1. An Introduction to
EnergyEfficiency
Amit Bando & Thibaud Voïta, IPEEC
October 2012
HEC, Paris

2. 1.
The World Today
1

3. of World Temperature (18892009)
Source: NASA

4. Worldwide Final Energy
Consumption
1990-2008
9.0
Mining and
construction
Agriculture, forestr
y, fishing
Commercial and
public services
Energy sector
8.0
Energy consumption (Gtoe)
7.0
6.0
5.0
Residential
4.0
Transport sector
3.0
Industry sector
2.0
1.0
0.0
1990
Source: IEA 2010c.
1995
2000
2005

5. Developing Countries‟ Final
Energy Consumption
1990-2008
5.0
Mining and
construction
Agriculture, forestr
y, fishing
Commercial and
public services
Energy sector
Energy consumption (Gtoe)
4.5
4.0
3.5
3.0
Residential
2.5
2.0
Transport sector
1.5
Industry sector
1.0
0.5
0.0
1990
Source: IEA 2010
1995
2000
2005
4

6. OtherWorrying Trends
 Population growth:
9.2 billion by 2050,
 2 billion new consumers in emergingeconomies by 2050;
 Natural resourcesdepletion:
 1.1 billion people lackaccess to safedrinking water in 2012,
 Deforestation: 80,000 square km everyyear,
 Food security:
 Food prices x 2 by 2030,
 1.5 bilion people with no access to electricty in 2012,

5

7. Geopolitical Changes in the
Energy Sector
 80% of the current oil reserves have been discovered before 1979,
 75% of these oil reserves will need to be replaced by 2035, it
represents:
 50 million barrels of oil per day,
 4 time Saudi Arabia‟s current production.
 But shale gas can flood the market, thanks to fields located in:
 The USA,
 Argentina,
 China,
 Canada,
 France,
 Israel.
 Today, Europe pays USD 14/1000 cubic feet of gas from Russia, the
USA produces shale gas at USD 2/ 1000 cubic feet.
6

8. 2.
WhatisEnergyEffici
ency?
7

9. “Something is more energy
efficient if it delivers more
services for the same
energy input, or the same
services for less energy
input.”
8

10. WhatEnergyEfficiency (EE)
Relates to
Agriculture
Industry
Utilities
Buildings
&Appliance
s
Transportation
Cities
9

11. Definitions of
EnergyEfficiencyPotential
Technical
Potential
Technical
feasibility
Economical
Potential
Achievable
Potential
Program
Potential
Cost
Effectiveness
Market &
Adoption
Barriers
Program
design, budget,
staffing& time
constraints
 National Action Plan for Energy Efficiency (2007). Guide to
Resource Planning with Energy Efficiency. Prepared by Snuller,
Price et al., Energy and Environmental Economics, Inc. p. 2-2.
<www.epa.gov/eeactionplan>
10

12. 3.
Whatis IPEEC?
11

13. IPEEC is a high level
international forum
 Provides global leadership on energy efficiency by
identifying and facilitating government implementation of
policies and programs that yield high energy-efficiency
gains.
 Aims to promote information exchange on best practices
and facilitate initiatives to improve energy efficiency.
 Formally established in 2009 at the G8 summit in
L'Aquila, Italy and resulting from the Heiligendamm
Dialogue Process.
12

14. 13

15. IPEEC is an
Autonomous Entity
Members account for over 75% of world GDP and energy
use.
EU
Germany
United
Kingdom
France
Italy
Russia
Canada
Japan
USA
Republic of
Korea
China
Mexico
India
Brazil
Australia
The IPEEC Secretariatis located in
Paris, France
14

16. IPEEC - guiding principles
 Improving energy saving and energy efficiency is one of the quickest,
greenest, and most cost-effective ways to address energy security and
climate change as well as to ensure sustainable economic growth
 All countries, both developed and developing, share common interests in
improving their energy efficiency performance
 There is abundant potential for international cooperation among them
 Will contribute to improvement of energy efficiency at the global level
 Developed countries need to play an important role in cooperation with
developing countries
 Accelerating dissemination and transfer of best practices, efficient
technologies and capacity building in developing countries
15

