Commentary: Placing innovation and efficiency at the heart of Korea and the world’s energy future



30 September 2019

With the right energy efficiency policies, the average passenger car in 2040 may operate on as little fuel as today’s best hybrids, according to IEA analysis. (Photograph: Shutterstock)

Major shifts are occurring in the global energy system due to the rapid spread of technologies, including energy storage, wind turbines and solar panels. Amid such innovation and change, energy efficiency has emerged as a key area. Although less visible than vast wind farms or eye-catching electric cars, energy efficiency is no less important for the health of people, the environment and the economy.

Energy efficiency brings many benefits to our daily lives: cars that run further on less fuel, lower heating bills for better insulated homes and the smoother operation of factories that make more products while using less electricity. There is still a great deal of room for improvements in energy efficiency across every country and every sector of the global economy which can have a large impact on progress towards sustainable energy goals – all using cost-effective technologies that are already available.

Korea is continuing to forge ahead with its energy transition towards clean and safe energy. On the supply side, energy transition implies lowering the share of coal and nuclear energy in the case of Korea while increasing the use of renewables. In terms of demand, it refers to the creation of a high-efficiency and low-consumption structure by improving energy efficiency.

Korea has continued to implement energy demand management policies since the Energy Use Rationalization Act was enacted in 1979. However, Korea's energy efficiency-related indexes are still far from satisfactory. Korea's energy use per capita is among the highest in the world and its energy intensity lags behind at 33rd place among member states of the Organisation for Economic Co-operation and Development.

Seeing the need to upgrade its consumption structure for a successful energy transition, the Korean government announced the National Plan for Energy Efficiency Innovation in August. This plan is in line with the direction of energy efficiency policies emphasized by the International Energy Agency (IEA): using programs and incentives to increase private investment; market-based instruments for innovation; and data collection. In addition, rather than the government imposing unilateral regulations, Korea’s plan focuses on eliciting the voluntary and active participation of actors in the market with a view to changing overall consumption behavior and values.

Energy efficiency targets will be voluntarily established by industry while the government promotes greater investment by providing incentives. As for buildings, energy-efficiency related data will be collected, evaluated and released to the public. In the case of home appliances, manufacturers, sellers, consumers and the government will sign a social agreement to facilitate the production and distribution of products with high efficiency. In short, consumers will come to choose high efficiency products and facilities in the same way that preference is given to prices, functions and designs.

Korea’s efforts reflect a growing recognition worldwide that greater efficiency offers tremendous opportunities. With the right efficiency policies, the global industrial sector – from chemicals to machinery and airplane manufacturing – could save about USD 600 billion in additional energy spending by 2040, according to IEA analysis. In transport, the average passenger car in 2040 may operate on as little fuel as today’s best hybrids. And across buildings worldwide, energy use could be kept at today’s level through to 2040 despite a 60% increase in floor space.

In terms of tackling climate change, a global effort to boost energy efficiency may cut energy-related CO2 emissions by 12% by 2040, according to IEA analysis. Such a figure represents more than 40% of the emissions reductions required to meet the goals of the Paris Agreement.

But despite energy efficiency’s huge potential, progress is stagnating worldwide at a time when its environmental and economic benefits are needed more than ever. Global energy demand grew by 2.5% in 2018, the largest increase since 2010, and energy-related carbon emissions rose to their highest level in history. Energy intensity improves each year, meaning the world is extracting greater value for the energy it uses. Nevertheless, this improvement amounted to just over 1% last year – well below what is possible if governments take advantage of the opportunities right in front of them – and well below the 3% rate needed to meet global sustainable energy goals.

To help reverse this worrying trend, the IEA is working with governments, companies and other institutions to highlight the urgent need for policy makers around the world to act quickly to improve energy efficiency.

Korea has been actively engaged in global discussions on energy issues as a member of the IEA since 2002. Vast efforts are being made to facilitate the supply of renewable energies. And as the host of the 2019 International Renewable Energy Conference in October, Korea is expanding its roles and responsibilities in the international community.

Korea has now set itself an ambitious challenge for the innovation of its consumption structure. As a nation that imports 95% of its energy from overseas and relies upon an energy-intensive industrial structure, enhancing Korea’s energy efficiency is of great global significance. Through various channels including the Energy Efficiency Hub in the IEA, the Korean government is more than willing to share its experience, and will continue to foster discussions on energy efficiency in the years to come.

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