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Energy Efficiency is the #1 Climate Change Tool

These are the thoughts of today's energy thought leaders. I've captured them here to refer to in the future...and though you might like to know what these leaders are thinking, as well.

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Energy Efficiency Global Forum and Exposition, hosted by the Alliance to Save Energy, 2009

Energy efficiency enables us not only to lower CO2 emissions, it helps to encourage energy security. And by consuming less it certainly helps.

In the period from 1973 to 1990 energy efficiency improved at around 2 percent per year and it outpaced, increased energy use by four times.

But between 1991 and 2005 the trend was very different. Energy efficiency improved by a rate less than 1 percent and increased energy use was greater than improvements in efficiency.

In other words, we are being less efficient with our energy than we were. Maybe it's partly due to lower price of oil. We must change this course and we must do it now if we are really to ensure a secure and sustainable energy future.

And the energy sector accounts for more than 80 percent of global CO2 emissions and 60 percent of the greenhouse gases. This is the world energy outlook and the CO2 emissions from energy sectors in OECD countries. And this is the one from non-OECD countries. You can clearly understand where the additional CO2 emission comes, mostly from coal in non-OECD countries.

It is obvious, some technology like carbon capture and storage in non-OECD countries like China or India, we cannot solve CO2 emission reduction.

And if no action is taken this business as usual scenario leads us to the 6 degreesC increase to the end of the century and it's a disastrous course of action.

So, IEA prepared two policy scenarios to cope with this business as usual scenario, 450PPM scenarios, which leads to about stabilizing CO2 emission by 450PPM, which leads to about 2 degrees.

550 is leading to the 3 degrees increase. In this case, we just showed the 450 scenarios. But 450 scenarios disintegrate where the CO2 emission should be reduced, OECD and non-OECD.

And you can clearly understand that non-OECD reduction must be almost double as OECD because economy growth is there. In this assumption the OECD grows about 2 percent per year and non-OECD grows 4.8 percent, more than double over OECD.

And also interesting enough that the tools or measures to cope with and CO2 emission reduction is slightly different from OECD and non-OECD. Non-OECD, energy efficiency makes much more sense.

Sixty percent of reduction in non-OECD should come from energy efficiency, while about less than 50 from OECD. Of course, as a whole 54 percent of reduction should come from energy efficiency.

This is the most important chunk of contribution. And other areas, renewables, nuclear or CCS must come. All of these infrastructure investments for low carbon technologies or power generation is a huge investment.

A huge investment is necessary. And to the end of 2030 the CO2 price is about $180 per ton of CO2. So energy revolution is necessary.

And especially I want to touch up on the importance of buildings, which I think Bjorn Stigson will tell you about more later today.

And because building sector accounts for 40 percent of energy use and renovating them to meet high energy efficiency standard while replacing outdated heating systems would cut this percentage in half.

So these actions also would create much more jobs in the short run. So for the sake of economic stimulus this building sector is probably the very important key sector.

And for the new buildings, the providing, the revising building code and providing incentives for possible energy houses or zero emission buildings is another very interesting challenge.

25 IEA energy efficiency recommendations

So, in these 25 recommendations we know what to do. The issue for the government is to implement it and then implement it and implement it.

If all the governments all over the globe introduce these 25 recommendations as fast as possible we can save about 8.3 gigatons of CO2 by 2030.

And this amount is more than, it is more than the current energy related CO2 emission of the United States and Japan combined, a huge potential of savings there.

I asked my staff the kind of wedge of CO2 ambition or energy savings of these 25 sectors for efficiency. We estimate that over 93 exojules could be saved if all 25 IEA energy efficiency recommendations are taken.

The G-8 leaders in Okido asked IEA to develop global energy technology roadmaps and we are working hard on this. And 19 roadmaps, they covered both supply side and demand side.

There are quite a number of energy-efficiency related technology policy. We are taking more of an integrated or holistic for systemic approach, because efficient vehicles or electric vehicles makes sense only when the power generation has carbon free.

