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The decoupling of energy consumption from energy services, eg lighting, heating, hot water, mobility, through increased energy productivity provides a potential, albeit partial, solution to global climate change. Among the principal drivers of increased energy productivity during the past 15-20 years has been the widespread adoption of advanced technologies. Further enhancement and deployment of high tech electronics and information and communications technologies can provide the foundation for the many new innovations that can set a trajectory for a low carbon path to the future. Greater levels of investment can maximise the potential cost saving benefits of increased energy productivity.
Are technologically advanced countries of the world simply the primary source of global climate change, or might they also be part of the solution? There is no doubt that greenhouse gas emissions from the more advanced countries have contributed disproportionately to global climate change. However, without past technological innovations and supportive government policies, emissions levels today would be vastly greater. More importantly, the thoughtful and widespread application of many of the advanced technologies that are currently available could lead to even more dramatic reductions in future greenhouse gas emissions.
DECOUPLING
Compared to less developed countries, per capita energy consumption in the US and other wealthier nations is disproportionately large. Current US energy consumption is in the order of 105.6 exajoules annually (roughly 21 per cent of global consumption) – despite the fact that the US population represents only five per cent of the global population. Conversely, however, US energy consumption per dollar of economic output has declined by 50 per cent over the past 35 years from 18.98 megajoules in 1970 to 9.61 megajoules in 2005. In other words, as shown in Figure 1, current US energy consumption is only half of what it would have been if levels of energy productivity had remained unchanged. A similar decoupling has been experienced in Japan and the European Union.
Understanding this phenomenon necessitates a clear distinction between energy commodities, such as fuels and electricity, and energy services, such as lighting, heating, hot water, mobility and an acknowledgement that growth in energy services need not be directly linked to growth in energy consumption. This decoupling of energy consumption from energy services illustrates the potential contribution of energy efficiency in reducing energy consumption while maintaining a high standard of living associated with our reliance on a wide variety of energy services. But how has this decoupling been achieved?
ADVANCED TECHNOLOGIES AND ENERGY EFFICIENCY
Among the principal drivers of increased energy productivity during the past 15-20 years is the emergence and widespread adoption of advanced technologies, including high tech electronics and an array of information and communications technologies (ICT). These technological drivers of energy efficiency range from stand-alone products, such as computers and cell phones, to numerous types of sensors, microprocessors and other technologies embedded in everyday products, such as cars, lighting systems and appliances.
While it is easy to imagine that the proliferation of advanced ICT technologies would lead to an increase in power demand in all sectors, calculating their net effect on energy usage requires a broader understanding of the ways in which new technologies have continued to displace and improve older processes and systems. On the one hand, evidence suggests that energy consumption, and especially the use of electricity, has increased as the development of new applications drives the expansion of new devices and appliances in our homes and businesses. On the other hand, the larger, economy-wide productivity gains and efficiency improvements that have been realised through the use of these technologies have more than offset the energy used to power them.
As such, the further enhancement and deployment of ICT and other advanced technologies can provide the foundation for the many new innovations that can set a trajectory for a low carbon path to the future. Such a path would provide strong momentum toward achieving the goals of the Kyoto Protocol and other efforts to reduce total carbon emissions throughout the world. Several studies by the American Council for an Energy-Efficient Economy (ACEEE) and others confirm that advanced electronic and ICT technologies, if given the appropriate mix of policy signals, could play an even greater role in reducing climate changing emissions, and in limiting the potentially negative economic consequences of efforts to simply curtail energy consumption.
ICT ENABLED EFFICIENCY TECHNOLOGIES
If people are asked to think about advanced electronics or information technologies, most are likely to imagine a desktop computer or a laptop with access to the Internet. Others might think about mobile phones, blackberries and iPods. But in fact, advanced technologies and ICT enabled devices and equipment are much more ubiquitous than a casual observer might first imagine. Microprocessors and other semiconductor devices are embedded in the most mundane consumer products, from toys and refrigerators to stoves, vacuum cleaners, and coffee makers. In fact, microprocessors and other semiconductors have already successfully enabled numerous and significant energy efficiency improvements throughout the global economy.
