Future new builds, which are energy intensive, will mostly take place in developing countries rather than advanced economies. Construction site in Dubai. Photo credit: S. Irfan Ahmed / IPS.WASHINGTON, Dec. 16 (IPS) – Energy efficiency (RE) is often marketed as a tool to save energy and money. The oft-repeated mantra does “more with less”, namely to produce more goods with less energy. However, as pointed out in a recent World Bank report I co-authored, EE can do something that is often more important to developing countries: it can produce the extra goods and services needed to raise living standards.
Shifting the focus from savings to more goods and services can help increase RE adoption in developing countries so that they can grow faster while promoting a more sustainable future for all.
The use of RE in these countries has suffered from a narrative that too often targeted advanced economies.
From the European Union to Japan to the United States (under previous administrations and likely under the future Biden administration), EE has generally been positioned as a tool for achieving energy savings. Various other benefits are also recognized, in particular job creation and increased competitiveness, which are often used to mobilize local political support.
However, the focus remained on RE’s ability to reduce things: energy use, as well as spending on energy and, more recently, greenhouse gas emissions. Indeed, through a combination of RE and other factors, large developed countries have managed to reduce their energy consumption and plan to use RE to achieve further reductions in the future.
In developing countries, there is another context in which the standard of living is all too often inadequate. In these countries the key to progress is to generate more and better quality goods and services for their people: more and better housing, better and better consumer goods, better and better transportation services, better and better office buildings, better and better schools, more and better hospitals – but also less pollution. The main focus is on producing and consuming more, rather than using less.
Developing countries want to save more energy in order to drive this progress forward. From India to Indonesia, from South Africa to South America, developing countries are likely to need more and more energy.
Total energy consumption in today’s developing countries is expected to increase by around 30% between 2015 and 2030. From this point onwards, it will almost double the energy consumption of industrialized countries (Figure 1). This dependence of developing countries on increasing energy use to support their economic growth (as opposed to advanced economies, where energy demand has generally already peaked) partly reflects their developmental position.
For example, future new construction, which is an energy-intensive activity, will mainly take place in developing countries rather than advanced economies, including emerging markets such as India, where over 70% of the built environment still needs to be built by 2030.
Figure 1: Development of energy consumption in developing and industrialized countries. Source: Energy and Development in a Changing World: A Framework for the 21st Century (Center for Global Energy Policy at Columbia University, 2019), Figure 3, based on data from IEA.EE, can ensure that this increasing energy consumption is efficient used will increase the standard of living. In the context of developing countries, the focus is less on generating “more with less” energy and more on generating “even more from more” energy.
RE not only helps to decouple GDP growth from energy consumption, it also helps to amplify the effects of increasing energy consumption on further economic expansion. Additionally, EE can be particularly strategic for governments during these COVID times as its use creates jobs (e.g. hiring workers to install energy efficient devices).
Coupling RE and more energy can also bring benefits at household and company level. Many of the poorer families in Asia, Africa and elsewhere would like to have the opportunity to increase their consumption of modern energy sources, for example for a refrigerator and other household appliances that generate the higher standard of living elsewhere.
Using efficient equipment is even better, adding to the benefits of easy power access, for example. Similarly, companies in developing countries are trying to expand their operations, increase production, and enlarge their markets in order to generate greater revenues that enable them to buy more energy to produce and sell even more. EE can help you do this more efficiently and profitably.
Unfortunately, traditional EE metrics are sometimes poorly adapted to many contexts in developing countries. This includes metrics such as energy consumption / apartment, energy for room cooling / square meter or energy for water heating / apartment.
“Progress” is usually indicated by lower levels. . . This makes perfect sense in advanced economies, whose populations will continue to enjoy a high standard of living, even if the energy savings generated by RE offer several advantages (e.g. energy security for the European Union).
In developing countries, purchasing that first refrigerator (which increases energy consumption in the home) or installing air conditioning in public buildings (which increases energy consumption in areas previously cooled by fans) leads to an inadequate standard of living.
Regardless of what could be deduced from a quick (albeit incomplete and inadequate) scan of RE indicators in the context of developing countries, this increased energy consumption per apartment or per square meter of office space reflects progress. It’s evolution. . . and EE helps ensure that the equipment is efficient for this advance.
EE is also the key to achieving global climate protection goals. For example, in the International Energy Agency’s Climate Model for Sustainable Development, RE plays a bigger role (37%) in reducing emissions by 2050 than any other low-carbon instrument, including renewables (32%).
This climate model also envisages increasing energy consumption by non-OECD countries (an increase of 16% between 2016 and 2040) to fuel their future economic expansion. Combining more RE to support GDP growth along with deeper penetration of renewable energy and other low carbon technologies is key to increasing living standards in developing countries while meeting global climate goals.
Achieving these goals will avoid the worst effects of climate change that could destroy the vulnerable in developing countries and elsewhere. When it comes to using more RE, the challenge of climate change has turned it from a “beautiful thing” to an “imperative”.
RE is a key to creating more prosperity in developing countries, as it enables even more goods and services to be generated from higher energy consumption in order to raise living standards.
For developing countries it is not a question of “achieving more with less”, but rather “doing more with more”. As shown in the World Bank report mentioned above, shifting the focus of RE from energy savings to the additional goods and services it produces can help improve use in developing countries. . . and this will promote stronger and more sustainable economic growth and social improvement.
Philippe Benoit has worked in international development issues for over 25 years, including in previous positions as department head for energy efficiency and the environment at the International Energy Agency and as an energy sector manager at the World Bank. He is currently Managing Director for Energy and Sustainability at Global Infrastructure Advisory Services 2050.
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