Energy efficiency is poised to meet the carbon reduction targets in the Paris Agreement, depends on readily-available technology, and constitutes a trillion-dollar opportunity, writes Kim Fausing, President and CEO of Danish energy systems manufacturer Danfoss, in a recent post for the World Economic Forum. All that’s needed is a change of mindset on the part of energy consumers—especially the big industrial ones—and smart governance.
“Our greatest energy source is the energy we do not use,” Fausing writes. “Energy efficiency is the one resource that every country possesses in abundance, and it is the quickest and least costly way of addressing energy security, environmental, and economic challenges.”
This fundamental condition of abundance, right under our collective noses, needs urgently to be recognized, Fausing says. “Urbanization across the globe puts our available resources under pressure, and we need to carefully plan to ensure that we have enough resources for the world’s expanding population,” he writes. Yet “global energy efficiency is slowing down, while growth in overall energy demand intensifies.”
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Addressing both policy-makers and the corporate community, Fausing insists this pattern is both dangerous and fundamentally irrational.
“We often speak about the costs of energy efficiency. This is conceptually wrong. We should focus on the return on investment, and yes, there is enough evidence that energy efficiency does pay back,” he writes: “On average, every €1 invested in energy efficiency saves €3 over the lifespan of a technology.”
And even as renewable energy installations accelerate, he adds, the electricity isn’t always available when and where it’s needed. So “without efficiency, the potential of renewables alone for a clean energy transition cannot be fully unlocked.”
Citing the large-scale deployment of electric vehicles as an emerging trend that will drive up electricity demand, he contends that demand can be met by buildings: By “increasing the building retrofit rate from approximately 1% per year to 5% per year,” he says, countries will be able to “power 550 million electric vehicles on the road by 2040—without the need to increase generation capacity.”
What will be needed to enable such energy thrift is “a connected energy system, with energy efficiency as the central pillar, supported by renewable energy, sustainable buildings, and electric vehicles.”
As examples of the hidden abundance of energy efficiency, he notes that optimizing energy flows through buildings could reduce their demand by 30%, while connecting the capacity of all European supermarket refrigeration systems to the grid would allow the shuttering of 10 conventional coal-fired power plants.
“Such stories are endless,” he adds, and “digitalization will help us speed up and exploit new areas of efficiencies, such as sector coupling or demand-side management.”
All told, Fausing concludes that the energy efficiency opportunities available today could reduce energy-related greenhouse gas emissions 12% by 2040, but “only if all of us, including governments, take bolder action.”