Even a cursory review of recent news articles underscores just how much advanced electronics and ICT capabilities are already an embedded feature in numerous devices, software tools and networked systems. Digital control devices and sensors have been rapidly replacing analogue electronic devices and numeric controls in numerous industrial processes whenever economically and technologically feasible. Sophisticated analogue systems employing the latest advances in materials technology and mechanical systems have merged with digitally based and/or Internet addressable control devices.
Sensors have become increasingly solid state, with the capability of linking to analogue-to-digital converters within digital control systems. These microprocessors, using application-specific integrated circuits (ASICs) and other solid state components, can guide the actions or movements of ubiquitous mechanical systems such as motors, pumps, fans, compressed air systems and even more sophisticated industrial equipment such as machine tools, mixers, conveyors and robots. As such, sensors, automatic controls, and smart software programs all now have widespread use in every sector of the economy, including buildings, transportation, electric power generation, consumer appliances and entertainment.
Two noteworthy examples will highlight the many larger opportunities for energy efficiency improvements. The first deals with telecommuting and teleworking. The second deals with the optimisation of building energy management operations.
Telecommunications
Cutting edge telecommunications technologies offer an alternative solution to growing levels of congestion, energy consumption and carbon dioxide (CO2) emissions within the transportation and buildings sectors. Transportation related energy consumption alone was recently estimated to be responsible for nearly one-third of the EU-27’s total energy consumption and 28 per cent of energy consumed in the United States. Throughout the world, more cars are driven more miles, consuming more fuel than ever before. And a significant proportion of those miles are work related. Telework offers a high tech means of substituting telecommunications for work related travel while also reducing the amount of building space required to house employees.
A study completed by the European Telecommunications Network Operators Association (ETNO) and the World Wildlife Fund concluded that if 20 per cent of business travel in the EU-27 were replaced by audio conferencing video conferencing or telepresence, 25 million tonnes of CO2 might be saved annually by 2010. The study also noted that if just 10 per cent of EU employees became flexiworkers, another 22 million tonnes of CO2 might be saved annually.
Intelligent building systems
In the European Union and the United States, buildings are currently responsible for approximately 40 per cent of greenhouse gas emissions or approximately four billion tonnes of CO2 per year for these two regions alone. These high levels of emissions can be reduced using information technologies – what might be called Intelligent Building Systems – that rely on sensors, transmitters, data acquisition and data processing to optimise and improve building energy use.
These technologies achieve efficiency gains by productively managing a building’s chillers, boilers, packaged air conditioners, heat pumps and lights. Since most buildings are not occupied 24 hours per day, space conditioning and lighting services can be reduced or shut down when buildings are unoccupied, reducing energy costs and minimising the wear and tear on equipment. The potential carbon savings provided through the adoption of intelligent building systems have been estimated as high as 20 per cent. 
While these case studies suggest that significant reductions are possible for both energy use and carbon dioxide emissions through the adoption of smart technologies, by default they overlook the larger contributions that may be possible from an economy wide versus a case study perspective. The impact of accelerated investments on performance and productivity benefits are illustrated in Figure 2. It shows that especially in the case of high return technologies such as those examined here, the cumulative effort and investments over time would, in effect, provide a discontinuous jump in the performance path as both the advanced technologies and the markets are transformed. This trend would also likely increase overall energy productivity, especially as policy and organisational efforts are catalysing market decisions to move in that direction.
THE MULTIPLE BENEFITS OF ADVANCED TECHNOLOGIES
For businesses, climate change is just one of six major forces driving a renewed focus on energy efficiency. The other five include:
Energy prices
Since the turn of the century, energy prices in many countries have been both high and volatile, upending household and corporate budgets and reducing disposable income and profits. Forecasters generally agree that this pattern is not a temporary aberration, and that the era of cheap energy is over. As such, energy efficiency investments have become a cost management strategy for families and businesses.
The supply straitjacket
Underlying rising energy prices is a set of deeply interrelated energy market problems. The production, processing, and transportation of energy are all experiencing unprecedented constraints that span all major energy markets. This energy straightjacket will not be easily resolved; with supply constrained in so many ways, efficiency has become a near term strategy for balancing energy markets, moderating prices and providing the badly needed headroom to keep energy supply systems reliable.
