Energy efficiency levers, inspired by the B20
October 14, 2022
Recently, I was honoured to speak at the G20-B20 Dialogue: Energy, Sustainability and Climate Task Force in Bali, Indonesia. I represented Accenture as Deputy Co-Chair of this group.
As we met to discuss policy ideas on this topic, the significance of our location and the timing of the meeting weren’t lost on me. Indonesia is the first developing economy to host the G20 in 2022. And with energy security and costs top-of-mind everywhere, the need for a just and inclusive energy transition felt real.
The G20’s 2022 theme is “Recover Together, Recover Stronger.”
This theme is echoed in the B20’s 2022 recommendations. They centred around three key strands:
As I met with my task force colleagues, I thought, “How can we recover together and be stronger?” This is quite difficult to answer, especially for emerging and developing economies.
We talked broadly on the transition to sustainable energy, the justice of that journey and the need for clean energy access for all. Yet, it’s energy efficiency I want to focus on here.
Because when we think about energy, we tend to focus on the supply side. And for good reason—with the phasing down of coal mining and scaling up of renewables. Solutions such as hydrogen for hard-to-abate sectors are also on the rise.
But I believe it’s the demand side that must be addressed. Specifically, reducing energy demand through energy efficiency.
Because it’s the “first fuel”—the cleanest approach to energy is to avoid using it in the first place! And its impact is notable. The International Energy Agency (IEA) predicts that energy efficiency will reduce energy-related greenhouse gas (GHG) emissions by 40% over the next 20 years. But it’s more than that. It’s the best way to improve resilience and affordability, reduce GHG emissions and create new jobs.
Here are some reflections I’m counselling my clients to consider.
When it comes to energy efficiency, the benefits can be significant and fast. More so when compared to supply side solutions, such as capital projects, taking years to come to fruition.
And those benefits will help with a just transition.
For emerging economies, energy efficiency measures provide a route to decouple economic growth from GHG emissions growth (SDG 8, target 8.4). That is to say, to grow while stabilising or reducing GHG emissions, as well as costs.
Meanwhile, energy efficiency is creating new industries and jobs, while also delivering those key cost savings. The IEA estimates that more investment in energy efficiency could generate nearly four million additional jobs The investments would focus on both upgrading existing assets and development of new technologies.
These broader topics relate to the World Economic Forum’s (WEF) idea of system value. System value is a way to think about potential energy solutions that includes economic, environmental, social and technical value.
With the help of Accenture, Indonesia—our host nation—applied the WEF system value analysis. The research suggests that energy efficiency measures at consumer, industry and transport levels could create up to 212,000 jobs by 2030. Plus, it could trigger $7.5 billion in electricity savings.
So if the proposition is compelling, what are the levers to make it happen?
For me there are three key levers: technology, behaviour and electrification. And reasons to be positive. Because here’s the good news: the tools and techniques to make energy efficiency a reality at scale are already here. It’s a case of leveraging them in the right ways for maximum effect.
#1—Technology: It’s time to adopt energy-efficient technologies to get fast results. That means next-generation machines for manufacturing, appliances and other electronics. The goal is to consume less energy in more intelligent ways. Think of how digital twins cut energy use by not needing to make physical copies of things. Adopting digital technologies such as Internet of Things can track, analyse and optimise use, cutting costs and emissions at the same time.
These projects are already a reality. For instance, in the Global South, Accenture helped an energy company to deliver an energy efficiency program. They did this by looking at the energy intensity (current use of fuels and energy) along the full upstream value chain, including utility generation. The program found more than 130 instances for energy efficiency measures. These could improve energy efficiency by 30% by 2030, save $220 million and cut 10% of GHG emissions.
#2—Behaviour: Just by changing user behaviours, we can cut energy use by impressive amounts. And the applications are wide and varied at the organisational and individual level. For example, a global retailer worked with Accenture to analyse energy waste across its stores. We applied AI to the data to identify and fix store-level behaviours leading to wastage. The project delivered a 15% decrease in energy consumption, also saving about 15% on energy costs.
And individually, the scope is boundless. For example, electric vehicle (EV) drivers have apps to help them optimise charging according to pricing. Meanwhile, utilities are helping customers concentrate on their use at the cheapest times. When you add them up, these interventions matter.
#3—Electrification: Industry, transport and buildings are electrifying at a large scale. Industrial clusters are using electrification to do great things. Meanwhile, consider that switching from ICE to EVs increases fuel efficiency by 70%+.
When we think about fleet operations being electrified in bulk (e.g., postal delivery services or law enforcement) cost savings and efficiency gains can be compelling. EVs are the way electrification and behaviour come together. Because of this, how drivers use EVs directly affects range, costs and emissions.
Our task force meeting also served to demonstrate the vital importance of regulation to speed up energy efficiency. Collectively, businesses need policymakers’ strong support to:
The need is real. A recent UN GC-Accenture study shows only 18% of CEOs feel governments and policymakers have given them the clarity needed to move forward in line with a 1.5°C warming trajectory.
With regulatory clarity, I believe businesses will stand up and play their part. They will meet and collaborate with partners, competitors and others for collective progress. Accenture, for one, is committed to doing just that. Together, we can bring new scale to bear on these challenges, across all economies.
Contact me to talk more about the road to G20, and what it means for businesses everywhere.