ENERGY WATCH #2 - October 23, 2018
How to get the GET right (II): should we go for energy efficiency or nuclear power?
by Karel Beckman
I hope my readers will be annoyed by the question I am posing here: energy efficiency or nuclear power?
Is there a contradiction between the two? Well, yes and no.
The broader question I am tackling is how to realize the Global Energy Transition or GET (see How to get the GET right, part I).
Everyone knows of course that energy efficiency – reduction in energy demand – is crucial to achieving any kind of climate goals. All climate scenarios, whether they are from the IPCC or IEA or the German government (for its Energiewende), rely heavily on an acceleration of energy efficiency compared to the “normal” rate of improvement.
And yet this acceleration never seems to come.
The International Energy Agency (IEA) has just come out with a new edition of its annual report on energy efficiency and I am sure you already know what its major conclusions are. Yes, global “energy intensity” improved – as it has been doing for decades – but no, it did not improve enough.
“Global energy demand grew by 2% in 2017 after two years of low growth”, notes the report. “An increase in energy-using activities across many countries, regions and sectors outweighed ongoing progress on energy efficiency. Global energy intensity fell by 1.7% in 2017, the smallest annual improvement this decade.”
So, while it is true that “demand would be much higher if not for progress on energy efficiency”, at the same time, the potential for enhancing energy efficiency is much larger than is being used.
The IEA’s report includes an Efficient World Scenario (EWS) which shows “what would result if all available energy efficiency measures were implemented between now and 2040”, noting that “all these measures are cost-effective, based on energy saving alone, and use technologies that are readily available today.”
I hardly need to spell out the findings from the EWS for you. I am sure you are familiar with them:
- New financing mechanisms are vital to delivering the investment opportunity in the EWS.
- Current rates of progress in implementing energy efficiency policies will not be sufficient to realise the potential benefits presented by the EWS.
- The EWS shows that energy efficiency could deliver significant economic, social and environmental benefits, but only if governments take greater policy action.
- The EWS shows that efficiency levels for passenger cars could be much higher.
- Trucks could provide over 40% of potential energy savings in the EWS for road transport, but achieving this will require a significant step up from current trends.
- In the buildings sector, the EWS highlights the opportunity to improve efficiency per unit of floor area by nearly 40% compared with current levels.
- In the industry sector, the amount of value-added produced for each unit of energy could nearly double by 2040.
And so on.
Indeed, I looked at the IEA’s energy efficiency report from 2008 – i.e. ten years ago – and this drew essentially the exact same conclusions.
“Detailed analysis for IEA countries shows that improved energy efficiency continues to play a key role in shaping energy use and CO2 emissions patterns, but that the rate of improvement has slowed substantially”, notes this 2008-report.
“Results for a group of 16 IEA countries show that since 1990 about half of the increased demand for energy services has been met through higher energy consumption, and the other half through gains in energy efficiency. All sectors achieved efficiency improvements, which averaged 0.9% per year between 1990 and 2005. These improvements led to energy and CO2 savings of 15% and 14% respectively in 2005 (16 EJ and 1.3 Gt CO2). This translates into fuel and electricity cost savings of at least USD 180 billion in 2005.”
However, the report adds, “the efficiency gains are about half those seen in previous decades; energy efficiency improvements averaged 2% per year between 1973 and 1990. Therefore, over the longer term, the savings from improved energy efficiency have been even more significant. Without any energy efficiency gains since 1973, energy use in a group of 11 IEA countries would have been 58% higher in 2005 than it actually was. This is the equivalent of 59 EJ of energy not consumed…. Despite the recent improvements in energy efficiency, there still remains a large potential for further energy savings across all sectors.”
If we keep on drawing these same conclusions, should we perhaps examine their underlying assumptions? Could it be that the “potential” that is being identified will never be realized, despite all good intentions?
It seems we are up against the long-known “energy efficiency paradox”, already identified by English economist William Stanley Jevons in 1865 (!), long before the IEA existed.
As Wikipedia notes, the Jevons paradox occurs “when technological progress increases the efficiency with which a resource is used (reducing the amount necessary for any one use), but the rate of consumption of that resource rises due to increasing demand.”
However, “governments and environmentalists generally assume that efficiency gains will lower resource consumption, ignoring the possibility of the paradox arising.”
The issue has been examined by modern economists “studying consumption rebound effects from improved energy efficiency. In addition to reducing the amount needed for a given use, improved efficiency also lowers the relative cost of using a resource, which increases the quantity demanded. This counteracts (to some extent) the reduction in use from improved efficiency. Additionally, improved efficiency accelerates economic growth, further increasing the demand for resources. The Jevons paradox occurs when the effect from increased demand predominates, and improved efficiency increases the speed at which resources are used.”
The following graph from the IEA’s Energy Efficiency 2018 report shows the stark reality of energy use and energy saving in the world:
Despite considerable energy savings, energy demand keeps growing relentlessly.
Mind you, the insufficient progress in energy efficiency is deadly serious business. If the world keeps lagging in its energy efficiency targets, the Global Energy Transition cannot be achieved according to the scenarios currently in play.
Another argument, I would say, for a carbon tax (see previous article).
It could also be an argument, though, for nuclear power.
What does energy efficiency have to do with nuclear power?
On Sunday 21 October, the pro-nuclear “ecomodernist” citizens movement Nuclear Pride, led by activist-scholar Michael Shellenberger, held a demonstration – a Nuclear Pride Fest – in Munich, Germany, in favour of nuclear power.
I wrote about Shellenberger and his initiative before on Energy Post.
One important argument of Shellenberger is that, as he puts it, “people want a high-energy life”.
“Ecomodernists”, as this group call themselves, don’t believe in energy saving as a goal in itself. “You want to increase the amount of energy you use”, Shellenberger said. “Living in a city uses a lot of energy. Going on holidays does too.”
“Opponents of nuclear energy advocate energy saving”, writes Rainer Klute, Chairman of the German pro-nuclear movement Nuklearia, who was involved in the event in Munich. “Expensive electricity for them is not a disadvantage of renewable energy, but a necessity. High cost of energy is to them a means of discouraging energy consumption.”
Supporters of nuclear power, however, don’t believe in lower energy use as a solution, notes Klute. “On the contrary: in their view, a generous supply of energy is indispensable for a high standard of living. For this reason energy must be available at a low price, also for lower-income groups.”
None of this is meant to imply that energy efficiency and energy saving are not important They obviously are. But they may never deliver the results expected of them. And maybe we should not even want them to: what we want is a decoupling of economic growth with CO2 emissions, not necessarily a decoupling of economic growth with energy use.