IEA has published Energy Efficiency 2020 report, and it is full of bad news. The energy intensity progress has slowed down, investments dampened. IEA’s sustainable development scenario requires renewables and efficiency to provide a hefty drop in emissions. Efficiency has a 42% role in this scenario. But it requires a 3% improvement each year. Now it will be less than 0.8%.
Energy efficiency is one of the main pillars of energy policies across the world. When a crisis happens, the first energy policy you will hear is energy efficiency. Yet, we may be underestimating the complexity of energy efficiency.
It may sound provocative or pessimistic to think that technological improvements will just do fine without any energy policy for efficiency. The LED lighting and electric car penetration may be an example of such viewpoints. As the technology is available, accessible, and affordable, then the efficiency shows up. But how about behavioral change and other dimensions? It is dubious.
The IEA report underlines major points like how energy-intensive industries gained strength after most crises, which slows the efficiency. Chinese push for more energy-intensive industries is one example. About retrofitting, the contractors couldn’t access the premises due to Covid. Another vivid example is the smart meter deployment in the UK and its decline.
Maybe one interesting point is the digitalization of the processes. According to the report, an increase in data transfer didn’t yield a lot of energy consumption increase. It was actually nearly the same. Netflix and other streaming services on mobile devices can be a magnitude more energy-efficient than television.
Transportation is one of the hardest-hit sectors. Rail and air traffic is one of the hardest-hit subsectors. It is a chance to replace old airplanes or push for more rail travel or no travel at all. But very few governments tied the rescue schemes to efficiency. Then there is the rise of personal mobility but with support for cycling. The results are mixed.
The biggest attraction of energy efficiency is its job appeal. “Energy efficiency is a job-creation machine,” and it can create up to 15 jobs per million $ spent. But most of the energy efficiency spending will be done by the EU. The renovation will surpass new building spending. But for the rest of the world, it is not a big deal.
So it puzzles me a lot. Why can such a logical, rational policy not be improved further? My theory is energy efficiency; in reality, it is more complex than the power sector. Growth-based resources are easy to understand and manage. You have to increase it from X to Y with an investment of such and such dollars. But degrowth resources like energy efficiency look simple on paper but actually more complex for our mindset. For an amount of million dollars, we get degrowth, and it sounds nonsense.
Therefore energy efficiency is hard to manage despite its appeal. We are used to growth dynamics. Creating jobs, investments, sectors for reducing activity footprints, energy consumptions can not be managed by state authorities. At its best, efficiency policies are designed to boost some SME’s and their markets.
Just like the distribution business, energy efficiency should be one of the regulated segments of electricity markets. The deregulated or pseudo-deregulated energy efficiency policies don’t work. Behavioral change is not sticky in favor of efficiency. If we want results and quickly, utilities should play a key role, and we should be honest about behavioral change. Minimalism is not a populist sport.