Energy efficiency evolves from "hidden" fuel to "first" fuel | RenewEconomy

Energy efficiency evolves from “hidden” fuel to “first” fuel

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IEA says energy efficiency should now be considered “first” fuel rather than “hidden” fuel, with potential economic benefits of $18 trillion.

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A new analysis from the International Energy Agency has highlighted the growing importance of energy efficiency – in decarbonising energy markets, reducing emissions, aiding economic growth and supporting energy and international security.

The growing importance of energy efficiency as a hidden fuel (also known as Negawatts, or measured on the fuel not used) is being recognised as the amount of money invested in energy efficiency topped $US300 million in 2011 – equal to all investments in coal, oil and gas power generation.

Now, the IEA, says, there is an increasing recognition of its role as the “first fuel”. So much so that the energy use avoided by IEA member countries in 2010 was larger than actual demand met by any other single supply-side resource, including oil, gas, coal and electricity.

Yet, the market for energy efficiency has barely scratched the surface. If it was used to its potential, it could boost cumulative economic output through 2035 by $18US trillion.

IEA EE potential

The IEA says however that two thirds of the benefits of energy efficiency may go untapped unless policies change.

IEA EE savingsThe IEA notes that the broader impacts of energy efficiency (highlighted in graph to the right) have not been systematically assessed, and the degree to which energy efficiency could enhance economic and social development is not well understood. It is often not considered at all in policy decision making processes.

This is true of Australia, where state governments such as Victoria have sought to cancel energy efficiency schemes – despite the fact that data shows they bring enormous benefits. But often they are only considered for their impact on demand, and on the profits of coal fired generators.

IEA says its new study, Capturing the Multiple Benefits of Energy Efficiency, challenges the assumption that the broader benefits of energy efficiency cannot be quantified.

It shows, for instance, that when the value of productivity and operational benefits to industrial companies were integrated into their traditional internal rate of return calculations, the payback period for energy efficiency measures dropped from 4.2 to 1.9 years.

Another example comes in the residential sector: by making homes warmer, drier and healthier, energy efficiency measures can dramatically improve health and well-being. When monetised, for example through the cost of medical care or innovative metrics such as the value of lost work time or child care costs caused by illness, these benefits can boost returns to as much as four dollars for every one dollar invested.

“This report lays out the case for governments to invest more time in measuring the impacts of energy efficiency policies, to improve understanding of their role in boosting economic and social development and to facilitate policy design that maximises the benefits prioritised by each country,” said IEA Executive Director Maria van der Hoeven.



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  1. Motorshack 6 years ago

    “But often [energy efficiency schemes] are only considered for their impact on demand, and on the profits of coal fired generators.”

    It is no longer surprising that big business and their paid stooges in the government perpetually think this way. They are after short-term gain for themselves, and simply don’t give a damn about anything else. However, at least they are smart enough to be seeking profits and not losses.

    What does continue to surprise me is the way that so many ordinary citizens pass up the opportunity to make sure-fire investments, with very high rates of return, and no taxes on the profits. At best that comes off as ignorant, and at worst stupidly perverse.

    No wonder the IEA thinks that government policies will be necessary. It appears that some people will not pick up the money that is there for the taking unless you hit them with a stick.

  2. Sid Abma 6 years ago

    Increased Energy Efficiency = Reduced utility bills = Profit
    Increased natural gas Energy Efficiency = Reduced global warming
    Increased natural gas Energy Efficiency = Reduced CO2 emissions
    Increased natural gas Energy Efficiency = Water conservation

    What natural gas is not wasted today, will be there to be used another day.
    Sort of a no brainer.

  3. Rob G 6 years ago

    Seems to slip most businesses by when they look to reduce costs and increase profits. Instead of looking at turning off the lights, printers and other typical office equipment, they look at getting rid of staff. Some have smartened up enough to get solar installed, but there really is still plenty more room to move in reduction power consumption.

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