17. and Services
FollowParallelJourneys
Basic research
Applied research
Individual innovators
Demonstration
& sample distribution
General regulation
Early demonstration
Full demonstration
Marketed product
Warranted product
Small group: start-up/
unit in a company
Medium-size operation
Large scale operation
Early adopters & niches
Rational economic purchase
Technology
& market evaluation
General regulation
Specific regulation
General regulation
General regulation
16

18. Case
studie
s
Examples of
EnergyEfficiencyP
olicies
17

19. USA‟sRefrigerator
Program
• Standards, labels & incentives led to EE improvement without
interrupting long-term decline in real purchase price: from
$1,000 to $600 (2009$)
• Government action has led to savings of about $20
billion/year in 2010 and $300 billion cumulative since 1978
AnnualEnergyU
sed a by a
refrigerator X 4
1945
Introduction of
refrigerators
standards
AnnualEnergyU
seddeclines:
reaches 1945
levels by 2010
1978
2010
Promoting a lowcarboneconomy
18

20. China 11th - Five-Year Plan
(2006 – 2011)
Results:
Government
sets
policies&
objectives to
promote a
lowcarbonec
onomy
2006
Top 1000
enterprises
Energyintensi - 19.1%
Closure of ty
inefficient Chemicaloxyg - 12.45%
plants
endemand
SO2
- 14.29%
Tenkeyproje emissions
cts
2011

21. Japan‟s Top Runner Program
 EE standards for appliances/vehicles
 Standards - set higher than the best performance value of
each product currently on sale in the market
 Standard takes into account technological development
 21 products are included, low technology products are
phased out
Passenger vehicle
Air conditioners
standards
In 1999, target: By
2010, fuel economy
improvement would be
22.8%
Target reached in 2005
EE improvement of 67.4% (1999-2004)
Companies used technologies that they may
otherwise have waited to commercialize
Improved consumer and retailer awareness
accelerated pace of market penetration
20

22. 4.
What Can
EnergyEfficiencyBring?
21

23. EnergySavings: Less
GHG Emissions
 Mitigation potential of energy efficiency can be
substantial since:



Building account 40% of energy use, 25% of water use & 1/3 of
all GHG emissions (UN estimates)
industry accounts for 25% of all GHG emissions
manufacturing and construction directly and indirectly account for
37% of CO2 emissions (developing countries 47%)
 Industrial energy efficiency can help reach CO2
reductions of around 1.3 Gtoe equivalent to global
emissions reductions of 4% from 2006 levels
 Chemical and petrochemical, aluminum, iron and steel,
cement and paper and pulp alone would reduce 12%
of CO2 emissions
22

24. Financial Savings
McKinsey estimates:
 USD 250 – 325 billion annualfinancialsavings or
avoidedenergycosts (2009 – 2030)
 USD 900 billion annualsavings: investing USD 170
billion annually in EE worldwidecouldgenerate an
average rate of return of 17% and produceenergysavings
up to USD 900 billion per year.
ACEEE estimates:
 In the US alone,
USD 12 - 16 trillion of possible
energysavings (2012 – 2050)
23

25. Green Jobs
 General estimates: EUR 1 million spent in EE
generates 17 to 19 jobs (as compared to 9 jobs in the
renewableindustry)
 The leverage of public & private funding varies from 5 to
1 to sometimes 10 to 1, meaning EUR 1 million of public
money can lead to investments of between EUR 5 and
10 million. That means between 85 to 190 jobs for
EUR 1 million of public money.
 According to ACEEE, if the US chooses to cut energy
consumption, it can create 2 million jobs in 2012 - 2050
24

26. Enhanced Distribution:
Energy Access
 About 1.5 billion people
worldwide, more than one in
five, lack electricity,
 The UN Secretary-General Ban
Ki-Moon has called to double the
global rate of improvement in EE
by 2030 in order to provide
energy for all.
25

27. EnhancedEnergy Use:
Energy Security
 Enhancedenergysecurity in order to:
Relyless on foreign supplies fromunstableregions of the
world
 Decrease the influence of energyprices on the economy
 Address national security issues (embargo, war, etc.)
 By reducing the energy use, EE helpsimprovingenergysecurity

