Lighting the Way: Toward a Sustainable Energy Future

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  • 2.1 Assessing the potential for energy-efficiency improvements

    Improvements in the efficiency of energy transformation and use have long been tightly linked to the development of modern industrial societies. Almost two and a half centuries ago, the Watt steam engine improved on the efficiency of previous designs by a factor of three or more, ushering in a revolution in the practical application of steam power. This development led to any number of sweeping societal and technological improvements, but it also had the effect of increasing demand for coal. In fact, changes in the efficiency and precision with which energy can be put to use have played at least as large a role in driving the social transformations associated with industrialization as has the simple expansion of available energy supplies.

    The technological and social dynamics that determine energy demand are of central importance to managing energy systems. Total demand for primary energy resources depends on both the efficiency of the processes used to convert primary energy to useful energy and the intensity with which useful energy is used to deliver services. For example, total demand for a primary resource like coal depends not only on the efficiency with which coal is converted to electricity (where efficiency is a dimensionless quantity that reflects the ratio of energy output to energy input in the conversion process),17 but also on the intensity with which electricity is used to deliver services such as lighting or refrigeration.

    Maximum energy savings can be achieved by comprehensively exploiting opportunities to improve conversion efficiencies and reduce end-use intensity throughout the energy supply chain, ideally also taking into account the lifecycle properties and content of different products, as well as the potential for substituting alternative products or services (Figure 2.1). To what extent theoretically available efficiency gains will be captured, however, depends on a number of factors. A first issue is obviously cost: many, if not most, consumer and company decisions are driven first and foremost by bottom-line considerations. Even where efficiency improvements are highly cost-effective (in the sense that the higher first cost of the more efficient technology is quickly recouped in energy-cost savings), they may be adopted only slowly; some of the reasons for this are reviewed in the discussion of market barriers in the next section.

    Other factors that affect the uptake of new technology have to do with the social and economic systems in which energy use is embedded. Simply

















    Figure 2.1 The energy chain
    Note: Energy flow is shown from extraction of primary energy to provision of needed services.
    Source: UNDP, UNDESA, and WEC, 2004.

    replacing an incandescent light bulb, which typically produces 10–15 lumens per watt, with a compact fluorescent that delivers over 50 lumens per watt will generate significant and readily quantifiable energy savings. But far greater intensity reductions (as well as ancillary energy and cost savings from, for example, downsizing space-cooling equipment) can often be achieved by deploying comprehensive strategies that also make use of improved lighting design, better sensors and controls, and natural light. Which lighting technologies and systems are adopted—and how much of this technical potential is ultimately realized—will depend, of course, on a host of other factors, among them human preferences for particular color-spectra, spatial distributions, and ratios of direct to indirect illumination. Such preferences are often culturally determined, at least in part, and can change over time. At the same time, continued technology development can overcome intial trade-offs between increased efficiency and other product attributes.

    Further complexities arise when assessing the potential for energy intensity reductions in the transport sector. As with lighting (and leaving aside for a moment the larger intensity reductions that could undoubtedly be achieved through better urban planning and public transportation systems), it is technically possible to deliver personal mobility for as little as one-tenth the primary energy consumption currently associated with each passenger-kilometer of vehicle travel.18 Despite significant technology advances, however, average passenger-car fuel-economy has not changed much, at least in part because improved efficiency has been traded off against other vehicle attributes, such as interior volume, safety, or driving performance (e.g., acceleration). The situation is further complicated by the fact that energy—while obviously critical to the provision of mobility and other services—is only one of many factors that play a role in determining how those services are provided: fuel costs, for example, may comprise only a relatively small percentage of total transportation expenditures.

    Similar arguments may be generalized across many kinds of energy systems. Technology innovations play a central role by enabling reductions in energy use, but their effect on overall energy consumption is often difficult to predict. Put in microeconomic terms, such innovations shift the production function for various services (such as mobility or illumination) and change the amounts of various inputs (energy, material, labor) required to produce a given level of satisfaction (utility). Typically, technology innovations create opportunities to save energy, save other inputs, or increase utility (Figure 2.2).

    Actual outcomes depend on how users take advantage of these opportunities. In some cases, technological innovations that could be used to reduce energy consumption are directed to other objectives: automotive technology, for example, has advanced dramatically in recent decades, but much of this improvement has been used to increase vehicle size and power. At a macro-economic level, technology improvements that boost efficiency and productivity can also be expected to stimulate economic growth, thereby contributing to potentially higher levels of overall









    Figure 2.2 Technology innovation and the production function

    consumption in the long run, albeit at a lower level of energy intensity. Simple economic theory suggests that if efficiency improvements reduce the energy-related costs of certain activities, goods, or services, consumption of those activities, goods, or services would be expected to rise.

    Further complicating matters is the tendency in modernizing economies toward ever more conversion from primary forms of energy (such as biomass, coal, or crude oil) to more useful or refined forms of energy (such as electricity and vehicle fuel). On the one hand, these conversion processes themselves generally entail some inevitable efficiency losses; on the other hand these losses may be offset by much more efficient end uses. Historically, the move to electricity certainly had an enormous impact on end-use efficiencies and on the range of amenities and activities available to people.

    How significant these ‘rebound’ or ‘take-back’ effects are in reality, and to what extent they offset the energy savings that result from efficiency improvements, has been extensively debated in the relevant literature. In industrialized countries, observations and theory suggest that (a) improvements in energy efficiency have indeed reduced the growth of energy demand over the last few decades, and (b) the economic stimulus from efficiency improvements has not played a significant role in stimulating energy consumption. This result is not unexpected, since energy costs are relatively small when compared to total economic activity for most industrialized countries.19 The situation may be less clear over longer time scales and in developing-country contexts, where there may be unmet demand for energy services and where energy costs represent a larger fraction of the economic costs of services. In these cases, energy-cost savings may be invested in expanding energy supply or other essential services and it is more plausible that macroeconomic feedbacks will offset some of the demand reductions one might otherwise expect from efficiency improvements.

    This debate misses an essential point: improvements in energy efficiency will lead to some complex mixture of reduced energy use and a higher standard of living.20 Given that economic growth to support a higher standard of living is universally regarded as desirable and necessary, especially for the world’s poor, concomitant progress toward improved efficiency and lower carbon intensity is clearly preferable to a lack of progress in terms of advancing broader sustainability objectives. Put another way, if growth and development are needed to improve people’s lives, it would be better—for a host of reasons—if this growth and development were to occur efficiently rather than inefficiently and with lower rather than higher emissions of carbon dioxide.

    Today, even countries at similar levels of development exhibit a wide range of overall energy and carbon intensities (i.e., energy consumed or carbon emitted per unit of economic output). This variation is a function not only of technological choices but of different economic structures, resource endowments, climatic and geographic circumstances, and other factors. On the whole, past experience suggests that energy-efficiency improvements do tend to accompany technological progress, albeit not at a pace sufficient to offset overall growth in demand. Moreover, the efficiency gains realized by the marketplace absent policy intervention usually fall well short of engineering estimates of cost-effective potential. Before exploring specific prospects for further energy-intensity reductions in different end-use sectors it is useful to review, in general terms, some of the likely reasons for this gap.