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Energy savings for better sharing—a new energy world

23.11.2016

Business as usual is leading us to irreversible climate change

Today, two billion people lack access to reliable electricity. An additional 2bn people will reach the middle class by 2030 with higher demand of energy services. We are already spewing 110 mln T daily of greenhouse gas emissions; knowing CO2 impacts our atmosphere for centuries. This situation is untenable.
Cost effective energy efficient technologies are available now. Their full deployment would save primary energy resources and allow increased sharing of energy services, whilst putting the world on a sustainable track.

Changes to the climate are unfolding with economic, human and infrastructure consequences

The occurrences of extreme weather conditions have increased tenfold in the last 15 years. Fourteen of the fifteen hottest years ever measured have been in this century. Ninety-three percent of the extra heat energy is trapped in oceans that are getting warmer. These have huge consequence; storms and typhoons are becoming stronger (eg: Super Typhoon Meranti sept 2016; Butchoy in July 2016); floods more significant. In July 2015 Houston experienced an outpouring of 162 bln of gallons—equivalent to 2 days of the full flow of Niagara Falls.[1] This leads to massive population displacement. There are over 65 mln of unwilling refugees around the world today, more than after WWII. Twenty million of which can be attributed to the consequences of climate change (UN Refugee Agency).

Costs on the economy are huge. World bank recently estimated the costs of natural disaster at over USD 500bn yearly, pushing 26 mln additional people into poverty every year. By 2030, assessments show that climate change’s associated damages could wipe 2% of the GDP in the US and USD 1.2 trn in China;[2] with the world’s least developed countries being hurt the most; with losses of up to 11% of their GDP.

Present conditions are causing stress to infrastructures with an increased number of blackouts and brownouts (i.e. drop in voltage of power supply, used for load reduction). Peak capacity is often more expensive and polluting. Business as usual is indefensible.

Solutions are available. Energy efficient technologies allow savings & sharing of energy resources

In the last 25 years, energy use has increased 50%. By 2050, it will increase by another 40% (McKinsey, 2016) Becoming more efficient immediately across all sectors is the only way we can put the world on track to sustainable progress.

Two third of overall efficiency potential remains untapped. Over 80% in the building sector, 78% in the infrastructure sector, and 60% in industrial sector. In our current energy system, less than 1/3rd of total generation reaches end-users; the rest is lost along the energy value chain in production and T&D losses. In 2015 alone, energy efficient savings in IEA member countries saved enough to power an entire country like Japan.

In residential buildings, billions of networked devices and appliances represent one of the fastest-growing energy demand of our digital economies. IEA studies show that for some devices, such as game consoles, up to 80% of the energy consumption is used to maintain a ‘standby’ mode, only 20% to provide main functions. Implementing best available technologies could reduce the energy demand of network-enabled devices by up to 65%. By connecting products together, current building automation systems, can reduce building energy consumption by 30% with an ROI below 3 years. Data collection, software and analytics can further increase this efficiency, leading the way to net zero and positive energy building.

Similar examples can be found in the industry and infrastructure sectors. In industry, demand side efficiency through automation and IoT (IT/OT convergence) could save 60% of electricity. Electric motors and the systems they drive consume twice as much as lighting. In infrastructures, grids made smart by advanced distributed management systems, enable software and analytics to optimize the distribution systems by proactive handling of assets. This assets’ optimization reduces costs and enables peak shavings.

These different components are the basis of smart cities that will soon compound over 70% of the world population and have significant potential for increased savings.

If it is that easy, why is it not happening?

Obstacles and barriers in the market explain that such potential remains untapped. Renewable and fossil fuel subsidies (still 2 to 3 times as large as the former with an average of USD 500bn yearly[3]); as well as the absence of a carbon price that would price environmental externalities, insulate consumers from full energy prices. Such conditions prevent consumers from making informed decisions.

Time for action is NOW

Actions that we take in the coming 5 to 10 years, lock us for the coming 50 years. With a yearly investment of 2% of GDP/ year we could avoid the worse effects of climate change by 2050 and achieve stabilization around 500 to 550 ppm of CO2.

Costs of inaction on the other hand are rising yearly and consequences are visible everywhere as seen earlier. Immediate concerns are also emerging. Fuel poverty is becoming a rising concern in mature economies. Currently around 50-125 million people in Europe are unable to afford a proper indoor thermal comfort, because of inefficient building stocks, high fuel prices, low income level. In France 1 out of 5 people live in energy precariousness.[4] In Germany, where the country spent more than EUR 24bn in renewable subsidies from 2008-2011 the share of energy-poor households jumped from 13.8 to 17% in the same period. Worldwide more than 1 out of 4 people have no reliable access to electricity. Ninety percent of whom are in Africa and developing Asia.

If we don’t act now, bigger challenges are ahead. Consequences from climate change are enmeshed in a vicious circle: increase in occurrences of extreme weather conditions = poor harvests = increase in prices of food and hunger. Estimates show that climate will heighten nutrition challenges with an increase in the number of people at risk of hunger by 10 to 20% by 2050 (WFP, 2009). We are already using 50% of all accessible fresh water. Food & water shortages combined with increased demographic pressure (>9bn in 2050) will lead to unsustainable pressure on infrastructure, and an increase in population displacement.

Positive signal & long road ahead

The Paris agreements of COP21 was an important milestone in the right direction. Yet, although ambitious, national commitments are not enough to close the gap to a 2 degrees’ world. Policy makers need to rise up and provide adequate policy signals, including a price on carbon standardized and international monitoring and verification protocols; mandatory policy instruments such as minimum energy performance standards, and increased transparency.

Successful action will also include the establishment of a world public private partnership platform for dialogue and alignment of all the stakeholders involved in enabling this transition: financiers; industries; policy makers; citizens. Institutions exist to facilitate this transition with the World Economic Forum as the official international organization on public private partnerships, as well as a world energy efficient expert through the International Energy Agency.

The earth should survive. She is a resilient beast. She has been through several glacial ages before. Humanity might not. These issues should be a priority focus for all candidates in coming elections the world over. Yet it is on no one’s list. It is our decision to jolt that focus. Our responsibility.

  

Meet Philippine de T’Serclaes at the 2016 Women’s Forum Global Meeting in Deauville, France – Thursday 01 Dec. at 12:20. She is among the women nominated for the 2016 Rising Talents Initiative of the Women’s Forum for the Economy & Society, in partnership with Egon Zehnder, Eurazeo and EY.

 

 

[1] Al Gore, Ted Talk, 2016

[2] “Climate Vulnerability Monitor: A Guide to the Cold Calculus of A Hot Planet” was carried out by the DARA group, a non-governmental organization based in Europe, and the Climate Vulnerable Forum. It was written by more than 50 scientists, economists and policy experts, and commissioned by 20 governments. ((DARA & Climate Vulnerable Forum, 2012)

[3] The year 2015 saw a steep decrease to USD 325bn (IEA, 2016)

[4] Le Monde 22 novembre 2016