26

28. Water &EnergyEfficiency
According to the UN:
 By 2030: almost 50% of the population willbe living in
regionswithhigh water-stress,
Water and EE:
 Between 2 & 3 % of the world's energy consumption is
used to pump and treat water for urban residents &
industry.
 Energy consumption in most water systems worldwide
could be reduced by at least 25 percent through costeffective efficiency actions.
27

29. OtherBenefits
Source: IEA
28

30. 5.
Opportunities in Key
Sectors
29

31. Global CO2 Emissions by
Sector (MtCO2)
Source: Lawrence Berkeley National Lab
30

32. Industry: Global Energy
Intensity Trends
1990-2008
Energy
200
MVA
EI
Manufacturing valued added, 2008
7.35 trillion $
180
Index (1990=100%)
160
140
120
Industrial energy
consumption, 2008
2.54 gigatonnes of
oil equivalent
100
80
Industrial energy intensity, 2008
0.35 tonnes of oil equivalent per US$1,000
60
40
20
0
1990
1995
Note: Industrial energy intensity in 2000 US dollars.
2000
2005
Source: UNIDO 2010; IEA 2010.
31

33. CombinedHeat& Power
(CHP)
•Thermal power emits heat that can be recycled,
•CHP consists the use of a heat engine or a power station to generate
both electricity & useful heat.
• These applications produce energy where it is needed, avoid wasted
heat, and reduce T&D network and other energy losses. Other benefits
cited by policy makers and industry include:
• Cost savings for the energy consumer;
• Lower CO2 emissions;
• Reduced reliance on imported fossil fuels;
• Reduced investment in energy system infrastructure;
• Enhanced electricity network stability through reduction in
congestion and „peak-shaving‟; and
• Beneficial use of local & surplus energy resources (particularly
through the use of waste, biomass, & geothermal resources in
district heating/cooling systems).
•CHP is one of the most cost-efficient EE measures
32

34. Motors
 Account for 60% of industrial electricity consumption and about 15% of final
energy use in industry worldwide (IEA 2007).
 By 2030, if BAU, energy consumption will rise to 13 360 TWh per year and
CO2 emissions to 8 570 Mt per year.
 End‐users now spend USD 565 billion per year on electricity used in motors;
by 2030, that could rise to almost USD 900 billion.*
 Electronic motor controls that allow for variable speed drives (VSD) have good
market potential.
 Using the best available motors will typically save about 4% to 5% of all electric
motor energy consumption. Linking these motors with electromechanical
solutions that are cost‐optimised for the end‐user will typically save another
15% to 25%.
 The potential exists to cost‐effectively improve energy efficiency of motor
systems by roughly 20% to 30%, which would reduce total global electricity
demand by about 10%.

35. Smart Meters
 In 2008, less than 4% of the global installed base of 1.5
billion electricity meters could be considered “smart” but
4 years later this penetration has grown to over 18%, and
is expected to exceed 55% by 2020.
 The North American market has already peaked
 European market has begun its growth period.
 The Asia Pacific region will continue to outpace all other
regions driven by major deployments in China, utilizing a
different breed of smart meter technology.

36. EnhancedEnergy Use:
Buildings
 Energy use in « buildings » meansenergy use of the
building themselves and of the electricappliances.
Togethertheyaccount for 40% of the world GHG
emissions,
 Measures to enhance EE in buildings canmean:
 Improving EE of appliances,
 Refurbishing:


Commercial buildings, or
Residential buildings;
Building new EE houses.
 Buildings situation change depending on the climate
zone,
 EE in buildings is a sensitive topicwith social implications.35


37. Zero Energy Building
 Zero energy buildings market remains a small fraction of the
overall building construction industry.
 Technologies required to make zero energy buildings possible,
add significant upfront cost.
 Worldwide revenue from zero energy buildings will grow
rapidly over the next two decades, reaching almost $690
billion by 2020 and nearly $1.3 trillion by 2035 (Annual growth
rate of 43% - mostly in the EU).
EU‟s Energy Performance of Buildings Directive (EPBD) will
require nearly zero energy construction in public buildings by
2019 and in all new construction by 2021.

