Energy efficiencies become ‘first fuel’

ENERGY efficiency savings in 11 member International Energy Agency countries in 2011 were greater than the combined crude oil consumption of the EU and Asia (excluding China). The IEA says investment worldwide in 2012 in energy efficiency is estimated at up to US$360 billion . . .

A QUIET but dramatic revolution is under way around the world as countries step up investment in energy efficiency. This will add to the woes of oil producers.
Prompted primarily by surging oil prices, energy efficiency has become an issue of national interest. The very reason for embarking on such a programme is to reduce demand for crude oil.
 In a report just released, the Paris-based International Energy Agency (IEA) says an estimated US$310 billion to US$360 billion was invested worldwide to increase energy efficiency in 2012. The IEA says the investment in energy efficiency was larger than the investment in renewable electricity, or in coal, oil and gas electricity generation — and half the size of upstream and gas investment. But investment is unevenly distributed across countries and energy-consuming sectors.
Describing energy efficiency as “first fuel”, the IEA says energy savings in 2011 in 11 IEA member countries were larger than the combined total final crude oil consumption of the European Union or of Asia (excluding China).
“These efficiency savings were equal to 80 per cent of total final consumption in China and 87 per cent of consumption in the United States that same year,” the report says. China’s energy efficiency and investment demands are driven to a large extent by the Government’s strong and comprehensive energy conservation policies and programmes.
During its 11th Five-Year-Plan (2006 to 2010), China invested more than US$100 billion to improve energy efficiency. China is expected to invest between US$200 billion and US$270 billion in energy efficiency between 2011 and 2015 to achieve a 16 per cent intensity reduction mandate it set in the 12th Five Year Plan.
The IEA says that, although the market for energy efficiency in Indonesia is still in its early days, there is opportunity for growth. Its analysis shows that Indonesia offers more than half of Southeast Asia’s energy efficiency investment potential in the period to 2020.
It says that, at a country level since 2001, energy efficiency has served to place downward pressure on total fuel consumption in 16 of the 18 countries analysed for the report, and that energy efficiency is the prime mover of the absolute reductions in consumption in 12 countries during this period.
It notes that efficiency is reducing energy consumption during a time when energy prices have increased significantly across the countries evaluated. Energy prices rose between 11 and 52 per cent in individual jurisdictions between 2001 and 2011.
The IEA says the share of household income spent on energy did not rise as sharply, and even levelled off or fell in some countries between 2001 and 2011.
Vehicle fuel economy standards now cover 70 per cent of the global passenger light-duty vehicle market, and will drive the market for more energy-efficient vehicles in the next five years. New fuel efficiency standards are estimated to lead to energy efficiency investments of US$80 billion a year out to 2020, and will save between US$40 billion and US$190 billion in fuel costs. Over the next 10 years, passenger light duty vehicle purchases, particularly in OECD non-member economies, are expected to offer the largest market opportunity for energy efficiency deployment.
China, India, Japan, Korea, Mexico, the European Union, and the US are among countries to have implemented or updated vehicle fuel economy standards for passenger cars.
These standards will increase average fuel economy to a range of 3.9 litres to 6.7 litres equivalent per 100 kilometres.
The IEA notes that the industrial energy efficiency market has benefitted from Government support in many countries. In South Korea, it says, the Government has committed to implement measures to promote the market for smart appliances, energy storage and energy management systems — using cutting-edge information and communications technology.
The report looked at market developments in 11 economies, including Japan and Thailand and India.
It finds that the light-emitting diode (LED) lighting market is taking off in Japan and Thailand. LED sales reached US$5.2 billion in Japan in 2013, and almost US$15 million in Thailand.
It also says the market for energy efficiency improvements in the building sector has seen significant Government support over the past few years in countries like Ireland, Italy, the Netherlands, Canada and Japan.
These programmes resulted in average annual investment of US$230 million in energy efficiency-related construction over the five years from 2009 to 2013. Energy-saving technology, manufacturing and service industries in many countries, including in Ireland and the Netherlands, have been growing.
The agency says a continued emphasis on “first fuel” is being supported by concerns for energy security, economic growth, sustainable development and climate change mitigation. All these concerns can be enhanced through improved energy efficiency.