Columnists: Rod Janssen, Independent consultant

Published on: 3 Dec 2020

New IEA Energy Efficiency 2020 report signals reversals for First Fuel

The recently released annual IEA update on energy efficiency trends is grim reading. It sets out cold evidence of the concern we all share that the Covid-19 crisis has significantly damaged energy efficiency investment decisions and behaviour.

Improvement in primary energy intensity is expected to be the weakest rate since 2010, well below the level needed to achieve the world’s goals for addressing climate change, the IEA says. Investment in energy efficient buildings, equipment and vehicles will plunge 9 percent in 2020.

Executive Director Fatih Birol made clear that he was unhappy that most post-Covid economic recovery packages do not give sufficient priority to energy efficiency. It is heartening that the IEA has taken such an unequivocal stance that this is a huge lost opportunity.

“Energy efficiency should be at the top of to-do lists for governments pursuing a sustainable recovery,”  Fatih Birol said in launching the report. “It is a jobs machine, it gets economic activity going, it saves consumers money, it modernises vital infrastructure and it reduces emissions. There’s no excuse not to put far more resources behind it.”

He regrets that renewables have maintained momentum and energy efficiency has not. But those of us who focus on energy efficiency are well aware that part of the challenge is the endless stream of headlines lately promising a climate change nirvana from hydrogen, carbon capture and storage, nuclear, the “Saudi Arabia of wind” etc.  The media and politicians are far less fascinated by the need to reduce demand and make energy consumption as efficient as possible. It will be a great morning when we can open the Financial Times to a headline calling for proper demand management.

The IEA report should be read by all eceee members and followers. This is one of the key annual reports, authoritatively consolidating the trends in energy efficiency.  The IEA has the best data and modelling around and senior decision makers do sit up and notice. Critically, the IEA speaks to a global audience.

But, personally, I am not as uncomfortable with the current trends as the IEA is.

The IEA correctly stresses that improvements in energy efficiency can contribute around half of the reduction in energy-related greenhouse gas emissions that is required over the next two decades. In  that case, the European Council should adopt a more ambitious target for GHG emissions reductions when it meets next week. We should all hope that it will target energy savings first, and emphasise  sufficiency – eceee has much to say on sufficiency and hopefully will be listened to.

In September, eceee held its bi-annual industrial efficiency conference. Participants stressed the policies, the regulatory framework, technologies and business models are moving in the right direction. Certainly, there has been some downturn in investments but that is hardly surprising in the current economic circumstances. But there was consensus that industry has kept a strong focus on decarbonisation, the circular economy, resource efficiency, renewable energy and digitalisation to complement the needed improvements in energy efficiency.

I lead a working group on industry for the Energy Efficiency Financial Institutions Group. Our recent meeting on energy-intensive industries offered many encouraging examples and a lot of positive discussion on how the financial community can play a bigger role.

On buildings, the Renovation Wave has created a new, positive buzz on how we move forward to significantly increase the rate of ambitious building renovations.

We cannot lose sight of the long-term goals to become carbon neutral by 2050. There will be some disastrous years, such as we are experiencing now, but setbacks should not set us too far off-course if we remain committed to the target.

It is good to have a wake-up call by the IEA.  But we also have to take stock of how far we have come and the practical measures we can take to improve energy efficiency in all sectors . We need decision-makers to accept that energy efficiency as the ‘first fuel’ cannot just be a slogan.

Energy efficiency must set the baseline for all our analysis in all aspects of energy policy. The climate community must embrace the IEA’s analysis about the importance of energy efficiency improvements to meet our long-term climate goals. Energy efficiency cannot be an afterthought. It has to be front and centre. Energy efficiency is not an end in itself. It is a means to the end of a sustainable future for all.

Correction: A small but important typo was changed on 7 December so an above sentence above now reads that [it] "is heartening that the IEA has taken such an unequivocal stance that this is a huge lost opportunity."

The views expressed in this column are those of the columnist and do not necessarily reflect the views of eceee or any of its members.

Other columns by Rod Janssen