Energy efficiency measures can halve growth in demand

22 November 2012
By Mark Venables
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Energy efficiency improvements will see economic rewards

Energy efficiency improvements will see economic rewards

The global energy map is changing in dramatic fashion, according to the International Energy Agency, and these changes will refashion expectations about the role of countries, regions and fuels in the global energy system over the coming decades.

But it is not just shifts in the dominance of regions and traditional fuels that will shape the future.

Rather, what has been dubbed ‘the hidden fuel’, energy efficiency, could have a huge impact on the energy agenda.

“North America is at the forefront of a sweeping transformation in oil and gas production that will affect all regions of the world, yet the potential also exists for a similarly transformative shift in global energy efficiency,” IEA executive director Maria van der Hoeven said at the launch of the 2012 edition of the World Energy Outlook (WEO), considered to be the bible of the energy industry.

“This year’s World Energy Outlook shows that by 2035, we can achieve energy savings equivalent to nearly a fifth of global demand in 2010.

In other words, energy efficiency is just as important as unconstrained energy supply, and increased action on efficiency can serve as a unifying energy policy that brings multiple benefits.”

The IEA has developed an Efficient World Scenario, which shows what energy efficiency improvements can be achieved simply by adopting measures that are justified in economic terms.

It will be presenting this to governments around the globe over the coming months.

Greater efforts on energy efficiency would cut the growth in global energy demand by half.

Global oil demand would peak before 2020 and be almost 13Mb/d lower by 2035, a reduction equal to the current production of Russia and Norway combined.

There is mixed news for the renewable sector.

Although renewables will become the world’s second-largest source of power generation by 2015 this rapid increase hinges critically on continued subsidies.

In 2011, these subsidies amounted to £55bn, but over the period to 2035 need to reach over £3 trillion.

“The main reason for growth in this sector is government subsidies,” said Fatih Birol, chief economist at the IEA.

“Only half the three trillion has been committed, and given the current global economic situation there must be doubts about the required funds being made available: there is a lot of discussion going on about whether to renew these subsidies.”

The case for renewables is further hampered by the continued subsidies for fossil fuels.

The IEA reported that there has been a 30 per cent increase in fossil fuel subsidies to £325bn in 2011.

“Subsidies to fossil fuels continue to distort energy markets,” Birol added.

“The increase reflects higher international energy prices and rising consumption of subsidised fuels.

“Financial support to renewable energy, by comparison amounted to £55bn.”

Coinciding with the launch of the IEA report, the UK Government announced its energy efficiency strategy, including £39 million for research into what drives energy demand and how that might be changed, a labelling trial with retail chain John Lewis to show the lifetime running costs of household appliances, and a programme to improve energy efficiency in business and the public sector.

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