38. EnergyConsumption in the
US
Source: DOE (2008)/Center for Climate&Energy Solutions
37

39. Energy End Use in the US
(2006)
Source: DOE (2008)/Center for Climate&Energy Solutions
38

40. Buildings Energy End Use in
the US (2006)
Source: DOE (2008)/Center for Climate&Energy Solutions
39

41. Improving EE in
Buildings: Cool Roofs
A cool roof has a white or special cool color that absorbs less
sunlight, staying cooler in the sun and transmitting less heat
into a building.
Substituting a cool roof for a conventional roof can:
• Reduce the annual air-conditioning energy use of a singlestory building by up to 15%
• Cool interior spaces in buildings that do not have air
conditioning,
• Reduce carbon emissions,
• Reduce peak demand for electricity,
• Potentially slow global warming.
(Source: DOE)
40

42. Enhanced Energy Use:
At Home
Whatcanenhancedenergyefficienc
ybring to households?
 Reducedenergy bill,
 Enhancedcomfort
An example of energysavings:
Compact Fluorescent Lamps (CFL) consume
1/5 to 1/3 lesselectricitythan the traditional
incandescent lamp&lasts 8 to 15 times longer.
41

43. Lighting
 Energy-efficient products are still for Asia Pacific customers
 Sales of LED lighting systems will increase rapidly over the next 10
years, accelerating sharply after 2015.
 Unit shipments (lamps, luminaires) will rise from 66 million in 2011 to
542 million in 2021 – a 700% increase.
 Translating into cumulative revenues of $11 billion from 2011 through
2021 for LED lighting in Asia Pacific
Japan‟s 21st Century Light Project;
China‟s commitment to LED is enormous – ex: Shenzhen plans to
install LED‟s in more than 90% of public lighting applications, street
lighting, and commercial spaces in the next decade

44. Other Areas
 Energyefficiency in transportation;
Fuel efficiency,
Urban planning.
 Energyefficiency in agriculture:
 Equipment,
 Water use.

43

45. 6.
Government, the
Motivator
44

46. Organisation Need to
Coordinate EE Policies
 Governmentsneed to exchange:
Theirresources (technologies, know-how, finance),
 Theirexperiences& best practices,
Theyneed to establish:
 Standards (see the International Standard Organisation),
 EE Indicators,
 Monitoring &VerificationProcess…
Multilateral institutions implementvarious type of projects (training,
capacity building, technical support): World Bank, regionalbanks, UN
organisations;
IPEEC promotes international cooperation;
NGOsimplementsimilarkind of projects on a largerscale
(ClimateWorks network, International Copper Association, Alliance to
Save Energy).





45

47. GovernmentsNeed to
PromoteEnergyEfficiency
EE investments are costly and involve long-paybackperiods.
Government
EE policies:
- subsidies,
-incentives,
- standards,
-outreach…
Banks,
Households,
Industry,
Local
governments.
•Loans to
promote EE
•Investments in
EE equipment,
• Adoption of
best practices,
• New projects.
46

48. … but a Top-Down
Processis not Enough
To be effective, EE measuresneed to bewidelyadopted.
Households,
Industries
Investments in
EE products
Market
Transformation
EE measuressucceedwhengovernment action
iscombinedwithmarketincentives
47

49. Case
Study
SustainableHousin
g
Policies in Mexico
48

50. SustainableHousing in
Mexico
Sustaina
bility
Social
Sustainability
REGIONAL PLANNING
URBAN
DEVELOPMENT
Environment
Economic
Sustainability
Strategydirected at strengthening Municipal
and Statelegislation in ordertopromote
“Smartcitygrowth”.
•
Optimum use of
existinginfrastructure
•
Reclaiming of urbanvoids
•
Densityincrease
URBAN DESIGN
SUSTAINABLE
HOUSING
Source: CONAVI
49

51. Climate Finance Strategy
POA
DUIS
8 certified , 18 in
process:
800,000 new units
in 15 states
GenerateCER’s
from Green
Mortages
Housing
NAMA
PenetrationFoviss
ste, SHF and
upscale
DURBAN /
COP 17
Negotiation with Annex
I countries and
multilateral organisms
“Ésta es
tu casa”
258,329
subsidies
Urban
NAMA
(midterm)
Investment in
efficientinfrastructu
re
Green
Mortgage
725,740
greencredits
Source: CONAVI
50

52. Penetration&Scaling-Up
Housing
NAMA
Penetration and
Scaling up
PENETRATI
ON
&
Green Mortgage
FOVISSSTE
• Pilot 2012 in hand Green MortgagePenetration
Aguascalientes Pilot Project
SCALING
UP
Source: CONAVI
51

