IEA says energy efficiency could save trillions


Trillions of euros in investment in clean-energy technology are needed worldwide by mid-century to control rising carbon emissions, says a new report that could help shape the debate on some of Europe’s most controversial energy policies.

The International Energy Agency report, released yesterday (11 June), says that while investments in clean power are essential to reduce fossil-fuel consumption, improved efficiency offers the clearest path to better energy management in the decades ahead.

The report comes as the European Parliament, Commission and Council prepare for their final negotiations Wednesday on a controversial proposed directive on energy efficiency.

The proposal has been bogged down in a withering debate over the how effective the directive will be in reducing waste after member states rejected binding efficiency targets.

IEA Executive Director Maria van der Hoeven, asked by EURACTIV about the decision on binding measures, said national leaders should “think again” about their position. Her agency’s report calls for “strong government policy action” to foster efficiency and the development of low-carbon energy.

The former Dutch economy minister also told journalists by telephone that the world “is failing to tap new technologies” that could reduce greenhouse gas emissions.

The Paris-based IEA estimates that it would cost $36 trillion (€28 trillion) through 2050 to cut carbon emissions by 50% compared to 2005 levels and limit the long-term rise in global temperatures to 2 degrees Celsius. This would be on top of the anticipated $100 trillion (€79.7 trillion) investments in the energy sector if current policies are unchanged.

Reports says efficiency pays off

But the IEA study says there are huge returns on the higher investment – long-term energy savings of $100 trillion (€79.7 trillion) would pay for the investments in low-carbon energy technology three times over, Bo Diczfalusy, IEA’s director of Sustainable Policy and Technology, told journalists.

“It is difficult to overstate the importance of energy efficiency, which is nearly always cost-effective in the long run, helps cut emissions and enhances energy security,” says the Energy Technology Perspectives 2012 report.

“Application of more stringent performance standards and codes will be necessary, particularly in the buildings and transport sectors.”

IEA cites progress in improving vehicle fuel economy and advances in electric transportation. Solar and wind generation have grown by an average of 42% and 27% annually in the past decade, but still would fall well short of meeting the doubling in demand between now and 2050, agency figures show.

Besides recommending investments in efficiency and renewable energy development, the IEA also calls for development of “smart grids” that reduce waste in electricity transmission. It says the “energy balance” needed for a world of 9 billion people – up from 7 billion today – should include far more controversial sources of power, including nuclear and biofuels.

The EU’s once-strong push for fuels derived from plants has been tempered by growing concerns that production may not be as environmentally benign as once thought, and amid concerns that fuel plants compete with food crops.

More than 1 billion need energy

But the world faces major challenges. In the EU, 40% of electricity plants are more than 30 years old, many of them heavily polluting coal plants. The report notes that the major challenge is finding the resources to invest in new plants or to improve outmoded technology, “but it also presents an excellent opportunity to drastically improve the efficiency and environmental impacts of power generation.”

Investing in renewable energy is part of both a United Nations and EU push to help millions of people in developing nations get access to electricity over the next generation.

In April, EU officials threw their support behind UN Secretary-General Ban Ki-moon’s call to help the world’s 1.5 billion people who have no power.

European Commission President José Manuel Barroso vowed to unleash EU money to support public and private investment in sustainable energy for needy countries, through a €50-million Energy Development initiative plus additional funding. Barroso also pledged to make energy access part of the EU’s contribution to the UN Conference on Sustainable Development that begins 20 June in Rio de Janeiro, Brazil.


"We have made some progress on the Energy Efficiency Directive," Danish Energy Minister Martin Lidegaard said at a news conference in Luxembourg yesterday. "I am a little more optimistic. We have made serious progress, but we are still not there."

IEA Executive Director Maria van der Hoeven ?said in releasing the Energy Technology Perspectives 2012 report: "While our efforts to bring about a clean energy transformation are falling further behind, I want to stress the golden opportunity before us: If significant policy action is taken, we can still achieve the huge potential for these technologies to reduce CO2emissions and boost energy security.

“Now that we have identified the solution and the host of related benefits, and with the window of opportunity closing fast, when will governments wake up to the dangers of complacency and adopt the bold policies that radically transform our energy system? To do anything less is to deny our societies the welfare they deserve,” she said.

The IEA’s Energy Technology Perspectives 2012 report shows that Europe remains a trend-setter in several areas, including:

  • The EU is the global leader in development bank project financing for clean-energy projects, with the European Investment Bank accounting for more than one-third in global financing $15.2 billion in global financing, followed by Brazil’s development bank ($3.15 billion), European Bank for Reconstruction and Development ($2.16 billion) and Germany’s KfW bank ($1.525 billion).
  • The EU holds the record for investments in low-carbon energy, accounting for 39% of the global investments in 2010 and 2011, though China has the world’s highest rate of growth in clean-energy technology investments.
  • 20-22 June: UN Conference on Sustainable Development in Rio de Janeiro, Brazil
  • July 2012: IEA to release its Medium-Term Renewable Energy Market Report 2012

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