A book by the International Energy Agency (IEA) identifies and quantifies a broad range of positive impacts of energy efficiency, repositioning it as a mainstream tool for economic and social development.
Noting that the traditional focus on energy efficiency as tool for energy savings has prevented appreciation of its full value, the study argues that energy efficiency is a “hidden fuel” that can enhance the sustainability of the energy system, support strategic economic and social development objectives, and promote environmental goals and prosperity.
9 September 2014: A book by the International Energy Agency (IEA) identifies and quantifies a broad range of positive impacts of energy efficiency, repositioning it as a mainstream tool for economic and social development. Noting that the traditional focus on energy efficiency as a tool for energy savings has prevented appreciation of its full value, the study argues that energy efficiency is a “hidden fuel” that can enhance the sustainability of the energy system, support strategic economic and social development objectives, and promote environmental goals and prosperity.
The study, titled ‘The Capturing the Multiple Benefits of Energy Efficiency,’ was launched during the International Energy Policies and Programmes Evaluation Conference (IEPEC), organized from 9-11 September 2014, in Berlin, Germany. It aims to build knowledge of the multiple benefits of energy efficiency, and demonstrate how policymakers and other stakeholders can measure and maximize related benefits to economy and society.
The study suggests that, given the low valuation of energy efficiency worldwide, only one-third of economically viable energy efficiency potential through 2035 will be realized if current policies are continued. In total, the full uptake of this potential could boost economic output by US$18 trillion by facilitating a more efficient allocation of resources across the global economy.
Alongside the “traditional benefits” of energy demand and greenhouse gas (GHG) emission reductions, the study calculates other benefits of energy efficiency through an in-depth analysis of five key areas: macroeconomic development; public budgets; health and well-being; industrial productivity; and energy delivery.
Significantly, the study demonstrates how energy efficiency can be quantified, including by applying existing methodological tools. In terms of health and well-being, it finds that energy efficiency measures to make homes warmer, drier and healthier will reduce the costs of medical and child care, boosting returns by up to US$4 for every dollar invested. In the area of industrial productivity, the study calculates a drop in the payback period for energy efficiency measures from 4.2 to 1.9 years when the value of productivity and operational benefits to industrial companies are integrated into traditional rate of return calculations.
According to the IEA, the “multiple benefits” approach taken in the study also helps evaluating the rebound effect (the loss of efficiency gains to increased energy use), which often reflects positive results in terms of achieving broader economic and social goals. It notes that “unbundling the relationship between energy savings and the broader outcomes of energy efficiency can provide… a clearer appreciation of where this effect either reduces or amplifies the benefits of an energy efficiency intervention.” [IEA Press Release] [IEA Launch Announcement] [IEA Publication Webpage] [Publication: Capturing the Benefits of Energy Efficiency: Executive Summary]