Improvements in energy efficiency are critical to meeting emissions reduction targets – and they are already making a difference.

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The latest findings from the UN’s Intergovernmental Panel on Climate Change (IPCC) emphasized, once again, that climate change is having a severe impact around the globe and the time for action is now. At the IEA’s 7th Annual Global Conference on Energy Efficiency, to be held in Denmark later this year, decision-makers from government, industry, and civil society will underline that the implementation of energy efficiency initiatives over the next 5-10 years is key to achieving “net zero”.

For the world to meet the goal of limiting global warming to 1.5 degrees above pre-industrial levels, as set out under the Paris Agreement, global greenhouse gas emissions must peak before 2025 and fall rapidly after that. Even at that level, the impacts of climate change will only be limited – not stopped.

Such a long-term sustainability drive will require ambitious changes in the way the world works, including the increased use of renewable sources of energy and a large-scale shift towards electrification – of everything from transportation to manufacturing. An often-overlooked solution to reach the Paris climate goals is energy efficiency, and proven energy efficiency initiatives and solutions are already available.

Transportation accounts for 27% of all global energy-related CO2 emissions (IEA, 2021). Electrification and efficiency is the key.

Energy efficiency measures can and must deliver huge emissions reductions. In fact, more than 40% of the required reduction in energy-related emissions over the next 20 years required to meet the Paris Agreement goals must come from energy efficiency measures, according to the International Energy Agency (IEA).

“The road to net zero starts with strengthening energy efficiency initiatives around the world, which are critical to reaching our energy and climate goals,” says Fatih Birol, the IEA’s executive director. “There is no time to wait, we need to act now and many of the solutions are already in our hands.”

Awareness of the potential of energy efficiency is growing. This is partly because of a redoubled focus following a sustained period of high energy prices. Europe’s untenable reliance on Russian gas and oil has intensified the need to reduce that relationship of dependency.

“There is no time to wait, we need to act now and many of the solutions are already in our hands.”

Fatih Birol, Executive Director of the International Energy Agency

This urgent demand for action on energy efficiency will be the focus of the IEA’s conference in June. It is being held jointly with the Danish Ministry of Climate, Energy and Utilities and will take place in the Danish municipality of Sønderborg, a world leader in energy efficiency. Home to the headquarters of international engineering and cleantech giant Danfoss, Sønderborg has been translating energy efficiency theory into reality for over a decade.

Denmark is already a global leader in energy efficiency solutions; Sønderborg is a pioneer even by Danish standards. The municipality aims to reach carbon neutrality in its energy system by 2029 – 20 years before the rest of Denmark. This target has been crystalised in ProjectZERO, a public-private partnership of which Danfoss is a part. It demonstrates that carbon neutrality can be achieved while exploring new technologies and creating jobs and growth.

Kim Fausing, President and CEO of Danfoss

In June, during the IEA conference, Sønderborg plans to show the world that with the right investment framework, practical solutions that begin on a small scale can have a major impact on emissions.

Underlining the need for immediate action, Kim Fausing, President and CEO of Danfoss said that “The IEA has consistently pointed out with scientific evidence that if we don’t place a much greater focus on energy efficiency, we’ll never reach the Paris Agreement Goals. The good news is that the energy efficient solutions that can deliver more than 40% of the reduction in energy-related CO2 emissions exist already.”

“But we need action to make this happen,” Fausing continued. “Everyone needs to roll up their sleeves, take the green transition much more seriously and implement the technologies that are readily available today.”

Danfoss aims to be carbon neutral in its global operations by 2030 at the latest. The company will have already achieved carbon neutrality in buildings and processes at its headquarters this year. To achieve its ambitious global goals, the company is implementing innovative energy efficiency solutions, such as building an on-campus data centre and recycling the enormous amounts of excess heat it produces to heat nearby buildings and facilities.

“Everyone needs to roll up their sleeves, take the green transition much more seriously and implement the technologies that are readily available today.”

Kim Fausing, President and CEO of Danfoss

In its Energy Efficiency 2021 report, the IEA says total annual investment in energy efficiency worldwide needs to triple by 2030 to be consistent with a path towards the 2050 net zero goal. Energy efficiency is also the key factor that will enable growth in clean energy sources to outpace growing demand for energy services. The agency sets out a pathway in its Net Zero Emissions by 2050 Scenario which foresees the global economy growing by 40% by 2030, the world becoming one-third more energy-efficient, and energy usage falling by 7%.

To reach its own carbon neutrality goal, Sønderborg has deployed green district heating using a nearby geothermal facility to heat 10,000 households, businesses, and industry customers with a net zero environmental effect. Further cementing energy efficiency at the centre of Sønderborg’s sustainability drive, houses, shops, and offices have been retrofitted to limit energy demand through existing technological solutions.

Alongside this, because energy efficiency requires participation from all stakeholders in society, there has been an alignment between enterprise and education in Sønderborg: Workshops teach residents of all ages how to save energy and water. This sustainability education starts early: The topic is taught in kindergarten and continues through school and into university.

Industry accounts for 39% of all global energy-related CO2 emissions (IEA, 2021). However, there is a way to ensure energy is only used when needed.

Collaboration is key for initiatives such as ProjectZERO to be successful. Public authorities are working with private investors and technology specialists including Danfoss, as well as with the local community to achieve the net zero goal. The revolutionary SIB ZERO+ house uses solar panels to produce more energy than its inhabitants consume. In 2017, ageing diesel buses were replaced by biogas vehicles, bringing the fleet’s CO2 emissions down to zero – just one of 27 green transport initiatives in Sønderborg.

During a visit to Danfoss Application Development Center in Tallahassee, Florida, Kim Fausing urged local governments, states, and businesses to urgently invest more in “energy efficiency and low-carbon heat improvements. Not only because of the current energy price levels. Energy efficiency has a central role in tackling climate change. We need better deployment of heat pumps, expansion of district heating infrastructure, and smarter use of waste heat.”

Energy efficiency has a central role in tackling climate change. We need better deployment of heat pumps, expansion of district heating infrastructure, and smarter use of waste heat.”

Kim Fausing, President and CEO of Danfoss

“Our experience is that strong partnerships across governments, businesses, industry and our communities are necessary to create the infrastructure of the future that eliminates reliance on fossil fuels as an energy source.”

In 2022, more than ever, energy is a hot topic. As the race to meet climate targets intensifies over the coming decades, energy efficiency is set to take on an ever more important role. Contemplating the potential impact of the IEA conference, Fausing concluded: “We expect more than 20 ministers to attend ... which will have an important role to play in demonstrating to the world that the greenest energy of all – and the most cost-effective – is the energy we don’t use.”

Learn more about how energy efficiency can fast-track the green transition and secure energy independence.

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