53. The Role of Local
Governments
Local governmentscan:
 Implementinnovative EE measures,
 Reach people at the local level,
 Generatecompetition in terms of EE
policieswithotherregions.
52

54. 7.
PrivateSector, the Key
Innovator
53

55. Utility Companies& EE: an
Ambiguious Relation
 Utility &energydeliverycompanies are the
best-positioned in the energymarketplace,
 Contact with power
generationindustry&customers
(individual& industries)
 Key actors in EE
 But: theyearn money by
deliveringenergy: by promoting EE, they
are beingasked to sellless of theirproduct!
54

56. EnergyEfficiency Obligations
(EEO) for Energy Providers
 All EEOs exhibit three core elements:
A multi-year energy savings target, shared between the parties;
2.
Penalties for noncompliance; and
3.
A measurement, verification and quality assurance system.
 The popularity of EEOs stems from their flexibility.
 Tradable EEOs are usually called White Certificates
1.
EEO in Europe
Country
Belgium Flanders
France
Italy
Great Britain
Denmark
ObligatedEntities
Electricity
distributors
Retailers
incl.transport
Electricity & gas
distributors
Electricity & gas
retailers
Electricity, gas &
heat distributors
Eligible Sectors
Residential,non energyintensive industry
Administrator
2011 Spending
(€ millions)
26
Flemish Government
300
All except large industry
Government
200
All incl. transport
Regulator (AEEG)
1,200
Residential only
All except transport
Regulator (Ofgem)
Danish Energy
Authority
40
55

57. Appliance Manufacturers
 Residentialenergy use: 14% of world
deliveredenergyconsumption (2008),
 Likely to increase middle classes
grow&adopt new types of consumption
in emerging countries
 Appliance manufacturers are
nowexpected to produce EE products
 Standards & labelling is a keytool to
reduceappliancesenergyconsumption
56

58. Financial Institutions
 The role of financial institutions iscritical to promoteloans
for EE investments.
 Some international &bilateral organisations organise
training on EE loans for banks: International Finance Corp.,
Agence France Developpement,
 Some countries have
developedspecificschemesthatfacilitate EE investments:
 KfW in Germany on EE in buildings,
 SIDBI in India for SMEs.
57

59. Heavy Industry &Others
 Industrialprocesses are most of the time energy intensive
(iron&steel, cement, aluminium, petrochemical, textile,
paper&pulp),
 Most of the companies are committed to
significantlyreducetheirenergy Lafarge as a WWF ClimateSavers
An example of a succesful EE plan: use.
Lafarge’s objectives:
• Reduce its GHG emissions to 33 % per t. of cement below 1990 levels by
2020,
• Develop sustainable construction initiatives by 2015 to achieve a lower
carbon footprint and greater EE,
• Contribute to the design of 500 sustainable buildings (2015),
• Advocate for ambitious climate change policies, through trade associations
and international organisations as well as for post-2020 climate policies.
Between 1990 & 2010, reduction of:
• 21.7% of its net CO2 emissions/t of cement,
• 36.5% of its absolute CO2 gross emissions in industrialized countries.
58

60. Energy Service
Companies (ESCOs)
Energy Performance Contracting
Loan&interestp
ayments
Financial
Institution
Remuneration
Customer
Contractor
Loan(s)
Service:
-financing,
- planning & installation of
energysavingmeasures
-energysavingsguarantee
Source: Berlin EnergyAgency
59

61. Case
Study
The en.lighten
initiative
60

62. Light Bulb &Energy Use
 Electricity for lighting accounts for almost 20% of global
power consumption and close to 6% of worldwide GHG
emissions.
 If a global transition to efficient lighting occurred, these
emissions could be reduced by half.
 Few actions could reduce carbon emissions as cheaply
and easily as the phase-out of inefficient lighting, making
it one of the most effective and economically
advantageous ways to combat climate change.
61

63. The En.lighten Initiative
 The en.lighten initiative has been established by Philips, Osram,
the China National Lighting Test Center, UNEP & the Global
Environment Facility
 en.lighten assists countries in accelerating market transformation
with environmentally sustainable, efficient lighting technologies by:
 Promoting high performance, efficient technologies in
developing countries.
 Developing a global policy strategy to phase-out inefficient and
obsolete lighting products.
 Substituting traditional fuel-based lighting with modern, efficient
alternatives.
62

