Age of efficiency?

29 November 2013

It may be the least thrilling component of the energy equation, but energy efficiency is beginning to emerge from the shadows as policymakers and businesspeople alike start to discover and appreciate its true value.

In fact, the International Energy Agency's latest 'World Energy Outlook' (WEO) notes that energy efficiency is set to supply more additional energy than oil through to 2035. The report's authors also hail energy efficiency as the only 'fuel' that can simultaneously meet economic, energy security and environmental objectives and have, therefore, decided to dedicate a chapter to the issue in all future reports.

Under the WEO's 'New Policies Scenario' (premised on the continuation of existing policies and the cautious implementation of announced policies that have not yet been executed), energy demand to 2035 is forecast to rise by one-third, compared with the 45% rise that could occur based on current policies. That would equate to a saving of 1 260-million tons of oil equivalent in 2035 and reduce the amount of energy required to generate a unit of gross domestic product (GDP) by 37%, compared with prevailing levels.

Under the scenario, industry would account for 37% of the efficiency-related primary energy savings and buildings 26%. The bulk of the savings would be made in the area of electricity, led by efficiency improvements in electric motor systems, stricter standards for appliances, and more efficient lighting. However, global investments of $8.1-trillion would be required over the period to facilitate such savings.

Already some gains have been recorded, with the amount of energy used to produce a unit of GDP declining by 1.5% in 2012, compared with an average annual decline of just 0.4% between 2000 and 2010. The WEO attributes the improvement to government-led initiatives, precipitated by higher energy prices and a desire to improve economic competitiveness.

However, the report warns that two-thirds of the economic potential for energy efficiency is set to remain untapped over the period unless market barriers are overcome. "One such barrier is the pervasive nature of fossil-fuel subsidies, which incentivise wasteful consumption at a cost of $544-billion in 2012," the authors assert.

For its part, South Africa is also starting to make some important, albeit still too modest, efficiency strides. Earlier this month, for instance, the National Treasury published Section 12L of the Income Tax Act, which effectively allows deductions calculated at 45 c/kWh for certified savings.

The incentive announcement was made as energy efficiency practitioners gathered in Johannesburg for the eighth Southern African Energy Efficiency Convention, where both opportunities and problems in relation to the country's efforts to improve energy efficiency were aired.

The National Business Initiative also used the platform to announce that it would be launching a Private Sector Energy Efficiency project, aimed at improving the energy efficiency of commercial and industrial companies of various sizes in South Africa.

In the same week, the Department of Trade and Industry reinforced the energy efficiency component of the R5.8-billion Manufacturing Competitiveness Enhancement Programme (MCEP) – a scheme that received a mention in the WEO report. The department urged manufacturers to dip into the 'green' aspects of the MCEP, saying that more efficient and cleaner production methods could emerge as an important further competitive advantage.

However, there is no question that far more needs to be done to cement the linkage between energy efficiency and competitiveness, which could, in turn, consolidate the role of energy efficiency in dealing with South Africa's current energy and competitiveness challenges.

This article was sourced from Creamer Media.

The original article can be found here.