Head of IPEEC Secretariat
Energy efficiency – A crucial strategy to manage the energy transition
The energy transition requires long- term structural change to people’s approach to energy systems (ES), leading to a more integrated and smarter energy system that is
better able to manage and balance dynamic patterns of supply and demand at global, national and local levels. Such systemic change will help minimise energy demand, diversify energy sources; maximise cost effective combinations of storage options; deploy smart platforms, technologies and controls and management to create a more integrated, smarter and more decentralised energy system, provide affordability and choice to consumers; and enable customers to be both consumers and producers.
The Low Energy Demand Scenario of the IPCC report released in 2018 (referred as P1) outlines a plausible and affordable scenario to achieve the Paris Agreement.
According to this scenario, managing and reducing energy demand on
the global scene through energy efficiency is vital as it generates multiple benefits, beyond the much- needed greenhouse gases (GHG) reductions. Over the past 20 years, the IEA World Energy Outlook (WEO) has steadily recognised that energy efficiency alone could have the potential to help countries achieve nearly 40% of the required energy- related GHG emissions reductions by 2040 to be in line with the Paris Agreement.
Beyond acknowledging its multiple benefits, it is valuable to recognise that energy efficiency, like education, is part of the ‘knowledge economy’ and that a new paradigm could help to better conceptualise its needs and benefits. Energy efficiency is a mind-set, an attitude, a new way of thinking. It is not only complex but also challenging since it relies on invisible, granular, small scale elements and decisions. To be delivered, energy efficiency requires very specific evidence, know-how, adoption of human behaviour, technologies and indeed a sound level playing field – for example economic measures such as price signals. Looking at energy efficiency in this holistic way can help address policy opportunities that are cross- cutting across multiple fields, leading to solutions that encourage greater inter-agency cooperation within national policymaking contexts, as well as across sectoral initiatives like IPEEC’s Task Groups. In this context, a clever and meaningful way to frame strategic action for unlocking the potential of energy efficiency to accelerate the energy transition is the‘6-Ds for energy efficiency’.
Strategy to capture the full potential of energy efficiency’s-Es that need -6Ds’.
A global energy transition that supports universal access to modern energy services while also achieving
the emissions reduction targets of the Paris Agreement implies reaching an outcome that is agreed to be desirable while acknowledging
it will require disruptive action in the following areas: decoupling, decarbonisation, decentralisation and digitalisation.
By definition energy efficiency is about decoupling. It not only includes the decoupling of energy services and the amount of energy consumed but also the energy consumed by an individual, a company, a community, a country and its wealth. It is therefore crucial to collect data on where, when, in which quantity, which end-use, energy (industry, transport, power generation and buildings)
is being consumed. This exercise requires sustainable and thorough approach that must be supported by adequate resources. Capturing these opportunities will reduce the cost of producing and delivering goods and services, thereby providing better profit margins for companies and potentially lower costs to consumers.
Energy efficiency is vital to decarbonising energy supply and demand. In its ‘Bridge Scenario’, the IEA shows that ambitious action in energy efficiency – simply through widespread deployment of existing policies and technologies – could deliver 57% of the emissions reduction needed in the near term.
A report prepared by IPEEC’s G20 TTG presented information on the status of policies for clean vehicles and fuels in select G20 countries and showed the impacts of expanded adoption of world-class standards. However, analysis of Nationally Determined Contributions (NDCs) submitted to date shows a substantial gap between individual commitments and the Paris Agreement’s shared goals. Hence greater action needs to be unlocked to deploy energy efficiency on both demand and supply sides on a much faster scale.
Everything everyone does – every day and everywhere – requires energy. Energy efficiency by nature is a granular, decentralised exercise. Recent experience through various IPEEC Task Groups (BEET, EMAK, and EEFTG for example) highlights the reality that while national energy efficiency policies and programmes are important, support for local implementation is vital.
On the supply side, clean energy solutions are relying on decentralised renewable resources. By harvesting energy where is it available and bringing the energy production closer to the energy needs, there are opportunities to help the consumer to better pay attention to energy efficiency on the demand side, where energy is being needed.
Today, inexpensive sensors, remote control and metering systems help in harvesting huge amounts of indispensable data on which to build knowledge and base decisions. Digitalisation can deliver the evidence – across several dimensions – to establish baselines and monitor change, thereby supporting strategic decision making in a cost-effective manner. Work carried out by IPEEC’s EMWG reports that EnMS provide organisations with a structure and methodology to discover opportunities, implement projects and maintain practices that save energy.
The EEFTG has highlighted the need for more energy performance data to be ‘tagged’ to assets such as real estate in order for financial institutions and investors to make better investment decisions. Innovative financial mechanisms such as ‘green tagging’ hold the potential to be deployed more broadly – a message that was central to the Tokyo Declaration launched at the G20 Global Summit on Financing Energy Efficiency, Innovation and Clean Technology in June 2019, in the margins of the G20 Ministerial Meeting on Energy Transitions and Global Environment for Sustainable Growth.
With strengthened international collaboration towards the 6Ds approach, energy efficiency can truly become the cornerstone of the energy transition in the years to come. International collaboration can truly unlock the potential of energy efficiency on a global scale.