1. Energy and Economic Competitiveness
Energy and Economic Competitiveness Workshop
9 May 2016
Jon HANSEN
Energy Analyst,
Global Energy Policy, IEA

2. Economic competitiveness
«Economic competitiveness refers to the productivity of an entire economy – industry, agriculture and services – relative to others»,
«Industrial competitiveness refers to the relative productivity of industry and thus its ability to compete internationally.» (IEA, WEO 2013)

3. Broader benefits Improve stability and reability of production systems
Lower maintance needs
Improve product quality
Reduce waste streams
Boost disposable household incomes
Raise economic growth
Cut airborne emissions of pollutants
Lower greenhouse gases

4. Who has the energy to compete?
Ratio of industrial energy prices relative to the United States
Natural gas
Electricity 3× 4× 5×
Reduction from 2013
2003
2035
2013
2003 2×
United States
Japan
European
Union
China
Japan
European
Union
China
Regional differences in natural gas prices narrow from today’s very high levels but remain large through to 2035; electricity price differentials also persist
electricity price differentials also persist
IEA, World Energy Outlook 2013

5. Energy-intensive industries need to count their costs
Share of energy in total production costs for selected industries
10%
20%
30%
40%
50%
60%
70%
80%
90%
Petrochemicals
Fertilisers
Aluminium
Cement
Iron & steel
Pulp & paper
Glass
Energy-intensive sectors worldwide account for around one-fifth of industrial value added, one-quarter of industrial employment and 70% of industrial energy use.
IEA, World Energy Outlook 2013

6. Average estimated electricity prices for electric arc furnaces in selectet countries, 2013
IEA, World Energy Outlook 2014

7. Energy efficiency and competitiveness
Estimated unit production cost of a plastic bottle
Exploiting the full efficiency potential
3.4 cents
3.0 cents
26%
18%
63%
56%
While energy efficiency only partially helps in energy-intensive industries, cross-sectoral efficiency policies stimulate overall economic competitiveness.
IEA, World Energy Outlook 2014

8. The effect of falling fossil fuel prices on plastic products
Estimated unit production cost of a plastic bottle (2014)
Estimated unit production cost of a plastic bottle (2016)
Falling oil prices have reduced production costs drastically across the world, though the Middle East and the United States remain by far the lowest cost producers

9. Material efficiency strategies
Change in energy demand of selected energy-intensive materials in
the Material Efficiency Scenario by measure
New Policies Scenario
Material Efficiency Scenario
This slide also illustrates some of the technology advandtages that EE can bring
Material efficiency can save more energy in 2040 than Germany demands today. Reuse/recycling and lightweighting account for almost two-thirds of the savings.
IEA, World Energy Outlook 2014

10. Material efficiency holds the largest potential in Asia
Change in energy demand by region in the Materials Efficiency Scenario relative to the New Policies Scenario, 2040
-100
-80
-60
-40
-20
China
India
Russia
European
Union
Middle
East
United
States
Rest of
non-OECD
OECD
Mtoe
-14%
-21%
-17%
-19%
-16%
-12%
Steel
Paper
Plastics
Cement
Aluminium
Material efficiency has the largest impact on economies with recently developed or quickly expanding energy-intensive industries, including China and India.
IEA, World Energy Outlook 2014

11. Some policy recommendations
Increase energy efficiency in existing processes
Set mandatory and high standards
Increase awareness of potential savings
Increase R&D in energy-intensive industries
Complete market liberalisation in wholesale and retail markets
Encourage the development of indigenous sources of energy

12. Energy Security
Environmental Protection
Economic Growth
Engagement Worldwide