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Energy efficiency provides added bonuses

Hydrocarbon Engineering,

Energy efficiency of course can reduce the global use of fossil fuels and the level of greenhouse gas (GHG) emissions. However, energy efficiency can also provide society with what the IEA have coined ‘the multiple benefits of energy efficiency. The IEA have established five categories to house these extra benefits;

  • Job creation and higher output or health and well being improvements.
  • Higher industrial productivity.
  • Lower infrastructure and operating costs for energy providers.
  • Increased property values.
  • Lower public spending.

The EIA believe that the above five benefits are continuously overlooked and the full value of energy efficiency can be underestimated. The EPA examined this and found that for every dollar invested in energy efficiency increased a building’s value by triple the amount.

Job creation and consumer benefit

Studies have shown that for every million euros invested on efficiency interventions, approximately 17 – 19 jobs are generated. The jobs are a mixture of the creation of new direct posts and new jobs further up the production chain as efficiency provides consumers with new savings that they can spend, bolstering overall economy activity.

The rebound effect

The benefits of spending may help to explain where the energy goes when reductions in consumption expected from an energy efficiency policy falls short, the rebound effect. This effect creates a challenge to the effectiveness of energy efficiency policy. Consumers to satisfy previously unmet energy needs often reinvest savings. For example, after installing insulation, a household might decide to turn up the temperature on the thermostat. In such cases, the rebound effect may be negative for energy savings but positive in other ways such as increasing the health and well being of occupants of the house as well as productivity in society. To evaluate the real impact of energy efficiency impacts across sectors and beyond fuel savings need to be analysed.

The Five Benefits explained

Health improvements

Improved indoor temperatures, minimising damp and mould in homes is one benefit of energy efficiency as this leads to a reduction in respiratory problems, as well as other illnesses. In emerging and developing countries, replacing highly inefficient and polluting cookstoves would half the number of child pneumonia cases.

Market value

Improving energy efficiency in the home, of cars, power plants and other assets can increase the market value. Studies have shown that ‘green’ buildings have higher rental and resale values as well as better occupancy levels and lower operating expenses.

Brownouts and infrastructure

Reduced energy demand due to efficiency leads to fewer brownouts and reduces the investments needed to create more energy infrastructure. This can lead to energy providers giving a better level of customer care and reduce bill rates.

Industry benefits

Efficiency can not only increase profits through lower operating costs but also provide consistency and improvements in the quality of output. It is widely thought that benefits in the entire industrial sector may be worth up to 2.5 times the value of the actual energy savings.

Macroeconomic impacts

These encompass a range of aggregate benefits for an economy. These include increases in GDP, improved trade balance for fuel importing countries, heightened national competitiveness and the cumulative benefits of all other impacts. Macroeconomic gains are mainly indirect effects resulting from increased consumer spending and economy wide investment in energy efficiency, as well as fro other energy expenditures, and are of particular importance during recessions.

Adapted from a press release by Claira Lloyd.

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