Power & Energy | |
Power & Energy | |
4021 VIEWS | |
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Wednesday,
November 21, 2018 10:32AM / By Kevin Lane, IEA energy analyst, and Armin Mayer, IEA
energy analyst.
While
the world is becoming more energy efficient, strong global growth is offsetting
those gains. As a result, we are consuming more energy and emitting more carbon
dioxide.
But
greater action on energy efficiency can reverse this trend. The International
Energy Agency’s most recent
market report on efficiency shows how deploying all cost-effective
efficiency measures, relying only on available technologies, would allow the
global economy to double by 2040 with only a marginal increase in energy
demand. This Efficient
World Scenario offers a blueprint for a world where energy
efficiency measures keep a lid on energy demand growth and carbon emissions
while economies expand.
But
would greater efficiency actually prompt more energy use? If consumers have
access to more efficient air conditioners or cars, for example, will they
simply use them more, increasing overall energy consumption? Or if households
save on energy at home, will they spend the income elsewhere, on services that
rely on energy? This theory is most commonly referred to as the “rebound
effect,” and some economists have suggested that efficiency improvements can
lead to greater energy consumption.
A recent article in The
Economist cited recent work by researchers from the Swiss Federal
Institute of Technology who have developed a general equilibrium model to
predict the economy-wide impact of more energy efficient technologies. The
model suggests that the rebound effect essentially negated all the efficiency
gains obtained in the United States during the second half of the last Century,
according to the article.
In
reality, energy efficiency has been critical in decoupling economic growth from rising energy
consumption and greenhouse gas emissions. In the United States, energy
consumption and GDP rose at almost an identical rate between 1949 and 1975.
Following the oil crisis of the early 1970s and the implementation of vehicle
fuel economy standards and many other efficiency measures, the US economy
underwent a fundamental shift: Between 1976 and 2009, GDP nearly tripled, while
energy consumption increased by less than 25%.
Japan
has had similar successes with efficiency measures, achieving a 2.6 fold
increase in real GDP while final energy consumption remained relatively
constant. Denmark provides a further example of how efficiency measures can deliver
meaningful economic outcomes.
The
1973 Oil Crisis had a severe impact on the Nordic country, which was heavily
reliant on fossil fuel imports to meet its energy needs. As a result of
comprehensive efficiency measures (combined with world-leading promotion of
renewable energies) implemented in the mid-1970s, Denmark reduced its energy
intensity by over 50% and GHG emissions by 30% while more than doubling GDP
growth by 2015.
All
this is not to say that the rebound effect does not exist. In some sectors,
like transport or home heating and cooling, a direct rebound has been measured
in some studies. Mitigating such rebound effects is possible through measures
such as: introducing road pricing to curb rebound within transport and by
introducing green energy levies or taxes to raise energy prices lowered as a
result of efficiency.
This
is required to maximise expected energy savings from efficiency measures.
However, some rebound may actually be intentional and even desirable,
especially where demands for essential services – such as heating and cooling –
are lacking. In developed economies, access to energy may not be an issue, but
access to affordable
energy is a major concern for many low-income households. In such cases, policy
makers must consider whether expanding energy services constitutes a rebound
effort, or rather a desired social outcome, such as families being able to
afford warm and comfortable homes.
In
emerging economies, the provision of more energy services is a fundamental part
of economic growth and social development. Energy efficiency can help ensure
that any increase in the availability of energy services brings real benefits
rather than creating additional problems, such as increased air pollution.
In
India, for example, the Ujala initiative has distributed 330 million
energy-efficient LED lamps since 2015. In addition to providing an important
energy service for millions of low income households, the initiative freed up
enough energy to power at least 1 million additional households. A similar
initiative, though on a smaller scale, led by the Energy Commission in Ghana
was able to increase energy access by over 7% in a single year through the
deployment of efficient refrigeration and lighting technologies.
In
such cases, energy efficiency contributed to social and economic development, rather
than simply a reduction in energy use. Some might consider this a rebound
effect; alternatively, these examples illustrate how energy efficiency can
ensure that more people benefit from essential energy services in an equitable
way.
Ultimately,
developed and emerging economies will continue to strive for economic growth
and increased use of quality energy services. Precisely for this reason, energy
efficiency will be absolutely indispensable for ensuring that these objectives
are met while increases in global energy consumption are kept to a minimum.
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