Energy efficiency: Is the 'fifth fuel' the cheapest?

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11 February 2015

LONDON: Energy efficiency has recently been labelled the 'fifth fuel' for being in effect the ‘cheapest and cleanest’ choice for balancing energy supply and demand in a sustainable world, with a number of recent studies supporting the argument.

The Climate Group is actively involved in promoting energy efficiency measures, explains Subaskar Sitsabeshan, Project Manager at The Climate Group: “Combined with a huge scale-up of clean technologies, we are well aware of the vital role energy efficiency will play in our low carbon future. 

Lighting in particular harbors huge potential for emission reductions though energy efficiency. Lighting currently accounts for nearly 6% of global CO2 emissions, so The Climate Group is encouraging utilization of low carbon Light Emitting Diode (LED) street lights in cities all over the world through pilot studies, which have so far proven successful. Full scale implementation of energy efficiency measures like this have the power to accelerate our pace toward a safer, smarter world for us all.”

The International Energy Agency (IEA) estimates that since the 1970s, energy efficiency improvements in 11 countries saved the equivalent of 1,337 million tons of oil in 2011, worth US$743 billion. This figure is larger than the combined total energy consumption in the European Union or Asia (excluding China) for the same year.

Recent estimates from American Council for an Energy Efficient Economy also show that on average it costs utilities US$2.8 to reduce electricity consumption by 1 kilowatt-hour. This value is two or three times lower than the cost of generating the same amount of electricity at a power plant.

Understandably, the importance of energy efficiency in our low carbon energy future is central to sustainable business discussions.

Last week, during a panel organized in London by the International Renewable Energy Agency, Michael Liebreich, Chairman of the Advisory Board at Bloomberg New Energy Finance, explained how energy efficiency is triggering market shifts such as decentralized renewable energy. He said: “Energy efficiency is removing demand at a great rate. The current market is described by a flat or falling demand for energy in the developed world and growing demand for different forms of decentralized energy generation.

"Sitting near to the consumers, helping them to install renewable technologies and manage their energy demand in an efficient way is going to be a winning business."


Commonly associated with savings in buildings and lighting systems, energy efficiency measures are also becoming increasingly popular also in the transport sector.

IEA estimates fuel expenditure may even be reduced by US$40 to US$189 billion annually by 2020, if the right energy efficiency improvements in the transport sector are implemented.

A major initiative in this sense was launched last month in the UK, to test prototypes for driverless cars. Large scale implementation of this cutting-edge technology is expected to drastically reduce traffic congestion, and considerably lower emissions in the mobility sector.  


The financial market is also indicating an increasing interest in energy efficiency, as larger and larger amounts of public finance are being committed to related investments.

For example, in 2013, German public investment bank, KfW, invested €16 billion (US$18 billion) in energy efficiency. The European Investment Bank also contributed €2.1 billion (US$2.37 billion), and Caisee Des Dépots in France and the Green Investment in the UK respectively contributed €453 million (US$511 million) and €181 million (US$204 million) in 2012, in energy efficiency investments.

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by Arianna Tozzi

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