Greening energy demand is the path forward

Investment in improved energy productivity for commercial and residential buildings could cut demand in the property sector by the equivalent of 14 million barrels of oil per day by 2020, a report presented to the United Nations says.

The ambitious target is benchmarked in a report by global management consultants McKinsey Global Institute, who claim demand for energy across all sectors in 2003 alone, including producers and end users, like commercial buildings, was the equivalent of 200 million barrels of oil per day.

Energy productivity is measured as the level of output we achieve from the energy we consume. If left unabated, the report warns demand on a conservative scale could almost double by 2020: “Although the world has learned to get more from the energy we use, a business-as-usual increase in energy productivity will not be sufficient to prevent energy demand from accelerating to 2020."

Presented in February 2008 to some of the world’s leading institutional investors and financial-firm leaders at the United Nations, the report — A Case for Investing in Energy Productivity — says that from 1980 to 2003 energy productivity grew by some 1% a year.

The report says while heavy industry has been the likely culprit in the past and remains a key producer of global greenhouse gas emissions, some of the greatest opportunities to reduce our carbon footprint on the planet could be found in the built environment: “The world economy has shifted away from industry and toward less energy-intensive service industries. As a result, sectors that have the characteristics of consumer goods — such as residential and commercial buildings and road transportation — will drive 57% of energy demand growth to 2020.”

The authors of the report use quadrillion British thermal units (QBTU) to measure energy consumption, where one QBTU is the equivalent of 20 million cars.

By acting now, the authors say the commercial and residential sectors could reduce their demand by 13 QBTU or 10% of the overall total and 35 QBTU or 26% respectively.

The report states that the targets for both sectors are achievable, with the residential sector in particular offering effective opportunities with little investment need: “In developed economies, nearly one-third of the opportunity lies in efficient lighting. Another one-fifth lies in heating and cooling packages for houses.”

The global incremental investment required to capture these energy productivity opportunities is in the range of US$40 billion annually.

For the global commercial building sector, the opportunities vary across regions with the power-intensive end uses of air conditioning, lighting and office equipment representing a large majority of energy demand and an even larger share of the abatement opportunity in developed countries.

On average, the incremental capital requirement to abate 1 QBTU of commercial sector energy in 2020 is a cumulative US$21 billion between 2008 and 2020.

If investment across all sectors was achieved, the authors forecast the equivalent of 64 million barrels of oil per day in energy could be saved.

Property Council of Australia