Early last week, the Executive Director of the International Energy Agency, Maria van der Hoeven, launched a new report on energy efficiency. The report, Capturing the Multiple Benefits of Energy Efficiency, is the culmination of a multi-year effort by the IEA and many committed experts (including Rod) to quantify the many benefits from improved energy efficiency. The IEA is trying to re-frame the discussion about the so-called “hidden fuel”, by showing how energy efficiency has the potential to support economic growth, enhance social development, advance environmental sustainability, ensure energy-system security and help build wealth. For those working in the field, this is well known (although maybe not quantified) but the importance lies in providing this analysis in a convincing manner to broaden the audience in order to gain wider policy priority for energy efficiency.
The new study shows how it is possible to move beyond qualitative assessments, providing examples of how existing methodological tools can be applied to measure and even monetise the value of energy efficiency to the economy and society.
The report shows 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. We really need to get that message out. IF cost-effectiveness is the driver, then this really makes a significant contribution.
The IEA is quite candid to say that if energy efficiency is a hidden fuel, t is hiding in plain sight. The market for energy efficiency is growing, with aggregate annual investment reaching USD 300 billion in 2012 – equal to investments in coal, oil and gas generation. The resulting savings have been larger than the energy provided from any other fuel, making energy efficiency the “first fuel” for many IEA countries. IEA analysis has also shown that the uptake of economically viable energy efficiency investments has the potential to boost cumulative economic output through 2035 by USD 18 trillion – larger than the current size of the economies of the US, Canada and Mexico combined.
Speaking about the market, the IEA will soon be publishing its energy efficiency market report for 2014. Hopefully all the IEA market reports for all of the energy sectors will reflect the messages from this report.
EiD encourages all of you to read the report. We leave you with one paragraph from the study’s executive summary
The term “multiple benefits” aims to capture a reality that is often overlooked: investment in energy efficiency can provide many different benefits to many different stakeholders. Whether by directly reducing energy demand and associated costs (which can enable investment in other goods and services) or facilitating the achievement of other objectives (e.g. making indoor environments healthier or boosting industrial productivity), recent research acknowledges the enormous potential of energy efficiency. This publication demonstrates its role as a major contributor to strategic objectives across five main themes: enhancing the sustainability of the energy system, economic development, social development, environmental sustainability and increasing prosperity.
Information on the report is available on the IEA website.
Energy in Demand - Sustainable Energy - Rod Janssen 