Renew the focus on energy

This post was originally featured on the Zayed Future Energy Prize blog and is re-printed with permission.

The convergence of accelerating climate change, a weak world economy and an ever increasing world population should be seen as the ultimate challenge for humankind. Governments the world over have been baffled as they seek to address these challenges, not least because of their continuing dependency on hydrocarbon-based energy solutions. This is understandable; it’s hard to wean society off a source of energy that has helped humankind develop by leaps and bounds in the space of a century.

In my country, the UK, where energy prices are already some of the highest in Europe, the percentage of households living in "fuel poverty" is as high as it’s ever been. Various Government-led initiatives to ease the burden of expensive energy and improve our use of energy – particularly in our domestic housing stock – have had some limited impact, but nothing like enough.

Energy efficiency should always come first in any policy hierarchy. But beyond that, there’s a massive opportunity for renewable energy to ease the burden on conventional sources of energy. The UK’s £860 million Feed-in-Tariff (FIT) scheme that allows homeowners to earn money from the power they generate from renewable energy sources (mostly solar), has proved to be very popular, with over 80,000 homes currently partaking in it. The scheme transformed the solar market into the fastest growing and most dynamic sector in the country.

The UK Government has now brought this initiative juddering to a halt – it was proving to be just too successful – and this will have a very negative impact on the uptake of solar energy by individuals, businesses and communities. I’m hopeful this is a temporary glitch, it simply doesn’t make sense (economically or environmentally) to backtrack on something like this.

But small-scale schemes like these only go so far in helping us collectively reduce our carbon footprint. The crux of the matter is that we must be more efficient in our use of the energy whether it is derived from conventional or renewable sources. This is just as true for a net energy importer like the UK as it is for an energy exporter like Abu Dhabi. 

Energy efficiency is commonly seen as the unglamorous part of the climate change mitigation debate. For one thing, it’s not as flashy as an array of solar panels or swanky new wind turbines swishing away on top of some windswept exotic hillside. But the truth of it is that there is as much potential for wealth creation in pursuing energy efficiency as there is in developing renewable energy sources.

A 2008 report by McKinsey found that if we invest US$170 billion a year globally in energy efficiency initiatives, we could see an average internal rate of return (IRR) of 17 percent. What’s more, it would halve the world’s energy demand by 2020, and could help save just under a trillion dollars by this date with little or no impact on the consumer’s convenience.