[140] Electrification, energy efficiency and decarbonisation

Sometimes, we have opportunities in the energy system to make step changes rather than incremental changes. E.g. for electric vehicles and heat pumps, we can save a factor three to five in final energy when switching to electricity. Provided this electricity comes from renewables, the combination of renewables with energy efficiency through electrification provides one of the most powerful decarbonisation routes for our energy systems, and market design should reflect this.

A similar gain can be achieved through the electrification of thermal processes in industry. Again we observe end-use efficiency gains of a factor two to three. Hence industry could consider electrification as a promising decarbonisation route.

[125] Efficiency leaders and laggards

This hardly comes as a surprise. Stimulated by regulation and competition, industry has been making massive improvements in energy efficiency, while transport and buildings are lagging behind.

With electric vehicles, building automation systems and heat pumps, the technologies to make a big leap forward in these sectors are at hand. However, the transition is slowed down by:

  • Barriers in the electric vehicle market such as lack of consumer choice and limitations in charging infrastructure.
  • Slow building renovation rates.

[122] Who will deliver on energy efficiency?

This report demonstrated how improved energy productivity can drive growth, create jobs and spread well-being throughout society. To make this happen, we should accelerate the transition. ‘The world is deploying new technology much too slowly to keep up with rising energy demand’.

Considering the multiple benefits and vast potential of energy efficiency, why are we still discussing it in Brussels? The answer lies in the complexity of energy efficiency at the crossroads of regulation [13, 20], markets [19], technology [17] and psychology [32].

[117] The wider concept

Industry has worked hard to improve its energy efficiency, with impressive results so far. The new challenge is to make energy demand more controllable, able to fluctuate to respond to the electricity market conditions. Such flexibility can be in conflict with energy efficiency. Industrial operators will have to deal with additional parameters to optimise their economic output. In any case, both energy efficiency and flexibility are great tools for decarbonisation.

[113] Deeper time perspectives please

Both for energy efficiency and for many forms of renewable energy, the major part of the financial effort is situated in the initial investment, which is then paid back over the years. Making lifecycle costing into a standard practice for energy related investments would therefore stimulate the energy transition.

And more generally, the energy transition moves the energy system from being primarily fuel-based to a mixed basis of fuel and capital. In such a context, lowest-first-cost is not a good idea, as it will increase system costs.

Let’s avoid turning capital goods into consumables, and pay attention to durability and circularity.