1. © OECD/IEA - 2007 INTERNATIONAL ENERGY AGENCY Carbon abatement through energy efficiency: the biggest opportunity yet the greatest challenge Paul Waide Senior Policy Analyst International Energy Agency 8th December 2007 COP-13 REEEP Side-event: Sustainable Growth through Energy Efficiency, Bali

2. IPCC What the world needs… Long term mitigation [1] [1] The best estimate of climate sensitivity is 3ºC [WG 1 SPM]. [2][2] Note that global mean temperature at equilibrium is different from expected global mean temperature at the time of stabilization of GHG concentrations due to the inertia of the climate system. For the majority of scenarios assessed, stabilisation of GHG concentrations occurs between 2100 and 2150. [3][3] Ranges correspond to the 15 th to 85 th percentile of the post-TAR scenario distribution. CO 2 emissions are shown so multi-gas scenarios can be compared with CO 2 -only scenarios. Stab level (ppm CO2-eq) Global Mean temp. increase at equilibrium (ºC) Year global CO2 emissions need to peak Year global CO2 emissions return to 2000 level Change in 2050 global CO2 emissions compared to 2000 445 – 4902.0 – 2.42000 - 20152000- 2030-85 to -50 490 – 5352.4 – 2.82000 - 20202000- 2040-60 to -30 535 – 5902.8 – 3.22010 - 20302020- 2060-30 to +5 590 – 7103.2 – 4.02020 - 20602050- 2100+10 to +60 710 – 8554.0 – 4.92050 - 2080+25 to +85 855 – 11304.9 – 6.12060 - 2090+90 to +140 The scale of mitigation efforts over the next two to three decades will determine the opportunities to achieve lower stabilization levels

3. © OECD/IEA - 2007 …is not what it will get without massive change: WEO Reference Scenario Global primary energy demand Global demand grows by more than half over the next quarter of a century, with coal use rising most in absolute terms 0 2 4 6 8 10 12 14 16 18 198019902000201020202030 billion tonnes of oil equivalent 0 2 4 6 8 10 12 14 16 18 198019902000201020202030 billion tonnes of oil equivalent Other renewables Biomass Hydro Nuclear Gas Oil Coal

4. © OECD/IEA - 2007 WEO Alternative Policy Scenario: Global Energy-Related CO 2 Emissions Global emissions grow less than half as fast as in the Reference Scenario, stabilising in the 2020s 10 15 20 25 30 35 40 45 50 198019902000201020202030 billion tonnes (Gt) Reference Scenario 42 Gt Alternative Policy Scenario 34 Gt 19% 27 Gt

5. INTERNATIONAL ENERGY AGENCY Improved end-use efficiency accounts for two-thirds of avoided emissions in 2030 in the APS Alternative Policy Scenario Reference Scenario Increased nuclear (10%) Increased renewables (12%) Power sector efficiency & fuel (13%) Electricity end-use efficiency (29%) Fossil-fuel end-use efficiency (36%) 26 30 34 38 42 200420102015202020252030 Gt of CO 2 Alternative Policy Scenario: Key Policies for CO 2 Reduction © OECD/IEA - 2007

6. CO 2 Emissions - 450 Stabilisation Case By 2030, emissions are reduced to some 23 Gt, a reduction of 19 Gt compared with the Reference Scenario 10 15 20 25 30 35 40 45 200520102015202020252030 Gt of CO 2 CCS in industry CCS in power generation Nuclear Renewables Switching from coal to gas End Use electricity efficiency End Use fuel efficiency Reference Scenario 450 Stabilisation Case 27 Gt 42 Gt 23 Gt Energy-Related CO 2 Emissions

7. In support of the G8 Plan of Action Energy Use in the New Millennium Trends in IEA Countries ENERGY INDICATORS © OECD/IEA 2007 Energy efficiency is the “Biggest Fuel” and the cleanest: historical impact for IEA-11 56% Actual energy use Hypothetical energy use without efficiency improvements Savings Actual energy use Energy savings due to energy efficiency improvements ~5.5 Gt CO 2 If whole world has followed the same trend global abatement from energy efficiency gains over 30 years amount to ~15 Gt CO 2 per annum

8. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Avoiding 1 billion tonnes of CO 2 per year Coal CO 2 Sequestration Nuclear Wind Solar PV Replace 300 conventional, 500-MW coal power plants with “zero-emission” power plants, or... Install 200 x current US wind generation in lieu of unsequestered coal Install 1300 x current US solar generation in lieu of unsequestered coal Install 1000 Sleipner CO 2 sequestration plants Build 140 1-GW power plants in lieu of unsequestered coal plants Efficient lighting Replace all inefficient lamps with efficient ones such as CFLs, LEDs, Ceramic Metal Halide

9. In support of the G8 Plan of Action Energy Use in the New Millennium Trends in IEA Countries ENERGY INDICATORS © OECD/IEA 2007 Large performance differences still exist e.g. final energy intensity across the IEA14

10. In support of the G8 Plan of Action Energy Use in the New Millennium Trends in IEA Countries ENERGY INDICATORS © OECD/IEA 2007 E.g. manufacturing energy intensity adjusted to a common IEA19 structure

11. © OECD/IEA - 2007 Just over half of all investment needs to 2030 of $22 trillion are in developing countries, 17% in China & another 6% in India alone Reference Scenario: Cumulative Investment in Energy- Supply Infrastructure, 2006-2030 Gas 19% Coal 3% Electricity 53% Oil 24% Biofuels 1% Power generation 51% 49% Other Refining 73% 22% 5% Exploration and development LNG chain Transmission and distribution 55% 37% 8% Mining Shipping and ports 10% 90% $5.4 trillion $11.6 trillion $4.2 trillion $0.6 trillion Exploration and development Transmission and distribution Total investment = $21.9 trillion (in $2006)

12. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Difference in global electricity investment in the Alternative vs. Reference Scenario 2003-2030 Additional investments on the demand side are more than offset by lower investment on the supply side -2 000 -1 500 -1 000 - 500 0 500 1 000 billion dollars (2000) Difference Additional demand-side investment Efficiency measures Avoided supply-side investment Generation Transmission Distribution

13. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Efficiency: both the greatest and cheapest source of mitigation potential

14. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Courtesy: P. Davidson BRE Example: UK residential buildings

15. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Policy is needed: the market doesn’t deliver all cost-effective savings Missing or partial information on EE performance and lack of common metrics Missing or partial information on EE performance and lack of common metrics Lack of awareness re cost-effective savings potentials – low visibility Lack of awareness re cost-effective savings potentials – low visibility Split incentives: Capital vs. O&M budgets Split incentives: Capital vs. O&M budgets EE often a minor determinant of capital- acquisition decisions EE often a minor determinant of capital- acquisition decisions EE is bundled-in with more important capital decision factors EE is bundled-in with more important capital decision factors All result in emphasis on 1 st not Life-cycle costs All result in emphasis on 1 st not Life-cycle costs

16. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE A comprehensive policy package is needed to deliver these savings Policy must identify and address all barriers to be successful Policy must identify and address all barriers to be successful The broad economic issues of energy prices, technology costs and financing are just one set The broad economic issues of energy prices, technology costs and financing are just one set Stimulating a massive increase in awareness of actors at all levels is essential Stimulating a massive increase in awareness of actors at all levels is essential Stronger and more comprehensive regulatory measures needed to correct market failures Stronger and more comprehensive regulatory measures needed to correct market failures Capacity building at all levels is required Capacity building at all levels is required Compatible supporting instruments are needed Compatible supporting instruments are needed

17. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Annual expenditure on energy and climate-change related activities

18. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Conclusions: energy efficiency Energy efficiency presents a huge under- exploited cost-effective GHG saving opportunity Energy efficiency presents a huge under- exploited cost-effective GHG saving opportunity It merits being the single greatest focus of GHG abatement strategies in near and medium-term It merits being the single greatest focus of GHG abatement strategies in near and medium-term The most effective policy approaches address all barriers by applying portfolios of measures and by being rigorous in design, implementation and evaluation The most effective policy approaches address all barriers by applying portfolios of measures and by being rigorous in design, implementation and evaluation EE is cheap but is not free. Current resource allocation is insufficient, imbalanced and often disjointed EE is cheap but is not free. Current resource allocation is insufficient, imbalanced and often disjointed