So the demand side-supply side approach should come together. The IEA has calculated that about 15 trillion U.S. dollars must be spent globally on research, development, demonstration, and deployment of these technologies in order to make them fully commercially available.

International Partnership for Energy Efficiency Corporation, IPEEC,

The IEA also has been asked to host the Secretariat for the International Partnership for Energy Efficiency Corporation, IPEEC, which will bring together the G-8, Brazil, China, India, Korea, Mexico, and the European commission with more countries expected to join in the near future.

Yes, energy efficiency must play a key role if we want to ensure that our future is cleaner, but also more secure. By being more efficient with our energy we will rely less on the oil and gas from producing countries. At the same time, we can contribute to lower CO2 emissions.

However, the IEA research shows that because of the current financial or economy crisis many energy efficiency projects or renewable energy projects are now perceived as high risk and are having difficulty attracting private investors.

This is troubling. And today's economic stimulus package by the way may provide an excellent opportunity to ensure greater energy efficiency.

The IEA calculates that our member countries have committed or plan to commit close to 128 billion U.S. dollars toward energy efficiency through initiatives such as stimulus packages.

And this is very good news in framing stimulus and rescue packages to ensure a scaling up of energy efficiency during these difficult times will mean a triple win in the future.

It will boost the economy and create jobs and help kick start the transition to the much needed low-carbon economy and possibly help facilitate the climate agreement in Copenhagen.

Alliance to Save Energy

EDF, Jean-Pierre Benque, Senior Executive Vice President EDF North America.

In the U.S. we have developed and we have the utility on the renewable 864 megawatts of wind farm. And we are now developing photovoltaic farms, solar farms because we think that it is really very promising.

And we also have an agreement with Constellation about setting up and building new nuclear plants and four EPRs with Constellation. It's a Unistar agreement, which is already in operation now.

And we are closing a deal on existing nuclear plants in Constellation to share with constellation of nearly 50 percent of the existing and we are investing in nuclear. So what does it mean?

It means that EDF wants, of course if you wish, I mean if the American people wish, wants to become American and to stay in the U.S.

how to make a sales and marketing policy link with a new offer to save energy and to save also the CO2 emission of our customer.

And to make our customer able to choose a solution, not only efficient from the financial point of view saving energy, but also efficient on saving CO2 emissions for themselves. So why we are doing that?

Well, 30 years ago as the Alliance of Energy said 30 years ago we were developing the nuclear program and the energy efficiency and in the sake of energy independency, which is still a main issue, which is still a main issue for the world, which is still a main issue for the US.

But after this time now, time after time the CO2, the climate change becomes another issue which is now in the front page and which is now our main task.

So the first action that we want to develop is of course to reduce unnecessary demand. But after that I think we have to think of the way we reduce the CO2 emission because the ultimate target is obviously the reduction in parts per million in the atmosphere.

And that's why I would like to be a little provocative, but it could imply to ENs, the electric consumption. And I will take an example.

If we move from thermal vehicles to electric vehicles we will increase, even with a large and huge program of energy efficiency we will increase the electric consumption in the country.


But then, and this is especially true for France, it's a CO2 saving which is very important because the refueling of the electric vehicle will be during the night and during the night is only the nuclear which is the marginal power for the generation.

To me there are a few levers to reduce the carbon contents of the economy and to reach what I like to call the energy eco efficiency. And the energy eco efficiency is the eco for the economy and eco for the ecology.

So it's a mix between the reduction of the energy consumption, but also the reduction of the CO2 emission. The first level is to reduce the carbon content of electric generation, of electric production.

To do so, from my point of view we have to look at the baseload. We have to look at the base load and if we look at the baseload there are two means.

One are the renewable and the second one is the nuclear. And I think that the development, I think that nuclear is not the solution, but from my point of view there are no solutions without nuclear.

This is maybe not so obvious I think for all of you, but if you look at the figures I think that nuclear is rather difficult not to use it.


The second point is the peak load.

