“No regrets” revisited

Energy conservation through improved efficiency has been seen as an important long-term policy tool since the first oil crises in the 1970s. The International Energy Agency (IEA) realised that improved energy efficiency could not be a short-term solution in a crisis so it ensured that energy efficiency policies took a longer-term perspective.

In 1987, the IEA published its landmark report, Energy Conservation in IEA Countries, the first international and comprehensive analysis of the lessons learned from past experience and the prospects for future efficiency gains. While there were some who wanted to downplay energy efficiency in energy policy, especially after oil prices fell dramatically in 1986, this first international evaluation showed how positive the results were, even with lower oil prices. The challenge then was how to achieve more of the economic potential for energy efficiency at times when short-term price signals did not reflect the long-term outlook.

Does this sound familiar?

In 1990, the Dutch Government published its Memorandum on Energy Conservation what was probably the first strategy on energy conservation (including renewable energy) in OECD countries that directly linked energy conservation policy with the growing concern of climate change.  At that point, climate change was hardly common knowledge.  Yet the Dutch report states: “Due to the strongly developing environmental awareness, it has now been decided to give a stronger impulse to energy conservation and renewable energy resources. . . . On the basis of new insights into the CO2 problems . . .”  These words were breaking new ground in OECD countries.

The same year, the Danish government came out with Energy 2000, which was its plan of action for sustainable development — a full two years before the 1992 Rio conference on sustainable development.  This followed an action plan on environment and development from 1988.  The report mentions CO2 emissions but its basic tenet “is that now is the time to launch a long-term policy aiming at drastically reducing the damage on the environment by the energy sector.”

There was scepticism then about the threat of climate change and there were also fewer threats to oil shortages, making it difficult to justify why energy efficiency should be improved. These were the days before discussions on multiple benefits. Interestingly, R. U. Ayres wrote a paper in 1991 for a workshop organised by the Center for International Climate Research (CICERO) in Oslo called “No Regret Options for Greenhouse Gas Abatement.” (Note Energy in Demand even had a tribute to Bob at a great event at INSEAD in 2013). CICERO followed up with report by Marit Pettersen entitled “Energy efficiency, A possible no regrets option for curbing greenhouse gas emissions?” The report starts:

The risk of global warming is a problem that is inherently international in its character. A solution may require international cooperation on a wide scale, but binding treaties are difficult to negotiate. Moreover, free rider incentives reduce the chances of successful implementation of these accords. Therefore, governments committed to reducing the emissions of greenhouse gases should look for areas where unilateral action may be justified. One such proposed area is the domain of energy efficiency, where improvements would lead to reduced emissions of greenhouse gases. In effect, some economists claim that in imperfect economies, possibilities for costless or profitable improvements in energy efficiency may exist. Policies aimed at realizing this potential have been named no regrets options; if there is a potential, then realizing it will be desirable even if global warming, or its related costs, should turn out to be negligible.

Note the emphasis on no regrets. Regardless of what else is going on in policy terms, it still makes sense for energy efficiency.

All this is to say, we’ve come a long way.

Last December, Fatih Birol, Executive Director of the IEA, said “Energy efficiency should be at the top of to-do lists for governments pursuing a sustainable recovery.”  He went on: “It is a jobs machine, it gets economic activity going, it saves consumers money, it modernises vital infrastructure and it reduces emissions. There’s no excuse not to put far more resources behind it.” Importantly, the IEA correctly stresses that improvements in energy efficiency can contribute around half of the reduction in energy-related greenhouse gas emissions that is required over the next two decades. And we need that impact even soon, given the recent IPCC report.

Encouragingly, the European Commission gives a high priority to improved energy efficiency in its July “Fit for 55” package, as Europe works on improving its policy and implementation foundation in order to meet its Paris Climate Agreement objectives and ensure our global temperature increase remains below 1.5 degrees C.

Energy efficiency has come a long way within energy and climate policies. Now, there simply is no choice!

Final Comment: In researching for this piece, I went back to the early eceee summer study papers (from 1993) on the eceee website and was so impressed by the quality of the papers, even from the early days. There is an unbelievable wealth of analysis, insights and experience that we can still all learn from. If you are not an eceee member yet, please join. These papers have been used by researchers, national and local administrations, and EU institutions, particularly the European Commission. I am on the board of eceee, I’ve attended many summer studies and Energy in Demand is proud to be a sponsor. Our voice only gets stronger, the more members we have.

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