CE Energy Insight – August 2020
Despite the global focus on climate change and reducing emissions, energy efficiency is often pushed to the background. This is especially so in comparison to renewable energy development. Or the electrification of mobility. Certainly, it’s not seen to be as cool as the emerging clean tech sector. Most policymakers agree that sustainability, not just renewability, is key to energy systems of the future. When viewed from from the lens of finite resources, population growth and time, it becomes clear that energy efficiency and sustainability are linked.
1. Finite Resources
Renewable energy technologies like solar PV, wind, biomass have been scaled to the point where they are cost-competitive. Allied with the electrification of mobility, most OECD countries have shown that it is possible to power economic growth using renewable energy. However, not all the components required to deliver these technologies are renewable. Further, a look at the complete lifecycle calls the sustainability of some of these precious resources into question. Shown in Figure 1 is the depletion rate of the four main metals used in renewable energy hardware production. The data presented doesn’t take into account increased depletion of these resources to meet growing demand.
The world doesn’t appear to be running out of rare earth metals anytime soon, but the proven reserves of copper and cobalt are concerning. Heightening the risk, over 60% of the world’s cobalt resources are located in the Republic of Congo. This is a region where there are concerns about unsustainable practices such as child labour, unsafe working conditions and poor environmental regulations. If production companies are compelled – or choose to – leave such environments, further strain will be placed on already limited resources. It’s true that new reserves – and indeed new materials – can be found. It is equally true that these will bring their own supply chain and sustainability risks.
2. Population Growth
Global population is expected to increase from 7.5 billion this year to nearly 9.5 billion in 2050. This represents an annual population growth of 0.9%, much higher in emerging economies. Exponential energy efficiency improvements will be needed in order to keep up with population growth and meet the Paris agreement targets. Interestingly, nearly 50% of this growth is projected to come from just seven countries, shown in Figure 2. Crucially, these countries are located in regions of the world which have not made significant strides either in the adoption of renewable energy or energy efficiency policies.
Nigeria, for example, will double its population within the next thirty years. Although India’s population growth has slowed, it will also add an additional 240 million citizens by 2050. Economic growth in these areas that is not built on a sustainable energy platform is likely to negate the emissions reduction efforts of OECD countries, no matter how aggressive the latter are.
3. Limited Time
This is linked to the other two factors described above. As clean energy experts have cautioned, delays in the removal of polluting forms of energy from the ecosystem have a multiplying effect on the length of time it will take to get down to the Paris agreement targets. The graph below shows the electricity generation capacity added by China since 2000.
China has been lauded for its focus on adding significant volumes of renewable energy generation during that same period. Yet, coal power makes up over half of the country’s installed capacity. Removing this capacity will require over three times the renewable energy investment the country has made since 2010 alone. Energy efficiency would allow coal plants to be preferentially retired earlier, speeding up the country’s journey to a renewable future without the attendant cost of replacing the lost capacity.
Summary
These three factors highlight the connection between energy efficiency and sustainability. Following this path can be the difference between progress in meeting emissions targets and not doing so at all. It can provide a time buffer for energy switching decisions without the inertia and stigma of standing still. Energy efficiency also allows entities with limited financial flexibility and/or regulatory support for energy switching to contribute their share to a reduction in global emissions. Most importantly, energy efficiency and sustainability can be implemented without sacrificing economic efficiency.
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