SESSION II:  UNDERSTANDING TOMORROW’S MARKETS:  END-USER ENERGY EFFICIENCY

Electrifying Futures – the Efficiency Dimension – Michael Grubb

Michael Grubb - Videoclip 1

Michael Grubb,  Chief Economist of the UK Carbon Trust and Chairman of Climate Strategies,  focussed the audience’s attention on energy efficiency,  pointing out that  “low carbon future scenarios are electricity intensive”  and that  “high carbon future scenarios are also electricity intensive” – the difference between one scenario and the other being,  in addition to the carbon intensity of the electricity supply, energy efficiency.  “Energy efficiency is pivotal to achieving the EU’s greenhouse gas reduction target and will also significantly reduce the cost of reaching the target,”  he told the delegates.

Mr Grubb argued that the proposed move to 100% auctioning of allowances under the EU Emissions Trading Scheme would completely change the balance of incentives to the power sector and encourage companies to invest in energy efficiency.  He foresaw the expansion of electricity use into new areas,  including a potential  “modal shift”  to plug-in hybrid vehicles in transport,  but pointed out that this was conditional on the power industry moving to a low-carbon electricity supply.  A key issue will be the interaction between the supply and demand sides,  modelling suggesting that a 20% reduction in demand,  with a carbon price over €60/tonne,  would lead to a 50% cut in CO2 emissions.

However,  the fastest-growing sectors both economically and in terms of greenhouse gas emissions are in fact the less energy-intensive sectors such as services and the public sector,  comprising a very high number of separate entities which are more difficult to target for energy efficiency policies than are the energy intensive industries.  For example,  buildings are not usually run in a full economically-rational way and do not take advantage of the energy – and cost – savings available through use of the right technologies.  “Energy efficiency in buildings does not depend on price,”  he underlined. In order to address this problem a consumption-based emissions trading scheme will start in the UK in 2010,  he told the conference.  “Improving energy efficiency in all sectors will not simply happen through the market,  and special policy measures are needed,”  argued Mr Grubb.

Michael Grubb - Videoclip 2

Electronic voting

Responding to a series of questions put before the panel debate by Serge Collé from Conference sponsors ACCENTURE,  the conference audience saw :

• The supply and demand side as equally important in efforts to  “decarbonise the economy”
• The highest impetus for the rational use of energy coming from high energy prices
• Plug-in hybrid vehicles as the most important technology for decarbonising the transport sector,  with a strong role for electricity in decarbonising road transport
• Nuclear power,  followed at some distance by CCS,  as the most important technology for decarbonising the power industry

Panel Debate:  Energy Efficiency – The Fifth Fuel

Panel Debate - Videoclip (end of debate)

Joining Mr Grubb in a debate moderated by Thomas Barth,  Chief Executive Officer of German power company Rhein-Main-Donau AG and Chairman of EURELECTRIC’s Energy Policy & Generation Committee,  were Fiona Hall,  UK Liberal Member of the European Parliament,  who sits on Parliament’s Temporary Committee on Climate Change;  Gary Kendall,  Senior Energy Business and Policy Analyst at environmental lobby WWF;  Hans Nilsson,  Chairman of the International Energy Agency’s Demand Side Management Programme;  and Ricardo Klatovsky,  Senior Partner Energy & Utilities in Europe at IBM Global Business Services.

Hans Nilsson - Videoclip 1
Hans Nilsson took exception to the title of the debate,  insisting that  “energy efficiency is in fact the first fuel”.  He stressed the economic rationale but felt that price alone is not sufficient to actually persuade the consumer to change to more energy-efficient equipment.  A culture change is needed and energy efficiency should be far more accessible and open to consumers.  “Consumers should know when they are buying energy efficient products or should enter a shop and ask directly for energy efficient products,”  he argued.  Mr Nilsson told the conference that consumers  “do not want to buy energy,  they want to buy the services that require energy.”  We need to commoditise and brand these services,  he insisted.
Hans Nilsson - Videoclip 2

Fiona Hall - Videoclip 1

Fiona Hall shared Mr Grubb’s conviction about the vital importance of energy-efficiency and was impressed that a largely energy-sector audience should have highlighted the role of demand-side efficiencies in their vote. However,  she identified the problem of actually getting energy efficiency measures into practice as this is seen as  “less exciting than some other areas of energy policy.”  She agreed that a modal shift is needed in transport – pointing out that the proposed new Renewables Directive promotes not only biofuels here but provides scope to include other ways to use renewable energy in transport.  However,  she called for a push away from private vehicles towards greater use of public transport.

Ms Hall also agreed with Mr Grubb that energy efficiency in buildings should be given high priority,  particularly that of existing buildings,  which have so far been the  “Cinderella”  of energy efficiency policy.  Ms Hall argued that we need to invest in energy efficiency in buildings but that government funding would be needed,  since it was doubtful whether the market would deliver.
Fiona Hall - Videoclip 2

Mr Barth intervened here to make a call,  backed by industry experts from the floor,  for full recognition in new EU legislation on Renewable Energy Sources for electric heat pumps as an energy-efficient and renewable-energy approach to heating and cooling in buildings.

Gary Kendall - Videoclip 1
Gary Kendall reminded the audience of the urgent need to address climate change,  and that in order to stay below the critical  2°C global temperature increase on the pre-industrial period,  greenhouse gas emissions must peak and start declining within the next decade.  Mr Kendall pointed to three types of action:  “eliminate demand, decarbonise energy and increase the efficiency of converting energy carriers into services”.

He focussed strongly on transport - a  “uniquely problematic area”,  which derives 95% of its energy from oil,  creating  “both an energy security and a climate change problem.”  We should be measuring the real energy efficiency of transport modes - not in CO2/km,  which is a measure of how efficiently we burn liquid fuels,  but in kWh/km.  Mr Kendall called for the support of the electricity industry in focussing on this,  stressing that the electricity industry can play a substantial role in all three areas of the transport sector:  demand, supply and energy efficiency.  Mr Kendall sees plug-in hybrid cars as  “bullet proof”,  as they are  “back and forward compatible”  – i.e. they do not shut out other options or require extra investments.
Gary Kendall - Videoclip 2

Ricardo Klatovsky - Videoclip 1

Ricardo Klatovsky pointed out that the Information Technology services sector is a very large energy consuming sector and that there is a lot of potential to improve energy efficient use in data centres,  which account for some 2% of total global emissions of greenhouse gases.  However,  consumers will not normally switch to another form of energy unless they see a price change of 5-15%,  he told the audience.  However,  IBM has a global emissions management process in place since 1997 and has achieved a 40% emissions reduction in 12 years.  “A single global certification process is the key,”  he explained.  Mr Klatovsky also argued that the more information you give the consumer,  via for example smart meters,  the more choices s/he will make.  Networks are extremely important in facilitating energy-efficient behaviour,  he said.

Ricardo Klatovsky - Videoclip 2

Session III >>