The ‘2015 Energy Productivity and Economic Prosperity Index’ launched recently reveals the huge potential for societies to raise economic performance and extend significant environmental and social benefits through improved energy productivity.
The Index, authored by The Lisbon Council, Ecofys and Quintel Intelligence and commissioned by Royal Philips (AEX: PHI, NYSE: PHG), is the first global report to rank countries by their energy productivity – based on their economic output per unit of energy consumed . The report warns that the current rate of energy productivity improvement – around 1.3% worldwide each year – is too slow to keep pace with the rising energy demand.
The report finds that most energy productivity gains will need to come from improvements to residential and non-residential buildings. A simple illustration of energy productivity is boiling an egg, where only 2% of the energy consumed goes into producing the boiled egg. Similarly, nearly 98% of all energy we use in the process of production is being wasted. Just by increasing the use of technology today, such as energy-efficient appliances, LED lighting and insulation, European households could reduce their energy bills by a third. Furthermore, overall energy consumption in the EU could be cut by 35% by more than doubling the rate of the region’s energy productivity improvement from close to 1.5% to 3% per year by 2030.
“Within the range of energy efficiency opportunities, LED lighting is a key contributor in addressing the soaring energy demand of the future as it already can deliver a 500% energy productivity improvement in average households. And by connecting LED lighting to sensors, apps and controls, even greater efficiencies may be realized. It is dramatically changing the way people experience and interact with light at home, at work and in their cities”, said Harry Verhaar, Head of Global Public and Government Affairs at Philips Lighting. According to the High-Energy Productivity Growth Scenario presented in the report, nearly 12 European households could be lit with a 1000 KWh of electricity, which is roughly what it takes to light two households today.
Miguel Arias Cañete, European Commissioner for Climate Action and Energy, added: “Energy efficiency is a powerful instrument for job creation with great potential for stimulating economic growth and EU competitiveness. Energy productivity provides us with an excellent framework to harness underutilized resources. I welcome the publication of this report. It will help us in coming years in using innovation to drive efficiency and improving Europe’s performance in this key area.”
The report urges policymakers to set more ambitious targets to improve energy productivity. It demonstrates that high levels of energy efficiency will contribute to global economic growth: doubling energy productivity could create more than 6 million jobs globally by 2020 and reduce the global fossil fuel bill by more than EUR 2 trillion by 2030. To achieve this, further progress in the world’s six largest economies – the US, Russia, China, Japan, India and the EU – is most important as they account for 60% of global GDP and 65% of global energy demand.
“World leaders are convinced that energy is the golden thread connecting economic growth, increased social equity and a healthy environment, but we still need to enforce more ambitious goals to improve energy productivity”, said Kandeh Yumkella, UN Under-Secretary-General and CEO of Sustainable Energy for All. “This report helps to focus minds on these goals and their benefits. Doubling of the global rate of improvement in energy efficiency by 2030 is our shared objective, underpinned by the Global Energy Efficiency Accelerator Platform launched by the UN last year.”
Global energy productivity highlights:
• The Index ranks countries by the amount of GDP they produce for every unit of energy they consume. This differs from energy efficiency which means using less energy to deliver the same service.
• Hong Kong topped the list with an energy productivity of EUR 456 billion of GDP per exajoule (one quintillion – 1018 – joules) consumed. Cuba came second, boasting EUR 365 billion GDP per exajoule. Columbia, Singapore and Switzerland made up the top five.
• The United Kingdom is ranked 26th, behind countries such as Sri Lanka, Dominican Republic, Gabon, Philippines, and Albania. Other leading nations trailed further behind with Germany placed 35th, the Netherlands 40th, Japan 51st, France 56th and India 72nd.
• The United States, which has pledged to double its energy productivity by 2030, comes 87th. China placed 111th and Russia 114th– both countries with energy productivity well below the world average of EUR 143 billion.
The 2015 Energy Productivity and Economic Prosperity Index is an effort to gauge the efficiency and effectiveness with which energy resources are being used worldwide. Energy productivity is defined as the volume of services or products that can be generated per unit of energy. It is not the same as energy efficiency, which measures the inverse – i.e. how much energy is needed to produce a given level of output (See International Energy Agency, Key World Energy Statistics 2014, Paris).