Energy efficiency: Nice on paper, but ...

If Mike Nichols’ classic comedy, “The Graduate,” were made today, the famous line about “plastics” would have a more up-to-date subject:

“I want to say one word to you. Just one word … Efficiency.”

Energy efficiency — in every form from better lighting to automated building management to smart metering — is the key to the future. But two very large hurdles stand in the way of its success. One, not everyone appreciates the importance of efficiency yet. And, two, even many of those that do aren’t doing enough to become more efficient.

Yes, some efficiency measures require upfront costs to implement. But analyses of returns on investment show time and again that those costs are more than worth it for the long-term energy savings they generate. One research project sponsored by Siemens, for example, found that many efficiency improvements actually deliver a negative cost in terms of euros expended per tonne of prevented carbon dioxide emissions. They include cavity wall and floor insulation, a switch to compact fluorescent lighting and a reduction in energy standby losses for computers and other electronic equipment.

What’s more, evidence is mounting that the longer we put off efficiency improvements, the far more staggering the costs will be down the road. The International Energy Agency (IEA) recently warned that, by not acting more quickly to reduce our consumption of fossil fuels, we’ve increased the cost of future climate action by $1 trillion between this year and last alone.

“We simply cannot afford to delay action any longer,” IEA executive director Nobuo Tanaka said to officials currently holding the latest round of international climate talks in Cancun, Mexico.

It’s not just a matter of cutting emissions to prevent dangerous climate change, either. Accelerating the drive toward energy efficiency is also crucial to blunt rising energy demand and prevent cascading social and environmental fallout.

“Tapping into the largely unrealised potential of energy efficiency will be critical for us to meet growing energy demand of the 21st century without leading to water, food or social crises,” said Pawel Konzal, head of the Oil & Gas Industry for the World Economic Forum (WEF), which today issued a report on efficiency at the Cancun gathering.

With global energy demand expected to rise by 40 per cent over the next 40 years, the cost for meeting that demand during the next two decades alone could total $26 trillion, according to the WEF report.

Efficiency offers the best solution, and it’s not like there aren’t lots of options available. (Just look at some of the Greenbang Award-winning innovators like 1E, Onzo and TelecityGroup.) But it’s not being pursued as aggressively as needed.

“Indeed, despite the recognised potential of energy efficiency, a gap remains between policy and implementation indicating that capturing this ‘low-hanging fruit’ is not as easy as expected,” the WEF report states. “Organisations and agencies are still operating at a project level versus a programmatic level and institutional and market failures are preventing the private sector from implementing and investing in energy efficiency at scale.”

The WEF reports concludes with three recommendations, including a call for “a set of harmonised international standards on measurement and reporting for energy efficiency that can sit alongside carbon emissions reporting.” It’s a good recommendation, with an appropriate sense of urgency (it asks for those standards to be developed for the corporate sector next year).

As with carbon emissions reporting, however, it’s becoming pretty clear that the carrot approach — highlighting “good” businesses for their eco efforts — isn’t working quickly enough. A couple of sticks, in the forms of stiff carbon prices and penalties for inefficiency, are warranted as well … but don’t hold your breath for either stick to be produced in Cancun this week.