The peak load will remain generated by fossil fuel generation for a long time. And then we have to shave the peak load. And to shave the peak load, well, there are many, many ways and I will give some examples in the follow-up of my talk.

And of course Smart Grid could be a good way. And we have an experience. The second level is to reduce the carbon footprint of building. A lot of things have been said about insulation.

I won't insist on that. That's obviously the first point to manage and to set up. But after that, I think that it's very important to develop renewable, disburse renewable.

And I think especially on PV on the rooftop, which is a very promising thing that we already developed in France, but in the U.S. there are fantastic potential for photovoltaic on the rooftop and nearly automatically efficient.

But there is also the heat pumps, because if you subsidize thermal heater as the fuel heater or gas heater and if you move to heat pump, the heat pump for 1 kWh of electricity you have 3 kWh of energy.

And two of these kilowatt hours are coming from the atmosphere or from the water if the pump is using water. The third level is to reduce the carbon content of the transportation sector.

And then of course hybrid vehicles and electric vehicles for our point of view is the solution or beginning of the solution. So how now EDF is living up to these principles?

And I'm going to leave you four examples of what EDF does in energy efficiency.


First of all and a long time ago now smart electric water heaters, about 10 million of electric water heaters in the residential state sectors and they come with a device that allows EDF to automatically send a signal in through the meter and that triggers these 10 millions on after 10 p.m.

So that means that all these electric heaters are heating the water with nuclear energy. Of course, of course if you want to, if you need more hot water you can switch on and get the heater during the day. But most of the time it works like that.

And that's a very important point because now nearly all the water heaters are working 10 million, that makes a lot of energy without any CO2, zero carbon emissions to heat the water.

And I think that in the very near future industrialization of heat pump will be a good way to move from a thermal heater to heat pump with an obvious stake and save of CO2 emission.

Electric vehicles, plug-in hybrid vehicles, EDF today has more than 1500 electric and hybrid vehicles in its fleet, in its own fleet.

But we have also partnerships with Toyota, with PSR, with Arnos to improve the technology and to improve the plug-in and to standardize the plug-in over the Europe.

Because obviously, when you have a vehicle you could maybe go to Italy with it or to Germany from France and you would like to refuel it when you are in this country.

And you need to have standardization of the plug, which is now nearly obtained. So the distributed generation is also a point that's very important. And I told you about the photovoltaic. I think it's in the future.

As a conclusion, I would say that to reach all these targets we need to have a market on the CO2 and a price on the CO2 and establish strong markets, because otherwise the solution won't come.

But I would say that even if tomorrow the cap-and-trade system will be launched and even if we generalize it over the world quickly, the price, not to burden the economy for the next coming year will be quite low.

So we still will need strong incentives in addition of the CO2 price. And this incentive must have a clear focus.

This clear focus from my point of view are insulation, heat pumps, photovoltaic and a de-carbonionization of the load curve generally of the electric generation, which means development of renewable and development of nuclear.

CERA, Douglas Howe

Global Energy Efficiency Conference here this week and have a chance to talk with you a little bit about a recently completed study that we have done at CERA which we call Strategies For a Leaner Europe; Meeting the Energy Efficiency Challenge.

20/20/20 goals

Those are 20 percent reduction in greenhouse gases, 20 percent of primary energy from renewables, and 20 percent reduction in primary energy from energy efficiency, all of this to occur within the next 11 years by 2020.

The 2020 goals have been talked about for quite a long time.

In fact, the history of it goes back to 2004 when they first started talking about a 9 percent reduction in energy from energy efficiency by 2016.

The first mention of the 20 percent by 2020 goal then came in 2005 and that was enshrined in policy in the first strategic energy review, which laid out the triple goal of 20/20/20.

Now, one thing that we have to keep in mind is that unlike the renewable energy goal and unlike the greenhouse gas goal, the energy efficiency goal is not binding yet on the member states of the European Union.

We performed a bottom-up analysis calculating end results on 18 different technologies.

