How will the benefits of energy efficiency impact the industrial sector?
To date, energy efficiency has been systematically measured by reductions in energy demand and greenhouse gas emissions. But according to the 2014 International Energy Agency (IEA) report, “Capturing the multiple benefits of energy efficiency,” a multiple-benefits approach to energy efficiency—focusing on macro-economic development, public budgets, health and well-being, industrial productivity, and energy delivery—reveals a broader range of potential positive impacts.
A big challenge in energy efficiency policy is accounting for the rebound effect. Improved energy efficiency often results in more energy use, rather than demand reduction, thereby deviating from the initial energy saving targets. Increased energy efficiency can be directed toward more productive and value-adding activities, resulting in improved competitiveness and economic growth, boosting market share and increasing energy needs.
Taking this multiple benefits perspective, the rebound effect could contribute to other economic and social objectives. This approach enables a greater understanding of the potential of energy efficiency and could accelerate the shift of energy efficiency from its status as “hidden fuel” to its emerging role as “first fuel.”
While industrial energy efficiency is improving, large potential remains untapped. Including the additional benefits in the decision-making processes can improve the attractiveness of energy efficiency investments and measures in industry. It is often claimed that energy efficiency is not part of the core business and hence not of strategic importance to companies. Considering a wider range of benefits and demonstrating their direct impact on business processes and productivity—by reducing costs, increasing value or mitigating risk—can strengthen the business case for energy efficiency investments.
One example from the IEA report of the multiple benefits approach is an energy efficiency project by a Danish company. The company wanted to reduce energy demand in the production of liquid gases. The new system led to a reduction of the temperature of the cooling water, reducing the energy demand. It also reduced the amount of required process chemicals, which, in turn, reduced the need for corrosion inhibitors. In addition, the company noted reduced labor costs, less down time, reduced negative environmental impacts and an improved work environment.
Including multiple benefits in the evaluation of energy efficiency programs in industry is valuable for the industry itself but also for policy makers, the financial industry and in evaluating energy efficiency programs. From a policy-making perspective, assessing industrial benefits can enhance energy efficiency program participation and help to show the broader value of the program, which in turn helps accessing funding. A better understanding of industrial benefits can also help policy makers to improve program design, and better address the industry needs and priorities.