Consumer and shareholder activism
Consumer, investor and voter groups are increasingly voicing their concerns regarding the environmental and human impacts of corporate behavior in the energy industry. Moreover, socially responsible investing, shareholder activism and public campaigns are being organised to provide real economic incentives and consequences related to corporate action or inaction on efficiency-related environmental issues such as global warming.
Global competition
With the increased globalisation of business, multinational companies are encountering increasingly stringent climate policies and regulations. Efforts to comply with regional policies are driving more widespread investments in energy efficiency. Many companies are also pursuing business opportunities in the ‘clean tech’ sector. In this context, efficiency is an internal cost management strategy geared towards maintaining competitiveness, as well as an emerging business opportunity.
Better mousetraps
A wealth of energy efficiency technology advancements is nearing market readiness. In the high tech world, microprocessor makers are driving performance per watt to new frontiers. Intel’s first (1996) supercomputer capable of a trillion calculations per second consumed 500,000 watts of power. In March 2007, Intel demonstrated a dime-size 80-core chip that used just 62 watts to break the teraflop barrier.
These six factors together have created a fertile environment for energy efficiency investment. However, the required investments and hoped for benefits are by no means guaranteed. Without a sensible framework of government policies, these unfolding technologies might follow any number of less productive paths.
INVESTING IN ENERGY EFFICIENCY: CURRENT AND FUTURE PROSPECTS
How big is the energy efficiency market? And does it make economic sense for businesses to invest in high tech enabled efficiency? Because the efficiency market is fragmented and dispersed, the opportunities are difficult to quantify. This phenomenon is an example of what economists call ‘search costs’; a classic market barrier that chronically inhibits investments. Even though industrial energy efficiency investments often have less than a four year payback based on energy savings alone, search costs hinder millions of worthwhile transactions. When other productivity gains are assessed, such as reduced water, feedstock or labour costs, the payback period is often cut by half.
A forthcoming ACEEE analysis estimates that current US investments in energy efficiency are in the order of US$300 billion annually. These investments range from Energy Star® computers and refrigerators to more energy efficient cars, trucks and industrial equipment. These findings are consistent with a recent United Nations Foundation study that identified energy efficiency as both the largest and least expensive energy resource and suggested that the G8 and other nations could double historical rates of efficiency improvement by 2030. A study by McKinsey Global Insight indicates that all future energy service demand growth in North America could be met through cost effective investments in energy efficiency.
Assuming that policies, market forces and new financing mechanisms facilitate substantial movement toward productive investments, assessments by ACEEE and others suggest that energy and climate change policies don’t have to be about ratcheting down the economy; they can be about technological innovation and leadership – all in a way that ensures both environmental and economic prosperity, if we choose to move along such a path.
This article draws from an AeA Europe report entitled Advanced Electronic and Information Technologies: The Innovation-Led Climate Change Solution. The full report is available at: www.aeanet.org/EUEnergy
Author
Dr Karen Ehrhardt-Martinez is a sociologist and a member of the policy research staff in the National and State Energy Policy program at the American Council for an Energy-Efficient Economy. Her work focuses on the human dimensions of energy and climate change and includes research and analysis of technologies and programmes designed to increase energy efficiency across all social segments and economic sectors of US society.
John ‘Skip’ Laitner is the Senior Economist for Technology Policy for the American Council for an Energy-Efficient Economy (ACEEE). He previously served for nearly 10 years in a similar capacity at the US Environmental Protection Agency (EPA) where he was awarded EPA’s Gold Medal for his work with a team of EPA economists to evaluate the impact of various climate change strategies. Skip has more than 35 years of involvement in the environmental and energy policy arenas.
Organisation
The American Council for an Energy-Efficient Economy (ACEEE) is a nonprofit organisation dedicated to advancing energy efficiency as a means of promoting economic prosperity and environmental protection. ACEEE fulfills its mission by: conducting in-depth technical and policy assessments; advising policymakers and programme managers; working collaboratively with businesses, public interest groups and other organisations. Support for our work comes from a broad range of foundations, governmental organisations, research institutes, utilities and corporations.
