The world shouldn’t have to choose between climate change mitigation and economic development. At the Alliance to Save Energy, we envision a new global economy where energy is used productively to deliver prosperity for all. We can break the historic tie between GDP growth and rising energy demand by deploying energy-efficient technologies and practices; according to the International Energy Agency (IEA), such deployment could deliver half of the solution to keeping Earth’s temperature from rising 2 degrees or more. The necessary upfront investment—$8 trillion, according to the IEA —may seem high, but the benefits will far outweigh the costs. To get there, the world needs to rally around improving energy productivity.
What is Energy Productivity?
Energy productivity—i.e., the amount of goods and services produced per unit of energy consumed—measures the economic value we get out of our energy. Improving energy productivity enables the decoupling of economic growth from energy consumption (Figure 1) – allowing countries to boost development while meeting their climate goals. Focusing on energy productivity also helps make the political case for investments in energy efficiency by allowing us to quantify the resulting economic benefits (Figure 2), and gives us our best chance to achieve the scale and speed of investment needed to protect the planet.
There are four areas where energy productivity constitutes a particularly effective weapon against climate change:
1) Transportation. Moving from a petroleum-dependent transportation base to a diversified fuel mix reliant on ever-cleaner electricity could prove “game-changing” in terms of improving the energy productivity of the transportation sector and reducing greenhouse gas (GHG) emissions. Well-to-wheel analysis using Argonne National Laboratory’s GREET model demonstrates that, with the current U.S. energy mix, an electric vehicle uses about 57 percent of the energy used by an equivalent internal combustion engine.
2) The Built Environment. Buildings represent one of the largest opportunities for radical energy productivity improvement. Demand for new building stock is growing, particularly in the developing world, and every inefficient building constructed locks in decades of energy waste and GHG emissions. By 2030, appliance and equipment efficiency standards will have saved the United States a cumulative $2 trillion and 129 quads of energy – more than the annual energy consumed in the U.S.Further productivity improvements can be achieved by looking beyond component-level efficiency and designing buildings to optimize their systems efficiency—i.e., the efficiency of HVAC, lighting, and other building systems, as well as their integration with each other, with other buildings, and with the grid.
3) Industrial Energy Productivity & the Importance of Corporate Leadership. Since industry is responsible for about21 percent of GHG emissions worldwide, improving industrial energy efficiency must be a priority in any climate mitigation strategy. Many multinational companies are leading such efforts, setting and meeting energy productivity targets—significantly improving their bottom line while drastically reducing energy use and emissions. Existing tools for supporting meaningful shifts in corporate policy include corporate commitment campaigns such as EP100—a global initiative of influential businesses that pledge to double their energy productivity.
4) Finance. Finance is the ultimate enabling platform for energy productive outcomes, and energy efficiency policy support can leverage significant private capital investments. Small investments to support financing solutions such as energy service performance contract (ESPC) programs, Green Banks, on-bill financing, and bond rating tools like the Alliance to Save Energy’s CarbonCountTM can galvanize private sector spending on efficiency.
In all these areas of opportunity, the big data revolution plays a key supporting role. Through the growing use of smart systems to collect, monitor and communicate data; Internet of Things platforms to leverage analytics; and artificial intelligence to predict system operations and prescribe automated improvements, the investments required for energy productivity gains are increasingly feasible and economically attractive.
However, despite these advances in enabling technologies, markets alone cannot bring about the necessary speed and scale of change. Policymakers need to prioritize energy productivity when considering steps toward mitigating and adapting to climate change. Every society stands to benefit from the savings, jobs, GHG reductions and energy security that come from improving its economy’s energy productivity.initiative of influential businesses that pledge to double their energy productivity.