There’s nothing exclusive about the Three Percent Club launched earlier this week at the United Nations Climate Action Summit in New York. The new global coalition of nations, businesses and non-governmental organizations (NGOs) is welcoming all joiners to harvest the energy savings achievable through the deployment of existing technology and passive design considerations.
Based on research from the International Energy Agency (IEA), club pledges will be challenged to deliver a three per cent annual increase in energy efficiency. On a global scale, that’s projected to be a low-cost curb on greenhouse gas (GHG) emissions that could meet 40 per cent of the reduction target envisioned in the Paris Agreement.
“Energy efficiency is an energy resource that all countries share in abundance, and it can help reduce emissions while enhancing their peoples’ well-being,” maintains Fatih Birol, executive director of the International Energy Agency.
Few signatories to the Paris Agreement have specifically listed energy efficiency targets in required national plans for meeting their commitments so Three Percent Club founders see plenty of room to capture untapped emissions reductions. They reiterate that easily implementable energy-efficient appliances and lighting, building materials that reduce reliance on energy-intensive heating and cooling systems, and district energy in place of in-building boilers and chillers would reduce operation costs and create economic benefits through job creation and avoided spending on additional power generation capacity and other more costly interventions to mitigate climate change. It’s projected the targeted energy efficiency advancements could translate into USD $500 billion in annual energy savings for households worldwide by 2040.
“If it’s 3 per cent on each prior year’s saving, 10 years from now the reduction would be 26 per cent from today. In 30 years, it would be a 60 per cent reduction from today,” advises Andrew Pride, an engineer who consults on energy management, sustainability and strategic conservation planning. “It’s a big target, but it is needed and it could be achieved cost-effectively in Canada.”
Provincial governments play key role in Canada
Neither Canada nor the United States are among the 15 countries that have signed on thus far, but industry associations and public interest groups in both countries are aligned with supporting NGOs like Alliance to Save Energy and EE Global Alliance. That includes Efficiency Canada, a non-governmental organization promoting the dual economic and environmental benefits of energy and water conservation.
Prominent business members of the coalition include: Johnson Controls; Signify (formerly Philips Lighting); two major HVAC players, Danfoss and Trane; Portugal’s national electricity utility, EDP; Italian electricity and gas provider, Enel; and Inter-America Development Bank, which provides financing to Latin America and the Caribbean. Honduras, Argentina and Colombia comprise the western hemisphere contingent in the initial list of nation members, making the commitment along with India, seven European and four African countries.
Canada’s constitutional quirks limit the scope of federal action on energy efficiency largely to: setting standards for equipment and appliances; devising the model national energy code; offering tax incentives; and dispersing funds for other levels of government and agencies such as the Federation of Canadian Municipalities to administer. Although revenues collected from carbon pricing have been earmarked for energy efficiency upgrades in Ontario, Manitoba, Saskatchewan and New Brunswick, that’s only in the absence of those four provinces invoking their own carbon pricing strategies.
Provincial/territorial governments devise programs and set targets, creating a cross-Canada patchwork of mandates and oversight. Various agencies — such as Ontario’s Independent Electricity System Operator, Energy Efficiency Alberta, Nova Scotia’s EfficiencyOne, Efficiency Manitoba and dedicated divisions of some provincial electricity and gas utilities — front the task, but receive instructions from their applicable Ministry of Energy.
“Many provinces are currently attaining from just under 0.5 to almost 2 per cent annual gains in energy efficiency through very cost-effective measures. It would be feasible to push that up to 3 per cent,” Pride submits. “And that comes with significant job creation and domestic economic growth.”
For example, Toronto-based energy management consultant Scott Rouse points to commercial office clients enrolled in an Ontario incentive program with a prerequisite for annual energy savings of at least 5 per cent.
“We have surpassed $700,000 in verified electricity savings alone across 12 properties and without capital investment,” he reports. “Future savings will grow exponentially as capital investments are made, creating greater efficiency and local jobs to support our economy.”
Confronting capital expenditure and the costs of inaction
Looking to the United States, Lindsay Audin, an engineer and energy management consultant with a 40-year career history of promoting energy efficiency, contemplates the potential and the challenges.
“Overcoming the capital expenditure barrier has always been the first step to securing the resulting savings,” he reflects. “The discussion needs to address the dollars that will be involved in securing that $500 billion in annual savings by 2040. Estimates to zero out just the U.S. carbon footprint may require upfront spending in the range of USD $10 to $20 trillion. Programs already suggested by several presidential candidates ranged from $5 trillion to over $16 trillion. We have to honestly confront that level of spending if we are to avoid the impending damage from climate change.”
Perhaps helping to make the case, that damage is projected to be considerably more costly. Accelerating annual climate-related insured losses — hitting a global record peak of USD $140 billion in 2017 — are just one incomplete marker since it’s estimated the same year saw $200 billion in uninsured losses.
Strategists are striving to grasp and respond to potential direct, indirect and induced impacts in every sector of the economy. Supporters of the Task Force on Climate-related Financial Disclosures (TFCD), including banks, asset managers, pension funds, credit rating agencies, accounting firms and shareholder’ advisory services worldwide, represent USD $120 trillion in financial interests and are working to avert what’s been termed a “climate-driven Minsky moment” triggering the sudden collapse of asset prices.
Founders of the Three Percent Club are promising immediate action to adopt, promote and continue to innovate energy-saving measures and practices. “We are proud to have achieved energy intensity improvements exceeding four per cent annually since 2002 and look forward to sharing our best practices, technologies and solutions with participating countries and partners,” says George Oliver, chairman and chief executive officer of Johnson Controls.
“Energy efficiency is the stealthy hero of climate action,” suggests Three Percent Club member, Andrew Steer, the president and chief executive officer of the World Resources Institute. However, other proponents now favour the overt.
“We know that energy efficiency accounts for more than 40 per cent of the carbon reductions required to meet the Paris Agreement,” reiterates Efficiency Canada’s executive director, Corey Diamond. “It’s time to get more aggressive.”
Barbara Carss is editor-in-chief of Canadian Property Management.