Energy efficiency: Vital for the Paris Agreement and Britain’s economy

Energy efficiency investment will be "critical" to achieving the global emissions reduction targets set out in the Paris Agreement, and must be embedded in Britain's new Industrial Strategy to drive economic productivity.

Those are among the key findings of two new reports released over the past week, which together conclude that there is now an urgent need to increase investment in energy efficiency technologies at both a UK and international level.

The first report, released by the Carbon Trust towards the end of the UN’s COP22 climate talks in Marrakesh last week, claims that energy efficiency is “the most cost effective way of tackling climate change” and reaching international carbon reduction targets.

The second report, released a day later by the Association for Decentralised Energy (ADE), reveals that the productivity of the UK economy rose by £1.7bn between 2010 and 2015 as a result of industrial, services and domestic sector energy efficiency investments.

Carbon Trust report

The Carbon Trust report refers to data from the International Energy Agency (IEA) which estimates that energy efficiency must account for 38% of total emissions reductions by 2050 – compared with 32% of renewables – and will require a global spend of $550bn a year by 2030.

However, in 2015, multi-lateral development banks (MDBs) committed only $2.9bn to energy efficiency programmes – less than half of that of renewables – accounting for 14% of climate change mitigation investments.

Director at the Carbon Trust and report author Simon Retallack said: “The most cost-effective way of tackling climate change is through energy efficiency. Yet too little is being invested in it and the programmes that are being funded are frequently not having the impact they should. Public funding from multi-lateral developments and governments has a critical role to play, but there needs to be a change in approach.

“To succeed with energy efficiency, more needs to be invested in getting the right policies in place to drive change and in providing the technical support companies and households need to deploy energy efficient technology at scale. Making capital available for investment is not enough. Demand for it needs to be stimulated and a pipeline of projects created.”

The Carbon Trust report goes on to suggest three points of action to help deploy energy efficiency on a global scale. These include stronger government policy to increase the attractiveness of investment; increasing the awareness of opportunities and providing technical assistance to create pipelines for project investments; and building local skills and trust to build momentum and create a self-sustaining market.

ADE report

Meanwhile, ADE’s 2016 UK Energy Productivity Audit outlines a strong case for the UK Government to put energy efficiency at the heart of its soon-to-be-published Industrial Strategy, which could be discussed in the Autumn Statement this week.

ADE’s Audit shows that Britain’s industrial, services and domestic sectors saved more than £1.7bn and reduced enough energy to heat 13 million homes between 2010 and 2015, thanks to energy efficiency measures. The UK lags behind many of its European counterparts on energy efficiency policy, with Germany, the Netherlands and France all adopting significantly better policies than the UK since 2011, ADE says.

ADE director Tim Rotheray said: “Like labour, energy is a vital input to the UK economy. Improving our energy productivity allows us to use the same or less energy to contribute more.

“Despite limited policy focus, the industrial, services and domestic sectors have made substantial energy efficiency gains yet over 60% of energy in the power sector is lost before it reaches homes and businesses.

“With our commitment to the Paris Agreement and Carbon Budgets, the UK is poised to create a low-carbon, competitive economy, but we must support energy productivity to meet these goals.  The Industrial Strategy provides a key opportunity to implement the right policies that will not only support business competitiveness, but drive energy productivity in the UK economy and help us meet our carbon goals.”

In its report, ADE calls on the Department for Business, Energy and Industry Strategy (BEIS) to tackle a significant policy gap on energy efficiency, and to use the upcoming review of the UK’s Industrial Strategy to prioritise business incentives to increase energy efficiency investment and improvements.

The cost benefits of energy efficiency as a national-scale energy solution has been touted by numerous industry groups of late. Consultancy firm Utilitywise recently suggested that an increased focus on energy efficiency could prove to be £12bn cheaper than the construction of the Hinkley Point C nuclear power plant.

A cross-sector panel of energy managers and experts gave their views on ‘cutting the complexities’ of energy management in a recent edie webinar, which concluded that energy managers can drive employee engagement with company-wide energy efficiency programmes through simple messages focused on the positive impacts of change and the effective internal dissemination of energy management systems.

Alex Baldwin

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