Energy efficiency ‘single largest’ climate lever – why aren’t we pulling it?

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IEA report says energy efficiency a huge investment opportunity, and growing rapidly, but must be ramped up to avoid dangerous climate change.

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energy efficiency leadership

The International Energy Agency (IEA) has released a new report on global investment in energy efficiency, which found that investment in energy efficiency is huge and growing rapidly, but needs to be ramped up even more to avoid dangerous climate change.

The IEA’s Energy Efficiency Market Report 2016 was released in Paris on Monday. The report found that global investment in energy efficiency in 2015 was a staggering $290 billion and is growing at a remarkable rate, increasing 6 per cent in just one year. This is not only a huge business opportunity – it’s also critical to tackling climate change.

The IEA is the world’s most senior advisory body on energy, producing reports on oil, gas, coal, renewables and energy efficiency. It was set up in 1974 in the wake of the Oil Crisis, and historically had a strong focus on energy security and fossil fuels. However, over the last two decades the IEA has increasingly focused on climate change, renewable generation and energy efficiency.

The importance of energy efficiency for tackling climate change is frequently overlooked, but it’s a critical part of a strategy that combines renewables and carbon pricing. In fact, Fatih Birol, the Executive Director of the IEA, states that the IEA believes that energy efficiency is the “single largest action” to help decarbonise the global energy supply.

The good news is that the ramp up in investment in energy efficiency is having a real impact. Global energy productivity (units of energy per unit of GDP) improved by 1.8 per cent in 2015, which is triple the annual rate of 0.6 per cent in the 2000s. However, this is still well short of the 2.6 per cent rate of annual improvement that the IEA believes would be required to deliver on the world’s climate goals.

The Energy Efficiency Market Report 2016 also found that in 2015 improvements in energy efficiency met more of the world’s energy needs than new generation. Even more significantly, global investment in energy efficiency was 66 per cent higher than global investment in conventional generation.

The report finds that energy efficiency is an enormous business opportunity. China alone invested $485 billion in energy efficiency between 2006 and 2014, delivering as much ‘energy’ as China’s investment in renewable energy. China is also the largest global market for specialist ‘energy service companies’, which have seen rapid growth in the last decade.

While energy efficiency makes good business sense, distortions in markets for energy, buildings and appliances prevent us from tapping its full potential. The IEA has concluded that mandatory energy efficiency programs, including standards for buildings, vehicles and appliances, were critically important to capture this opportunity. While governments have taken significant action, there is much more still to do.

Following the release of the report the Energy Efficiency Council spoke briefly to Brian Motherway, the IEA’s Head of Energy Efficiency and former CEO of Ireland’s Sustainable Energy Authority. Brian Motherway will be in Sydney on 15-16 November 2016 for the National Energy Efficiency Conference.

“Our 2016 Energy Efficiency Market Report demonstrates that businesses and governments around the world understand the critical role energy efficiency will play in the transition to a low carbon economy,” said Brian Motherway.

“Not only that, they and are acting on that knowledge, and pursuing cost effective energy efficiency that has benefits well beyond savings on energy bills in terms of comfort, health and productivity.”

“This opens up significant opportunities for Australia to tap into the rapidly growing export market for energy efficient products and services, particularly in the Asia Pacific region. I’m looking forward to discussing these opportunities at the National Energy Efficiency Conference in November.”

The Australian Government has set a target to improve national energy productivity by 40 per cent by 2030. If we meet this target it will deliver substantial reductions in Australia’s emissions, smooth the transition to renewable energy and deliver economic growth. As noted by the IEA, the challenge is to introduce the strong policies that will allow Australia to capture this opportunity.

Rob Murray-Leach is Head of Policy, Energy Efficiency Council 

The Australian Energy Efficiency Policy Handbook is at the EEC website: www.eec.org.au/handbook

About the Energy Efficiency Council (EEC)

The Energy Efficiency Council is Australia’s peak body for energy efficiency, cogeneration and demand management. Formed in 2009, the Council is a not-for-profit membership association which exists to make sensible, cost effective energy efficiency measures standard practice across the Australian economy. We work on behalf of our members to promote stable government policy, provide clear information to energy users and drive the quality of energy efficiency products and services. www.eec.org.au

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14 Comments
  1. Ian 3 years ago

    Governments who take too much notice of the generators and retailers have been blocking initiatives for energy efficiency…such as the very successful CTIP being dismantled by abbott the clown.

  2. Miles Harding 3 years ago

    Perhaps, we already have.

    A number of commentators indicate that the economy has become strongly linked to energy use, suggesting that most efficiency gains have already been had.

    I would expect that manufacturing (what’s left of it) is likely already relatively good in order to (not quite) complete with cheap labour overseas. Industrial staples such as electric motors are already very efficient, with larger (400kw) sizes 96% or better these days, so no gain to be had there. We will need to look at other parts of processes, transport and buildings for any gains.

    I suspect that a 40% improvement in energy productivity is at the limit of what’s possible and not aceivable without a significant departure from our ‘businss as usual’ trajectory. This won’t happen without coercion via strong regulation, something that conservative governments are reluctant to do, so we can expect that this will remain an aspirational target.

