Cheaper-to-run appliances, warmer homes and switching to healthier fuels such as electricity – these are all things most people and politicians want. And these are all things that are delivered by improving energy efficiency. Yet, after decades of progress, we are losing pace when we should be accelerating. We are stagnating at a rate of only 1% efficiency improvement per year, compared to double that rate last decade. We should be at 4% to meet our shared global goals.
Improved efficiency is a critical path for a successful energy transition. Simply put, against a context of population growth, upwards pressure on energy demand from higher cooling, desalination and data centre needs, neither climate nor energy system maths are possible without steeper efficiency gains.
A recent report by BP highlighted that the increase in fossil fuel consumption is to a large part due to efficiency efforts falling behind. If we do not double energy efficiency improvements, our needs to build out the supply side will become gigantic. Instead of 11TW of renewables by 2030 we would need 27TW if we still want to achieve climate aims.
The politics of delivery: why are we stuck?
E3G’s work across local, national and global contexts points to one key challenge to keep political attention to delivering efficiency: it is everywhere, which makes its impact hard to communicate, its delivery hard to coordinate and its promoters hard to organise.
- Getting a seat at the table with “big infrastructure” is difficult. Efficiency measures shape the value of the world’s biggest asset class – real estate – and drive competitiveness of industries through higher energy productivity. Yet, in most countries, it is still not considered an equivalent solution when it comes to national energy planning and the allocation of investment resources.
- Leadership is there but too fragmented for political impact. Interest groups, whether businesses at national level or government coalitions at global level, are fragmented across insulation, appliance and electrification communities. A strong, consistent voice for the criticality of demand side action requires a lot of coordination.
- Delivering energy efficiency is limited by low national and local government capacity to regulate and build new supply chains. For example, in the UK, ambitious energy efficiency policies have repeatedly failed when rushed without adequate quality standards or time to line up skilled workers and input materials in time. The boom-and-bust cycle of efficiency policies has weakened supply chain confidence, while local governments and health services often foot the social bill from unnecessarily high energy costs due to poorly insulated homes.
How do we unlock faster progress at global, national and local level?
- At global level there is leadership from many countries across the broad spectrum of sectors. This needs to be rallied and elevated consistently. The UAE’s Global Energy Efficiency Alliance offers a forum for this to act as unifying hub and pacemaker.
- At national level efficiency interventions need to become an equivalent solution to the supply side in planning processes or when it comes to defining energy security strategies. This should not only unleash resources for a more efficient energy system overall by saving on supply and grid costs, but also give necessary long term supply chain visibility.
- At local level local governments need to translate national schemes into local supply chain signals and create places for those financing affordable and decarbonised housing to combine efforts. Local governments must together make the case nationally for how energy efficiency reduces local government expenditure in the long run. This can make a significant contribution to more balanced national and local budgets.