64. 8.
Challenges for
EnergyEfficiency
63

65. Assessment of Potential
Strengths
Weaknesses
•
•
•
•
• Cost of investments
• Lack of skilled people
• Lack of awareness of need of
EE amongst consumers
• Weak in-country R & D
Increased sustainability
Increased energy security
Creation of market leader
Increased energy access
Opportunities
Threats
•
•
•
•
•
• Rebound effect (effort does
not reduce energy
consumption as planned)
• Fall in energy prices leading
to “expensive” conservation
Increased value and lifespan
Investment relief (tax)
Market for new innovations
Socio-economic influence
Competitive advantage

66. Moving Forward
Governments need to commit and also provide the following:
 Overarching policy framework combining mandatory and voluntary
policies and strengthening enforcement;
 Promote greater awareness of EE
 Play an essential role as integrator of the value chain
 Establish funding mechanisms to jump-start EE financing,
particularly in the short term.
 Institutionalize standard-selling and enhance professionalism within
the industry by creating proper accreditation and certification
standards,
 Publicizing more accurate information about EE product suppliers
and ESCOs.
 Remove other barriers that distort markets such as energy subsidies
65

67. Moving Forward - 2
And Business needs to
 Move towards an integrated value chain approach where suppliers
extend their service portfolio to offer complete solutions (auditing,
installation, maintenance and financing solutions).
 Develop innovative financing vehicles for EE projects by
collaborating with financial institutions and by developing expertise in
EE project financing.
 Increase awareness of EE and enhance professionalism of the
industry from within.
 EE suppliers and ESCOs should adopt a more active role in
promoting EE and in professionalizing the industry from within by
setting standards and benchmarks.
 Multinationals should act as catalysts by bringing in the best
practices from their experiences in other countries.
66

68. The Political Challenge
 EE
needsstronggovernment
support,
 EE requires a long-term
vision: how governments
in place for only 4–5
yearscan impose it?
 In a time of
economicslowdown, how
to enhance the EE
position in the political
agenda?
67

69. Technical&Know-How
Challenges
 To beimplemented, EE measuresrequire:
Access to technology,
 Know-how.
 How canemerging and developingeconomies have
access to thisknowledge?

Example: the massive need for energyauditors in
countries such as China &Russia
• How to select them?
• How to train new auditors?
•Whichtechnologyshouldthey use?
68

70. The Finance Challenge
 EE requires long-terminvestmentswithuncertainpayback
 How to finance energyefficiency in the context of global
crisis?
 How to limit the social impact of enhanced EE standards?
69

71. The International
Cooperation Challenge
 Differentresources in different parts of the world :
TechnicalKnowledge
Money to implementit
Developed Economies
Yes
No (crisis!)
Emergingcrisis
Not yet
Yes
Developingeconomies
No
No
 Lack of standard measures for energyefficiency

e.g.: EE indicators, standards.
Need for enhanced international cooperation in order to:
•Address global issues,
•Sharelessonslearnt, best practices & technologies,
•Enhance the measurement of EE.
70

72. The Social Challenge
 Implementing EE measurescanbecostly,
 Whendesigningpolicies, governmentsneed to
takeintoaccount the potential social impact of:
 Refurbishingrequirements in the building sector,
 New equipment standards,
 The price of energy.
71

73. The Communication
Challenge
 EE is not trendy:
It requires long-terminvestment,
 It istechnical,
 It does not result in visible results (as compared
to windmills in the renewablesector).
 At the same time, climate change &energy issues
are not priorities on the political agenda
anymorebecause of the economiccrisis.

72

74. The ReboundEffect
Challenge (?)
 Whatis the reboundeffect?
When an energy-usingtechnology or processbecomes
more efficient, the user cantakeadvantage of the
increased service delivered, ratherthanaccepting the
same service at a lowerenergy or financialcost.
 Is the reboundeffect an issue?
 Not an issue in the long term?
 It exists but seems to belimited,
 Reinvestment of energysavingscan
act as a driver for achievements of
Otherpolicy goals
(source: IEA)

73

75. Questions?
74