Bulletin

Food for thought, thoughts to chew on: Solving the Energy Efficiency Puzzle at the Energy Efficiency Restaurant

22 Mar 2018

By Inchul Hwang, Director, Global Project Division, Korea Energy Agency

In 2016, global energy efficiency investments increased by 9% compared to 2015, amounting to a total of USD 231 billion. In particular, the global energy service company (ESCO) market saw significant expansion, with the amount of investments growing by 12% to USD 26.8 billion. Overall however, energy efficiency policy progress in 2016 was the slowest since 2009, a downward trend that puts future energy efficiency gains at risk.[1] To protect and enhance these gains, we need a systematic implementing framework for energy efficiency. Below is my metaphorical suggestion, called the energy efficiency restaurant.

Let’s pretend that the institutional governance for energy efficiency is a restaurant. There are four elements that make a restaurant successful: professional chef, money, cooking tools and ears to VOC (the voice of customers).

1) Professional Chef: First and foremost, you need a professional chef. A dedicated energy efficiency institution is needed to act as the chef for energy efficiency governance. In Korea, this role is taken on by the Korea Energy Agency (KEA).

2) Money: Sufficient money is required to hire good staff and prepare fresh ingredients. Korea has a dedicated energy efficiency fund called the Energy and Resources Special Account. The funds are collected through taxes and levies on imported fuels.

3) Cooking tools: Chefs cannot cook with their bare hands. They need cooking tools – choppers, frying pans, and so on. Energy efficiency institutions likewise need to be given tools to use, in their case a systematic mix of carrots (incentives) and sticks (regulations). KEA has carrots in the form of soft loans, tax credits and other attractive incentives, and sticks in the form of strong regulations, such as building codes and appliance standards and labelling.

4) Ears to VOC: Good restaurants turn their ears to VOC (the voice of customers). With attentive ears, they can meet the various demands of customers, leading to better service and increased customer loyalty. Energy efficiency institutions have to establish better and more regular exchanges with stakeholders and adapt through feedback received from them. KEA has been maintaining close contact with energy managers in large companies and buildings through dedicated networks. Trust can be built in the market through close, open and frequent communication among stakeholders.

Once the implementing framework has been set up, we need to get to work on accelerating energy efficiency deployment. Let’s now pretend that we are solving a jigsaw puzzle of energy efficiency at the energy efficiency restaurant. The puzzle is very big and very complex. Energy efficiency overall is exactly this kind of puzzle – it’s a complex mix of energy savings, energy efficiency investments, regulations and incentives across sectors, such as industry, buildings, transport and appliances.

Furthermore, the market situation keeps changing. Electrification of energy, global urbanisation, the rapid growth of electric vehicles (EVs) and connected devices, and Chinese market dominance is changing market paradigms. To respond to the evolving market situation in a complex world, all we can do is to make an all-out effort in every sector, continuously. There is no silver bullet to energy efficiency. Pieces of energy efficiency are scattered in the nooks and crannies of every sector. In Korea, we have a saying: “Ten spoons of rice make one bowl.” If we can succeed in gathering enough spoons of energy efficiency to get a hundred bowls everywhere, in every sector in every country, then it can make a big difference. Just as we put together the pieces of a jigsaw puzzle with patience, seeing the patterns gradually emerge and the whole fall into place, at the end we can enjoy the beautiful, full picture of energy efficiency.  

Renewable energy is visible. We can spot many solar panels or wind turbines across the world, out in the fields. But energy efficiency in many cases is not visible. Energy efficiency is hidden in boiler rooms or inside walls. Making energy efficiency visible is the key to solving the tricky energy efficiency puzzle for governments and other stakeholders. This formidable task includes publishing information pieces, such as articles in the IPEEC newsletter and energy efficiency reports, introducing energy efficiency labels that contain annual energy cost information, and energy efficiency-conscious power bills, which provide infographic analyses of monthly power consumption and compares them to the consumption patterns of individuals in similar groups. The puzzle may be big and complex, but well worth the task. We must all sit in our energy efficiency restaurants and get to work.

 

Mr. Inchul Hwang has over twenty years of national and international experience in implementing policies on energy efficiency, renewable energy and climate change mitigation.  He has managed green ODA programmes in cooperation with the ASEAN Center for Energy and worked with the World Bank and UNIDO to provide capacity building to developing countries in the Asian and African regions. He has also represented Korea at many international meetings, including at UNFCCC, APEC, IEA, IPEEC and ASEAN+3. Previously, he served as KEA’s CDM auditor for various renewable energy projects. Mr. Hwang holds a Bachelor of Business Administration from Korea University and a Master of Arts in Energy and Earth Resources from the University of Texas at Austin.

 

 

[1] IEA (2017), Energy Efficiency 2017.