, and other energy efficiency-related measures. The United States ratified the UNFCCC in 1992, and the Convention entered into force in 1994. The UNFCCC calls for each nation to develop a strategy for emissions reduction, inventory emissions, and promotion of energy and other technologies that reduce emissions.

Energy Efficiency and Energy Use

Increased energy efficiency of combustion and other fuel-using equipment has a long record of reducing the rate of growth in fossil fuel use and, thereby, reducing carbon emissions. This improvement is reflected in the ratio of U.S. energy use to Gross Domestic Product (GDP), which fell from 19,750 British thermal units (Btu's) per dollar in 1971 to 14,040 Btu's per dollar in 1986. This represents an average annual reduction of 1.81% in the energy/GDP ratio. For the period from 1972 to 1986, energy efficiency improvements cut energy use by 30% or 32 quadrillion Btu's per year. By 1988, recognition of this accomplishment had led to a focus on energy efficiency programs as a key strategy for future control of CO2 emissions.

However, from 1986 to 1998, the rate of energy efficiency improvement slowed. The energy/GDP ratio declined from 14,040 Btu's per dollar in 1986 to 12,480 Btu's per dollar in 1998, but this represents an average annual reduction of 0.85%, which is less than half the rate for 1972 to 1986. Further, the decline in oil prices since the mid–1980s has led to historically low gasoline prices which, in turn, encouraged motorists to buy less fuel-efficient automobiles, such as sport utility vehicles, and to increase travel by about 24%. Overall, national petroleum use for transportation grew 21%, or4.3 Q during this period. Also, since 1994, electric utility industry restructuring at the state level caused utility spending for energy efficiency to fall 48% by 1998 and the resultant rate of energy savings fell 20% from 1996 to 1998. Meanwhile, coal use for electricity production grew 33% from 1986 to 1998.

Thus, despite the increase in efficiency as measured by Btu/$, total fossil fuel use, has been rising steadily due to low energy prices, economic growth, and population growth. This growth includes oil and coal, which are the most intense emitters of carbon dioxide (CO2). As a result, CO2 emissions have been rising, eclipsing the 1993 Clinton Administration Climate Change Action Plan (CCAP) goal of reducing emissions to the 1990 level by 2000. In fact, Energy Information Administration (EIA) projections show fossil energy use and emissions increases continuing through 2010.

Fred Sissine

sissine, fred. “global climate change: the role for energy efficiency.” national council for science and the environment. congressional research service, february3, 2000.

See Also Adaptation; Energy Contributions; Industry (Private Action and Initiatives); Lifestyle Changes.



Casten, Thomas R. Turning Off the Heat: Why America Must Double Energy Efficiency to Save Money and Reduce Global Warming. Amherst, NY: Prometheus Books, 1998.

Hordeski, Michael Frank. New Technologies for Energy Efficiency. Lilburn, GA: Fairmont Press, 2002.


Wing, Ian Sue, and Richard S. Eckaus. “The Implications of the Historical Decline in U.S. Energy Intensity for Long-Run CO2 Emission Projections.” Energy Policy 35, no. 11 (2007): 5267–5268.

Web Sites

Lovins, Amory B. “Energy End-Use Efficiency.” Rocky Mountain Institute, September 19, 2005. <> (accessed October 26, 2007).

Sissine, Fred. “Energy Efficiency: Budget, Oil Conservation, and Electricity Conservation Issues.” Congressional Research Agency, May 25, 2006. <> (accessed October 26, 2007).

Sissine, Fred. “Global Climate Change: The Role for Energy Efficiency.” United Nations, February 3, 2000. <> (accessed October 26, 2007).

Larry Gilman

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