We also included improvements from transmission and distribution systems and we also included an impact analysis for smart metering. In addition, we included the impact from plug-in hybrid electric vehicles. So we've taken a fairly comprehensive approach. We looked at it sectorally as well.

We looked at residential, commercial, industrial, and power sectors. By the power sector I mean specifically the effect on natural gas consumption from power generation.

So let's get to the results and talk a little bit about those. It's a mixed news story, let me just say that right up front. Our analysis shows that we can't get there by 2020.

Twenty percent reduction by 2020 is not a realistic goal. We can get about just under half way there, about 9 percent as this graphic illustrates. Now, some countries will perform considerably better than other countries.

This shows for example the United Kingdom is able to achieve a great deal more than other countries. That's largely because the United Kingdom has the most opportunity.

There is a very, very large stock of inefficient housing there. Sweden, on the other hand, looks like a laggard in this demonstration but actually it's because Sweden is already a very advanced and energy efficient society.

The news gets better when we move out to 2030. By 2030 we can make the goal of 20 percent. In fact, we can make it a little bit over. We can get to about 23 percent.

So really, I think what we show is that 2020 is not possible, 2030 is more like it. But there's really an important issue hiding behind this fact and that is and it's an issue that Jaana Remes from McKinsey also made as well.

That is between now and 2020 we're going to have to change a lot of what we do. And I'm going to talk a little bit more about that. The impact of that between now and 2020 is only going to the moderate.

The real savings start to kick in between 2020 and 2030. And this is largely because of the long turnover time that all of the appliances and the equipment that we have in our house and in our businesses have.

It's going to take a long time to turn that equipment over. So the longer we delay and defer in enacting these goals the more and more and more inefficient appliances and equipment gets implemented.

But then, again, obviously it takes a long time to work out of the system. Let's go and talk a little bit about what happens to electricity and then a little bit about what happens on the gas side.

This is actually a pretty interesting finding I believe. What we see is that on the electricity side by 2020 we can get to about an 8 percent reduction and then by 2030 we can get to a 20 percent reduction.

But more interesting than that, what it does effectively is to flatten electricity growth and that's a pretty phenomenal occurrence. I mean we don't find that we can get electricity growth to go negative, but we find that it is feasible with currently existing technology to get electricity growth to essentially go flat after about 2010, 2012, and remain there. That is even in the face of a growing economy and a growing population. Now, we also took a look at smart metering and wanted to see what the impact of that would be. Frankly, what we find is that smart metering can reduce the overall electricity consumption perhaps by about another one percentage point. But we don't find that smart metering is going to, by itself, make a tremendously huge contribution to conservation.

There may be many good reasons to be doing smart metering, but we think that its contribution to energy efficiency is going to be very modest.

Who is going to be responsible for giving these energy efficiency results? It's mostly going to have to come out of the residential sector.

There's at least 50 percent that's going to come from the residential sector and what kinds of technologies are going to deliver this result?

Two technologies deliver 45 percent of it. First standby and off mode switches.

Bringing them up to current available technology will save as much as 24 percent of current final consumption. That's a phenomenal number.

Lighting, including the current ban in 2012 on the incandescent lighting or most of it is going to provide a large bulk of the rest of it.


Let's turn the attention to gas because actually in the energy efficiency conferences that I've been to, including this one, the emphasis tends to be on the electricity side.

But really when you get right down to it gas is where the big savings are going to come from. And what this shows is that for the E.U. 27, the European 27 member nations, we can get down to about 13 percent and then a 26 percent reduction by 2030.

Now, let's put that in the context of where we are today. That means by 2030 we can reverse gas demand and get back to where we were in 1992, at a 1992 level.

That means we go from about 500 billion cubic meters down to about 340 cubic million meters. That's 160 less than we're consuming today.

Let me put that in context for you. The U.K., which is the largest consuming natural gas country in the European Union, consumes about 100 BCM.

So we're talking about a reduction that is at least 25 percent greater than the entire natural gas consumption of the UK. That is a fairly astonishing result in our opinion that you can actually contemplate that kind of a decline.