    Like GHG targets, LNP policy will deliver a ‘missed by miles’ result here too.

  3. Ren Stimpy 3 years ago

    The opposite of energy efficiency is inertia.

  4. Tim Forcey 3 years ago

    Here is something that is not exactly “energy efficiency”. I call it “economic fuel switching”. Heat your home with an efficient reverse-cycle air conditioner for as little as 1/3rd the cost of using gas. This is about the biggest Australian consumer win ever. https://theconversation.com/hot-summer-nights-and-cold-winter-evenings-how-to-be-comfortable-and-save-money-all-year-long-51046

  5. Kay Schieren 3 years ago

    I use all LEDs at home – I run off grid battery storage (self designed self installed – very simple) and I use a 12V for lights and a 24V system for inverted 240V power. The 12V system (so much really cheap lighting available, and very bright and reliable) runs on 3 or 4 x 80W panels and cost only $850 all up at today’s prices and has never failed in six years – ditto my 24V system, which cost about $6500 all up (my own design and install). Runs fridge, washing machine, kitchen gear and tools in my one man, three room cottage and workshop. I charge e Trike batteries as well for transport. For a family-sized home of frugal and disciplined users maybe double the cost. I’ve been off grid for 30 years while most of Australia and the world have been asleep or counting on their bank balance. But LED’s and a separate system for lights can be done easily and will stop the lights going out anywhere, no matter what the grid does.

  6. Marcelo 3 years ago

    So what is the money that the government saves from being more energy efficient going to be spent on? Building new airports or new roads or any other polluting activity it feels is necessary. I am not convinced this is a solution.

    • Ray Miller 3 years ago

      Marcelo, you obvious have no idea about the subject, you seem to believe the unsubstantiated “beliefs” by 18th century economics.
      When energy efficiency saving are made maybe we could invest more in our schools and the NDIS or even NBN “fiber” to the home first.

      • Marcelo 3 years ago

        Yes and all the economic activity (whether it is building roads or the NBN) consumes energy. I was only posing a question.

  7. trackdaze 3 years ago

    Globally the incentive probably not as great as in australia. which has lost its competetive edge in part due to our expensive electricity.

    No brainer in australia.

  8. Rod 3 years ago

    “The Australian Government has set a target to improve national energy productivity by 40 per cent by 2030.”

    If that target was met I would be amazed and ecstatic. The problem is you need plans and goals to reach a target and I haven’t seen any evidence of that.

    I don’t think we have even scratched the energy efficiency surface so far.

    Local Councils have a role to play in housing efficiency. A 10 star design with the wrong orientation quickly loses it’s energy efficiency.

    The amount of dark roofs in this country is bizarre. Councils could mandate cool roofs and reduce energy use (for cooling) by 30% for new housing stock.
    Consumers could be educated as to the ramifications of dark roofs.

    https://ec.europa.eu/energy/intelligent/projects/en/projects/cool-roofs

    The short lived price on carbon was successful in increasing energy efficiency because business and households started to think about ways to reduce energy use.

    The poorly implemented pink batts scheme was also successful in increasing energy efficiency proving the desire of households to save money/reduce carbon etc.

    Deep retrofits of existing commercial buildings has been proven to be very cost effective, but yet to become widespread.

    Retrofitting existing housing stock with secondary glazing, blow in insulation etc. will also pay for itself over several years and with interest rates so low seems a no brainer to me.

    Co-generation also makes economic sense for large energy users.
    Gas fired electricity for use in smelters, iron works etc. is ridiculous. Gas generators are at best 30%-40% efficient. The rest is waste/pollution/Co2
    Why not use gas directly?

    The only good thing I can say about Mighty Turncoat is he is a fan of Public Transport. An increase in Public Transport use would increase energy efficiency in the transport sector by reducing commuting by motor vehicles.

    Refrigeration has improved recently but I think can be improved further. Federal legislation could drive this. More insulation, siting the compressor above the cabinet, timing options for defrosting could all be improved at little cost.
    Refrigeration is a major energy user in energy efficient houses.

    The list is endless and I agree we should be pulling this lever as well as replacing FF generation with RE.

    • Brunel 3 years ago

      I prefer taxes instead of bans.

  9. Brunel 3 years ago

    What about forcing gadgets to accept USB charging.

    My toothbrush + beard trimmer + torch + shaver + camera could all be recharged using USB. But instead each has its own unique plug.

  10. Ray Miller 3 years ago

    Very good question, seems like we pick and choose what we want more efficient and what we ignore.
    One of the fundamentals I think is the route cause is the human belief in “unlimited” resources, and since our economics dictates that when we scale up things they get cheaper this seems to reinforce our “delusion” that resources are indeed unlimited.
    The only unlimited resource seems to be our capacity for “delusion” as this is blinding us to the consequences of this unlimited resources thinking.

  11. Jill Springer Forrest 3 years ago

    That’s alot of cash to throw at a problem that half the electorate believes is unreal. I hope we can all become energy literate soon and that means teaching EE in the classrooms. All humans are affected no matter the company you choose to keep.

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