Politicians are forgetting a key cog in energy policy

Energy efficiency standards might not make for exciting headlines, but a recent IEA report highlights how vital they are in promoting emissions abatement.

You have to read a different document to understand why paragraph 18 of the G20 communique is important. This is the paragraph that talks up an “action plan for voluntary collaboration on energy efficiency”.

It sits right above the one that supports “strong and effective action to address climate change”.

Go to the world energy outlook commentary released by the International Energy Agency as G20 leaders were travelling towards Brisbane last week.

Achieving the levels of energy efficiency envisaged by the agency between now and 2040 can have a huge impact on investment requirements, economies and greenhouse gas emissions, the commentary points out.

The target for the IEA energy efficiency plan is to reduce annual oil demand in 2040 by 22 per cent (or 23 million barrels a day, more than the current production of the Saudis and the Russians combined) below “business as usual”, to cut gas consumption 17 per cent (or 940 billion cubic metres, more than today’s production in North America) and to cut coal demand 15 per cent (or 920 million tonnes).

“Energy efficiency”, says the agency, “will lower energy bills, improve national trade balances and cut carbon dioxide emissions.

“Improved energy efficiency (at the level the agency models) will reduce oil and gas import bills for the five largest energy-importing regions by almost $US1 trillion in 2040.”

It is very easy in all the mouthing off in the wake of the G20, the admiration of the US president (whose country’s economic fortunes and abatement prospects have been fundamentally changed by the ‘shale revolution’) and the local desire to beat up on Tony Abbott to overlook the importance of this issue to the twin targets of much-improved economic productivity and enhanced carbon abatement.

Energy efficiency is not sexy or photogenic (like a wind turbine) and doesn’t attract the colorful language of those for and against renewable energy subsidies. But, as the IEA numbers show, it is a vital cog in the wheel of the energy and carbon cart.

What’s more, it cuts across the emissions landscape by being as important for transport as it is for power supply.

The new IEA outlook describes it as a “critical tool” to relieve pressures on energy supply across the board. It points out that with 75 per cent of global car sales currently subject to efficiency standards, oil demand for transport between now and 2040 will rise by only a quarter despite the numbers of cars and trucks doubling.

Of course, the path the IEA foresees for a transition over the next quarter century will not be enough to stem the rise in energy-related emissions. The agency says they will be a fifth higher than today and will have the world on a path towards 3.6 degrees warning rather than two degrees.

This would be worse except that the agency expects a strong focus on new nuclear power construction that, by itself, will have the effect of pulling four years’ worth of global CO2 emissions at current rates from the 2040 greenhouse gas inventory.

Nuclear, a massive investment in hydro-electric energy, and stepped-up energy efficiency are a trifecta of key steps in driving down emissions, as the IEA sees things.

(You don’t see this getting much media attention, do you?)

The agency is planning to produce a special report in mid-2015 to address what more could be done ahead of the UN negotiations in Paris at the end of next year.

One thing is for sure: that report won’t be suggesting that energy efficiency efforts are of lesser importance than some of the other stuff that will grab media headlines as governments travel towards Paris. The G20 is ordering its energy ministers to meet in 2015 to further discuss the issue.

Environmental campaigners like WWF are not happy with the ‘energy action plan’, describing the efficiency segment as “nothing more than a commitment to keep on talking”. But this overlooks the fact that while the pace might not be fast enough, energy efficiency is an area where banal things like minimum standards for stuff using energy and better building codes are already making a difference.

How much more can be achieved and how much harder governments should drive this vehicle are contentious. Energy efficiency budgets are easy targets for finance ministers looking to slash budgets -- cf Labor’s performance under Rudd and Gillard -- but this is an action area where the emphasis is on doing rather than talking. 

The message from both the IEA and the G20 seems to be ‘we can do much more’. This shouldn’t be lost in the local debate as the leaders depart and the normal state of political catcalling takes over.

If one product of the Brisbane talkfest is that efficiency has risen higher in Tony Abbott’s thinking about the big energy and carbon picture, this is a good thing.

Keith Orchison, director of consultancy Coolibah Pty Ltd, publisher of the This is Power blog and editor of OnPower newsletter, was chief executive of two national energy associations from 1980 to 2003. He was made a member of the Order of Australia in 2004 for services to the energy industry.