Where is the source of savings going to come from? Again, it comes from the residential sector. And what's going to deliver it? This is where I think the findings were really the most insightful for us. It's the ordinary household boiler.

Of all of the technologies that we looked at, the ordinary household boiler is the one that's going to deliver the results.

If we bring mandatory standards up to what is currently not best available technology, but is just the level of the technology of the currently available condensing boiler these kinds of savings will, in fact, kick in.

What are the implications? The implications are pretty big for everyone. If you're in the power industry the implications for infrastructure are quite large.

We calculate that it would be about 164,000 MW avoided just by flattening the electricity demand. Putting that into context, that's about 130 new nuclear plants that would be avoided because of things like incandescent light bulbs and standby and off mode switches.

Most of that is going to come out of new coal and coal with carbon capture plants, some new gas plants and some new nuclear plants.

All of those things will be affected and not be built in this scenario. Implications for gas infrastructure are even greater because as opposed to electricity we anticipate that on the gas side there are would actually be a decline back to 1992 levels.

That means that imports could go down by about 23 percent of total gas. That's about 125 BCM. Again, more than the entire consumption of the U.K. in avoided imports.

Now, that has clear implications for security of supply as this last winter's recent disagreement between Russia and the Ukraine has once again reminded us.

So there are very big implications here on the gas side. Certain LNG regasification plants, perhaps certain pipelines and certain storage facilities could experience rather low utilization rates under this kind of a scenario.

How much is this going to cost? It costs a lot. We shouldn't hide that fact from ourselves. Our calculation to 2030 is that this is going to cost about €500 [billion] to €700 billion nominal.

And smart metering is going to add another 50 to 70 billion, about another 10 percent on top of that. Now, admittedly in this day and age of bailouts that's a fairly ordinary number.

But €500 [billion] to €700 billion is nevertheless a very, very big number. What is the cost benefit of this? Well, we calculate that it's break even, again out to 2030, it's break even to a mildly positive cost benefit. For policymakers what do we need to think about?

Now, what are the implications of all of this? Well, first of all I'm going to echo my colleague, need to start early. If we're really serious about doing this we can't let inefficient appliances become more and more embedded into our society.

Second one for policymakers is this is not a laissez faire approach. The invisible hand of the market is not going to deliver these kinds of results even with the positive payback.

Our analysis indicates that consumers are currently purchasing about as much energy efficiency as they want.

And if we want to get this additional energy efficiency out of the population it's going to require a more forceful policy hand in terms of mandated minimum energy efficiency levels.

Costs are a significant and they're going to hit consumers squarely in the face. So policymakers are going to have to think about what kinds of mechanisms can they put in place to help consumers manage these kinds of costs.

For energy companies the implications are big and the stakes have never been bigger in this kind of future.

They are all going to have to reevaluate their infrastructure requirements and test new projects against the potential future of no growth or potentially negative growth.

That's a future that has never been faced in Europe since World War II. There has been year-over-year growth in electricity and in natural gas and Europe since World War II.

So this is a future that I think few energy companies are contemplating as even possible right now. They're going to be competing for a shrinking market that's never a wonderful thing if you're in a competitive market.

And so we think that companies are going to have to start looking for growth probably outside of Europe. New business ventures, we think that's energy efficiency could become as we call it the mobile telephone of the energy industry.

It's the substitute product that's going to take off. It's quite possible that energy efficiency will become a much more major business as the commodity markets shrink at least in this scenario.

Lastly, let me just say a word about smart metering networks. They can be useful for many reasons. As I've indicated before, we think that they will make a major impact on energy efficiency and conservation.

Nevertheless, if they are going to be put in place through mandated regulatory or legislative findings then we think they could possibly be a platform for innovation for energy companies. But there will be very big risks to those companies.

And, therefore, we don't see that any of the energy companies are probably going to undertake significant smart metering implementations without having some sort of regulatory recovery and coverage protecting them.

Douglas Howe, CERA

Edited by Carolyn Allen
| editorial | energy efficiency | energy savings |


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