Why energy efficiency policies need a rethink

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Businesses, authorities and institutions throughout the world know that it's beneficial to improve energy efficiency; it reduces costs, creates more jobs and even helps to save the planet. But what about the negatives of energy efficiency - the things the media doesn't always talk about?
A recent article on the Project Syndicate website explores this very issue. It pointed to the UK as an example, which ended its flagship energy-efficiency-loan initiative last year having spent £240 million on it, but with a National Audit Office report showing that people weren't signing up. Even worse, those who had signed up were not delivered the energy-saving measures they were promised.
Another example is California's energy efficiency standards, which were revealed by environmental economist Arik Levinson to have failed to meet their goal of building homes that were 80% more energy efficient. In fact, there was found to be no evidence that homes built under the new energy codes used any less electricity than those that came before.
The article explains that one reason for this is the 'rebound effect'; as our technology, transport and buildings become more energy efficient, we actually find more ways to use them - in the process, consuming more energy.
Making real, quantifiable energy improvements and reductions can be expensive. Researchers at the Copenhagen Consensus Centre, for example, looked at the UN's goal of doubling the global rate of energy efficiency improvement by 2030.
Global investments in energy supply total more than $1.6 trillion each year, of which $130 billion goes towards energy efficiency; this is expected to rise to $2 trillion by 2035, of which $550 billion will be spent on energy efficiency. However, the researchers found that it would actually cost $3.2 trillion to meet the UN's ambitious energy efficiency improvement target.
While this sounds expensive, the report found that savings of around $3 trillion would be made by not having to invest in other infrastructure. Meanwhile, consumers and industries would save around $500 billion, and reductions to CO2 emissions would be worth between $25 billion and $250 billion each year by 2030.
One of the biggest way to make savings, of course, is to move away from oil, gas and coal and towards greener energy sources. That's not to say green energy is cheap - it currently costs $168 billion in subsidies each year, and by 2040 this could reach $206 billion per year.
Therefore, the next step should be to make renewable energy cheaper and more competitive by driving its price down. Further research from the Copenhagen Consensus Centre suggests that if just 0.2% of global GDP was committed to green energy research and development, the chance of a breakthrough in this area would dramatically increase.
Sustainable Development



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