New report identifies cheaper pathway to stable climate, global savings potential of up to US $2.8 trillion

(0-nothing, 25 Nov 2015) eceee Press Release – The world’s largest and fastest-growing economies can help restrict global warming to 2 degrees centigrade and save $2.8 trillion in the process by prioritizing energy efficiency in their mitigation policies between now and 2030, according to a new study released today by Fraunhofer ISI, funded by ClimateWorks with support from eceee and other organisations.

The study, How Energy Efficiency Cuts Costs for a 2-Degree Future , shows that new efficiency policies and programs in the United States, Europe, China, India, Brasil, and Mexico can reduce the cost of economy-wide decarbonization by a total of up to $250 billion per year for these regions, with no net cost to society through 2030.

Note: The report will be presented at a COP 21 Seminar 4 December in Paris. See more below!

“As world leaders consider how best to fulfil their commitments to cut carbon emissions as part of the forthcoming international climate negotiations in Paris, these new findings should provide a great deal of comfort,” said Nils Borg, eceee’s Executive Director. “Energy efficiency actually makes full-scale climate action truly affordable; in many cases, efficiency results in net economic gains from dramatic reductions in energy intensity and related carbon emissions.”

The “Cheaper pathway” report modeled several pathways to identify the role energy efficiency could play in achieving the internationally-agreed 2 degree upper limit for global warming. The results show that, by following an “energy efficiency” pathway, policymakers can achieve low cost carbon reductions through to 2030 while also cutting carbon emissions from the energy supply.

The $2.8 trillion in savings are as compared to a more “energy intensive” decarbonization pathway that focuses primarily on eliminating carbon from energy supply, with more limited energy efficiency policies. The financial savings in the “efficiency pathway” come from reduced need for investments in new energy supply, and direct savings on energy expenses.

The “Cheaper pathway” report found that the potential annual savings of the energy efficiency pathway vary by nation. Annual savings range from 0.1 to 0.4 percent of annual GDP, or a low of about US $1.9 billion to a high of about $82 billion per year, and are not sensitive to macro-economic shifts or to changes in fuel price.

For comparison, recent research by the World Bank Group shows that the world can achieve universal access to electricity through investments of between $40 billion and $100 billion annually; an additional $4.3 billion per year would also offer universal access to modern cooking fuels - making energy efficiency a highly attractive pathway to alleviate energy poverty.

“What our findings show is that energy efficiency holds the key to controlling costs of limiting global warming to 2 degree.” said Jakob Wachsmuth, principal author of the “Cheaper pathway” report. “Each nation we studied should craft a strategy that reflects its domestic energy mix, but our research shows that everyone benefits from some form of aggressive policies to support energy efficiency.”

While modeled results suggest significant future savings from current and new energy efficiency policies, programs and technologies, the future costs of decarbonization in China, the EU and the US have already been reduced by at least $750 billion between 2015 and 2030 by energy efficiency policies adopted since 1990. Much of these gains have been realized in the transport, buildings, and industry sectors through policies such as fuel economy and appliance standards, building energy codes, and best practices in industrial energy management.

The “Cheaper pathway” report takes account of moderate “rebound effects” from energy efficiency in some sectors and regions, where new energy demand partially consumes the gains made by energy efficiency. Even accounting for rebound, the economic gains and return on investment for energy efficiency consistently dwarf losses from rebound in all scenarios. Compensating for rebound effects, the report found that energy efficiency continues to provide the lowest-cost carbon abatement for most policy interventions in every region under study.

To learn more about the “ Cheaper pathway” study or to download the report, click here .

Seminar at COP 21 in Paris - 4 December

You are cordially invited to join the presentation of the report at the side event to COP 21 in Paris "How energy efficiency cuts costs for a 2 degree future.

Speakers  include: Jakob Wachsmuth, project leader at Fraunhofer ISI, who will provide a summary of the report findings. Jakob will be joined by regional experts Nils Borg from the European Council on an Energy-Efficient Economy (EU) , Manish Kumar Shrivastava from TERI (India) and Rodrigo Flora Calili from the Pontifical Catholic University of Rio de Janeiro (Brazil). Dan Hamza-Goodacre, Program Director for Energy Efficiency at ClimateWorks will moderate the event.

WHEN: December 4 th , 9:00 – 10:30am (breakfast will be provided)

Fondation Charles Léopold Mayer
38, rue Saint Sabin
75011 Paris – France

For more information, contact Jakob Wachsmuth at Fraunhofer ISI or download event flyer.