Energy Efficient Prosperity: Low-hanging fruits

(Paris) — 12 October 2016

From Africa to East Asia, energy efficiency is increasingly becoming a critical consideration for countries that want to promote sustainable growth in the face of fast-growing energy demand. Investments that support more energy-efficient technologies and services can help businesses save energy and money, which ultimately means higher production levels and profits and more jobs.

The far-reaching economic benefits of energy efficiency are well established. In South Africa, analysis by the IEA indicates that implementing efficiency measures could effectively contain energy spending at current levels.  

Energy service companies, commonly known as ESCOs, can play a central role in supporting a range of technical and financial energy solutions and services. ESCOs are an increasingly important focus for many emerging economies.

China has fostered the development of more than 5 000 ESCOs, creating about 600 000 jobs. Shenwu Corporation – one of the first ESCOs to be certified by China’s National Development and Reform Commission – develops energy-saving technologies, and has grown rapidly over the past 15 years. From 78 workers in 2000, it now employs more than 4 000 people.

In just five years, its sales jumped from USD 3 million in 2010 to USD 1.75 billion in 2015.

In India, the Confederation of Indian Industry has promoted a range of measures, including the “Perform, Achieve and Trade” programme targeted at energy-intensive industries. Encompassing nearly 500 companies across eight energy-intensive sectors, the programme sets incentives and targets for energysavings – recognising good performers, penalising bad ones and encouraging further improvements, resulting in savings of over USD 1 billion per year.

There is also significant potential to use energy efficiency to strengthen the productivity and competitiveness of small and medium-sized enterprises, which are especially critical players in many emerging economies. These businesses account for nearly 60% of China’s economy; in India, they deliver 45% of the country’s manufacturing production. On a global scale, they account for more than 13% of total final energy consumption and provide 60% of all jobs.

According to the IEA, implementing cost-effective energy efficiency measures in small and mid-sized entreprises could reduce global energy consumption by 30% – an amount equal to the total combined annual energy use of Japan and Korea.

Business owners are also increasingly recognising how energy efficiency improvements can yield low-hanging fruit in the form of major savings. Take Ivan Stojakovic, a producer of pekmez – a fruit delicacy popular in South-Eastern Europe. Mr. Stojakovic is one of many manufacturers in the western Balkans whose business needs large amounts of energy to operate. For him, it’s a costly business to heat the plums jam in vats.  

With the support of a local partner of the European Bank for Reconstruction and Development, Mr. Stojakovic has been able to install a new, more efficient biomass boiler that transforms the plum stones – which were once a useless by-product of jam production – into a sustainable fuel.

A more efficient boiler now powers the production process and heats the workers’ offices, reducing the factory’s demand for fuel oil and lowering the factory’s overall energy consumption and spending. As a result, he can continue buying plums from local farmers and produce pekmez year-round.

This is the third of a five-part series on energy efficiency focusing on real-life examples in developing countries (Part 1, Part 2, Part 4, Part 5). Check out #EnergyEfficientWorld on Twitter to join the conversation.

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