Epic Failure of Energy Policies. An Economic Sin of Global Proportions

An economic sin. An epic failure of international energy policy.  Harsh words from the chief economist of the  International Energy Agency (IEA) Dr Fatih Birol on why only a third of economically-viable energy efficiency measures are actually achieved globally. He said this in Singapore with the Asian launch of the World Energy Outlook 2012 organised by Energy Market Authority. Ken Hickson was there and clearly heard Dr Birol offer some praise too – for the industrial sector in the US, as well as China, Japan and Europe, for making some positive moves to capitalise on the benefits of energy efficiency. Enlarge the telling graph on the right to see where the problems lie, but read more on what Dr Birol and IEA has to say on what’s needed to capitalise on huge energy efficiency opportunities. Read More

Ken Hickson reports on the World Energy Outlook and on what International Energy Agency (IEA) Chief Economist Dr Fatih Birol had to say in Singapore on 4 December 2012:

Focus on Energy Efficiency as its where the most can be achieved in the shortest time

Eloquent and energetic. Mostly diplomatic, but very direct.

Dr Fatih Birol does not mince words when it comes to pointing out the fateful omissions of countries when it comes to not exploiting the opportunities to cut emissions of greenhouse gases by effectively employing energy efficiency measures.

Here is the man with his finger on the pulse of the global energy scene and with his mind tuned to the bottom line of energy – what its costs to produce and what cost the planet has to bear.

He is undoubtedly an energy economist with a heart and one he proudly wears on his sleeve.

Cool and calculating, he tells the world – and in this case a sober Singapore audience of 200 plus – that for him it is “an economic sin” that only one third of all economically-viable energy efficiency potential is being realised.

That means two thirds of economically viable energy efficiency opportunities are missed. Lost forever.

In terms of international energy policy implementation this is – in his words – “an epic failure”.

He pointed out that the IEA studied every country and every sector and looked at all the opportunities for producing energy savings.

He also made clear that this year the “fuel” IEA decided to focus on in its World Energy Outlook was not coal, or gas, or renewables, but was energy efficiency. The fuel we often forget about. It goes to waste.

The gains promised by energy efficiency are within reach and are essential to underpin a more secure and sustainable energy system.

He talked about the benefits of unlocking the purely economic potential for energy efficiency could do for energy markets, the economy and the environment.

Some of his strong words and impressive points:

  • Energy efficiency can delay “lock-in” of CO2 emissions permitted under a 2 °C trajectory – which is set to happen in 2017 –  until 2022, buying five extra years
  • Cumulative investments in energy efficiency of $12 trillion are more than offset by fuel savings & trigger economic growth of a cumulative $18 trillion
  • Industry is the one sector where the most of energy efficiency opportunities have been realised – that because industry recognises the business case. Proof that energy efficiency works.

Here’s an important extract from the World Energy Outlook:

A blueprint for an energy-efficient world

Energy efficiency is widely recognised as a key option in the hands of policy makers but current efforts fall well short of tapping its full economic potential. In the last year major energy-consuming countries have announced new measures: China is targeting a 16% reduction in energy intensity by 2015; the United States has adopted new fuel economy standards; the European Union has committed to a cut of 20% in its 2020 energy demand; and Japan aims to cut 10% from electricity consumption by 2030. In the New Policies Scenario, these help to speed up the disappointingly slow progress in global energy efficiency seen over the last decade. But even with these and other new policies in place, a significant share of the potential to improve energy efficiency – four-fifths of the potential in the buildings sector and more than half in industry – still remains untapped.

Our Efficient World Scenario shows how tackling the barriers to energy efficiency investment can unleash this potential and realise huge gains for energy security, economic growth and the environment. These gains are not based on achieving any major or unexpected technological breakthroughs, but just on taking actions to remove the barriers obstructing the implementation of energy efficiency measures that are economically viable. Successful action to this effect would have a major impact on global energy and climate trends, compared with the New Policies Scenario. The growth in global primary energy demand to 2035 would be halved.

For the full executive summary or the 2012 World Energy Report go to: www.worldenergyoutlook.org


Energy Market Authority Reports (4 December 2012):

Singapore, 4 December 2012 – The International Energy Agency (IEA) today held the Southeast Asia launch of its flagship World Energy Outlook (WEO) publication in Singapore, noting that dramatic changes to the global energy system would have wide-ranging implications on energy production, policy decisions and the geopolitical landscape.  Asia is a key region in this regard due to its growing share of demand for energy resources, said this year’s report.

IEA Chief Economist and WEO lead author, Dr Fatih Birol, highlighted several key insights from the publication, including the energy renaissance in the United States. Resurgence in oil and gas production in the United States is accelerating an ongoing shift in international oil trade towards Asian markets.  This is necessitating a greater focus on the security of strategic transport routes. Among other developments, several countries are retreating from nuclear power generation while there is continued growth in the use of renewable technologies.

More, however, needs to be done to improve energy efficiency and ensure that the global energy system remains on a more sustainable path, said Dr Birol.  He noted that the central scenario of WEO 2012 shows that several conflicting trends persist – energy demand and CO2 emissions are rising; energy market dynamics are increasingly determined by emerging economies; fossil fuels are still dominant as sources of energy; and the world is lagging in providing universal energy access to the under-privileged.

Said Dr Birol: “Our analysis shows that in the absence of a concerted policy push, two-thirds of the economically-viable potential to improve energy efficiency will remain unrealised through to 2035.  Action to improve energy efficiency could delay the complete ‘lock-in’ of the allowable emissions of carbon dioxide under a 2oC trajectory – which is currently set to happen in 2017 – until 2022, buying time to secure a much-needed global climate agreement.  It would also bring substantial energy security and economic benefits, including cutting fuel bills by 20 percent on average.”

The report also confirms that the 10 economies of the Association of Southeast Asian Nations (ASEAN) are set to play a key role in global energy markets over the next quarter century.  Southeast Asia’s energy demand is expected to expand by over four-fifths over the period.  Alongside rising energy needs in China and India, this robust growth is refocusing the global energy landscape increasingly towards Asia. “But many challenges will need to be overcome if Southeast Asia is to meet its growing needs at affordable prices and in a sustainable manner,” said Dr Birol.

WEO 2012 sets out updated projections of energy demand, production, trade, investment and carbon-dioxide emissions, broken down by country, fuel and sector, from now to 2035.  These projections are used by the public and private sector as a framework for policymaking, planning and investment decisions, and to identify the impact of current trends on energy security, environmental protection and economic development for specific regions.

Singapore was IEA’s first Southeast Asia stop to launch the WEO 2012.  For a full report, including Dr Birol’s presentation  - http://siew.sg/sites/default/files/WEO2012_slides.pdf  – and video clips from the forum, go to the source.

Source: www.siew.sg

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