Efficiency's 'hidden' rewards

3rd October 2014



The benefits of energy efficiency go well beyond the simple scaling back of demand, says a report from the International Energy Agency, which outlines how it has the potential to support economic growth, enhance social development and advance environmental sustainability.

The report, Capturing the multiple benefits of energy efficiency, argues that, because energy efficiency is routinely and significantly undervalued, two-thirds of the economically viable potential available between now and 2035 will remain unrealised.

It says that, if IEA countries implement all economically viable energy efficiency investments, cumulative economic output could rise by $18 trillion over the next 20 years.

Describing energy efficiency as a “hidden fuel”, the agency advises governments to move away from focusing on energy savings to measure the viability of energy efficiency measures and adopt a multiple benefits approach that includes, for example, improvements in local air quality and public budgets.

“When the value of multiple benefits is calculated alongside traditional benefits of energy demand and greenhouse-gas emissions reductions, investments in energy efficiency measures have delivered returns as high as $4 for every $1 invested,” says the agency.

The report reveals that, when the value of productivity and operational benefits to industrial companies were integrated into their traditional rate-of-return calculations, the payback period for energy efficiency measures dropped from 4.2 years to 1.9.

The agency’s executive director, Maria van der Hoeven, said governments needed to invest more time in measuring the impacts of energy efficiency policies and in understanding their role in boosting economic and social development.


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