Excessive production and consumption by humans have resulted in increased energy use. In turn, it has led to increase in global temperatures. Experts believe that the future of the globe is at risk due to alarming climatic and environmental changes. Many governments have realized the adversity of the situation and have incorporated different measures to reduce energy consumption – with an objective to cut emission and control global warming.
The International Energy Agency (IEA), an autonomous body set up in 1974 with the aim to promote energy security, says that energy efficiency needs to become the crux of policies under development in all countries. It also states that the core requirements of any energy policy such as decarbonization, air pollution, energy-bill control and energy security can be conquered, provided there are strong energy policies.
Actions and practical solutions
The use of energy-efficient products is likely to increase only with greater incentives, anywhere in the world. In India, while the average consumer is almost invariably looking for money-saving options, they are intelligent and have their best interests at heart. However, alternative appliances have a long way to go before they become more mainstream, or rather familiar.
In that direction, companies like UL are driving enterprises – not just to meet quality standards, but adopt cost-effective manufacturing approaches without compromising on safety. That is a vital factor leading to lower costs for the consumer.
The global urgency
The total amount spent on energy supply investments is $1.6 trillion, and yet, there is huge potential for growth. Records reveal that 70% of the energy usage takes place outside the energy-efficiency requirements. Maximum progress in energy efficiency has been recorded where effective policies are being followed. While there is untapped potential, the concepts are often alien. As per the IEA reports, global energy intensity – the amount of energy used per unit of GDP – improved by 1.8% in 2015, up from 1.5% improvement recorded in 2014. Further analysis indicates that parameters of global energy intensity needs to inch towards 2.6% to be consistent with climate goals.
Global energy efficiency has seen positive signs across developed and developing countries. This has resulted in energy savings of 450 million of oil equivalent in 2015. If this can be put in a simpler perspective, the quantity of energy saved could power the whole of Japan for a year. These savings also resulted in reduction of total energy expenditure by $540 billion, another startling fact.
4 factors that potentially drive the future of energy efficiency:
Public policy: One of the strongest energy-efficiency drivers is public policies adopted by governments. Set standards in terms of performance and coverage are largely attributed to improved energy-efficiency levels. The last one and half decade has seen tremendous progress as more and more countries started complying with new policies. As per IEA’s Energy Efficiency Market Report 2016, 30% of the global energy demand was covered under these efficiency standards in 2015; a significant improvement from the 11% coverage recorded back in 2000. Standards for buildings, automotive products, appliances and equipment have managed to establish steady improvement of energy efficiency.
Investments: The increasing need for a safer planet and growing awareness have brought in checks on global energy usage. The global increment investment average (the difference in expenses towards energy-efficient goods vs expenses on average efficient goods) required to increase energy efficiency was $221 billion for 2015. Of this, investment in buildings was $118 billion followed by investments in the transport sector at $64 billion. The figure for the industry segment was $39 billion. (Source)
Energy-efficiency financing: Financing started as a niche market and in last few years, it has been drifting towards becoming an established financial market. Various means of financing energy efficiency such as bill financing, property tax financing, energy-efficiency mortgages, etc. have over the few years contributed to better efficiency.
ESCOs: The growing need for energy-efficient operations has led companies to look for energy services companies (ESCOs) – companies or agencies that have expertise in energy efficiency. ESCOs help organizations with a broad range of services such as design and implementation of energy-saving projects, energy conservation, energy infrastructure, etc., thereby helping move towards the path of lower energy consumption and improved efficiency. As of 2015, the ESCOs segment is an estimated $24 billion market with China at $13.3 billion and USA at $6.3 billion.
Upcoming trends in the industry
Population: Growing population and ever increasing need for additional living space have resulted in consumption of more energy. This trend, though, has been negated to some extent by strict adherence to standards in building constructions.
Change in spending habit: The recent change in spending habits of people has shown that they are willing to spend more for their convenience. Every year people spend a significant amount of their income in buying more of energy appliances and equipment such as heaters, coolers, lightning equipment, etc., which eventually results in tremendous rise in energy consumption. However, investments to develop energy-efficient appliances are helping.
Awareness and policy: Awareness among people has motivated investments in energy-efficient appliances. The same goes for construction companies and automotive manufacturers. Governments too have adopted public policies that stress on energy conservation and efficiency.
Dedicated effort by governments, experts and people at large has collectively created a lot of hope towards achieving the objectives. The Paris Agreement on Climate Change, which was convened in November this year, gave a huge impetus for excellence in energy efficiency. Under the agreement, participant countries promised to reduce emission intensity – the amount of greenhouse-gas emission per unit of GDP. There is hope that governments, corporates and people will all come together and work towards better energy optimization and a safer world.