Global energy use is shifting. It is hard not to notice plunging prices for oil, coal and natural gas. In the past, whenever fossil fuels became cheaper, usage increased – but carbon emissions are not rising in response this time – at least not yet. Plunging prices for renewables and energy storage are also increasing, contributing to new product substitution for fossil fuels, but what about energy efficiency?
The International Energy Agency observed “An energy sector transition is underway in many parts of the world”. 2015 was the first year in human history that carbon emissions fell even as the world economy grew. Bloomberg New Energy Finance’s 2015 Sustainable Energy in America Fact Book states “There has been an outright decoupling between electricity growth and economic growth.” In short, global and American economic growth is being separated from fossil fuel consumption. This was not thought possible by many people a few years ago, and still not believed possible by some doubters today. But for over thirty years, another group (that includes many clean energy proponents such as Amory Lovins) has been arguing correctly that an absolute transition away from fossil fuels was not only possible, but necessary.
To add to the 2015 milestones, the COP-21 agreement among 185 countries signed in Paris signaled a new seriousness by the global community to transition away from fossil fuels. The representatives of countries experiencing dwindling fresh water supplies, accelerating seawater inundation of large land areas, and dramatic increases in severe weather easily dismissed those remaining climate change deniers circling around the Paris meetings. Instead, the world’s nations finally took a major first step to jointly commit and monitor a loosely coordinated global effort to accelerate that shift away from fossil fuels.
What might this mean for energy efficiency? The negawatts that we have been harvesting for generations are still as cheap or cheaper than most of the fossil or renewable kilowatts they replace. But now, with the Paris agreement poised to send the long-awaited CO2 market signal, the magnitude of capital flow diverted away from fossil fuel infrastructure and towards renewables and energy efficiency could be staggering. Last month, Barclays estimated that as a result of the Paris “path”, coal, oil and gas could lose a quarter of their revenue – $34 trillion – over the next 25 years. On the other side of the equation, they estimated that $21.5 trillion of global investment in energy efficiency will be needed by 2040. Since we are talking in round numbers, and current global spending on energy efficiency was about $325 billion in 2012, that rate of investment for the next 25 years is a multiple of about 3x from today’s levels.
Should we get ready for a tripling of our industry? I, for one, will not be surprised when we do – after all, many of us have believed that climate change would eventually force a shift away from the fuels that literally fired humanity’s extraordinary recent episode on this planet.
Jim Edelson, Director of Codes & Policy