So far in 21st century energy transitions, we've talked about producing and storing energy, and more of it every year in response to rising demand. But let's look at another approach. If people could be more efficient in using energy so that we could accomplish the same tasks using less energy, we could slow energy demand growth, making the challenges of energy transition less daunting. This approach doesn't receive as much media attention as many other energy transition issues, but is universally recognized as a key factor in supplying energy to meet humanity's demands in the future. When viewed in this light, energy efficiency doesn't mean just getting better gas mileage in your favorite vehicle, but it also means choosing an alternative method of transportation, a smaller vehicle, carpooling, public transit, cycling, or walking. Perhaps we might think of it more as energy demand reduction than just energy efficiency. Since 1990, the amount of energy required to produce a unit of economic output has fallen substantially around the globe, led by development of more energy-efficient processes to produce everything from ammonia to steel, to automobiles. We should realize, however, that there are many factors that contribute to these trends, such as the proportion of heavy industrial production versus the creation of services in an economy. For example, Canada, the United States, and the UK economies all became more service-oriented with less manufacturing in the last quarter of the 20th century, thus creating more economic output with fewer emissions. But how much more efficient can we become? Rich countries became fully aware of the value of using less energy when OPEC, the Organization of Petroleum Exporting Countries, proclaimed an oil embargo in 1973, targeting nations perceived that's supporting Israel, which included the United Kingdom, United States, Japan, Canada, and the Netherlands. World oil prices jumped by 300 percent in less than a year, now called the first oil shock. One reaction was to impose corporate annual fuel economy or CAFE standards, regulating how far passenger cars and light trucks must be able to travel on a gallon or liter of fuel. These standards dramatically changed the auto industry from the fleets of huge V8 engine gas guzzlers of the '60s and '70s, ushering in fleets of new, small, fuel-efficient vehicles and in the process, paving the way for accelerated Japanese auto imports into North America, like these models from 1975 and 2020. Other sectors followed. New efficiency standards for appliances have been imposed designated by accredited testing laboratories. New building code standards were created, including incentives for better insulation and more energy-efficient windows, drastically reducing heat energy loss from homes and commercial buildings. Several generations of new lighting technologies have evolved, replacing the inefficient incandescent light bulb and produce an equal or better lighting using a fraction of the electricity. Yet, even with remarkable energy efficiency gains over the years, this modified Sankey diagram shows that only about a third of the energy the United States produces is actually used in the tasks people do, such as driving a vehicle or heating a building. The other 2/3 is wasted or lost, called rejected energy in the diagram. We can see that there are huge energy losses in the conversion of fuels to electricity and in burning of fuels for transportation. In both cases, much of the energy and fuels is converted to waste heat and only a portion is captured as electricity or mechanical energy to drive the vehicle. Energy losses are proportionately much smaller in residential and commercial applications because here, the desired energy project is largely heat for space and water heating. So the heat is not wasted. The question is, can we continue to change the balance to become more efficient, producing more useful energy and reducing wasted energy? Even if we reach the end of the line in making things like ammonia production and artificial lighting more efficient, there are many other things to target. For example, if we could reduce rejected energy and transportation by generating electricity to fuel electric vehicles, instead of using gasoline and inefficient internal combustion engines, we could make the whole transportation energy chain more efficient. The International Energy Agency devotes an entire annual report to advances in energy efficiency. The agency tracks annual improvements in energy efficiency, showing that they averaged at about 2.2 percent from 2010 through 2017. Energy efficiency improvements in 2018 were smaller than 2019 on an absolute basis, but the small circles show that weather normalized changes were almost identical. In other words, more temperate weather in many parts of the world in 2019 compared to 2018 reduced demand for coal, gas, and electricity for heating and cooling. Meaning we use less energy to live our lives, so it appeared more energy efficient. Governments are promoting energy efficiency by funding various initiatives. The IEA energy efficiency report tract about 66 billion US dollars in stimulus funding to the end of October 2020. The largest portion of this spending is on efficiency of buildings, paying for better insulation, windows, and heating and cooling systems, such as heat pumps versus traditional electrical or gas heating and air conditioning. Research and incentives for development and purchase of electric vehicles attract a lot of funding as well. Keep in mind, though, that government stimulus dollars are spent to maximize popular appeal, not necessarily to be most efficient or effective. Note in the bottom graph that Europe by far leads the world in government stimulus for energy efficiency. The center for research into energy demand solutions modeled four different scenarios for future energy demand reduction efficiency gains in the United Kingdom. The ignore scenario in red assumes progress under current energy demand policies. The steer, shift, and transform scenarios are aimed towards net-zero greenhouse gas emissions with increasingly stringent strategies towards modifying the economy to meet emissions goals. These scenarios are not predictions, but our simulations of what the future might look like using different sets of assumptions. It's important to note that they are driven primarily by GHG emissions goals, not by energy pricing or reliability. We'll see the importance of this viewpoint when we discuss energy transition policies and pathways later in the course. Potential energy demand reduction is modeled for 2030, 2040, and 2050 across major energy-consuming sectors. Agriculture, industry, non-domestic buildings, residential buildings, and transport. The projects suggests possible demand reduction strategies such as reducing food waste, centralized retail and distribution, increased building insulation, and retrofitting of electric heat pumps, switching all road transport to electric vehicles, office sharing, and increased household occupancy. The authors recommend the government policy to drive these changes be put into place. But there is no analysis of feasibility, costs, supply chain and construction pathways or public acceptance. Important points to be taken from this study are that energy efficiency or demand reduction is complex, touching on all areas of society and, in many cases, requiring substantial modifications to how people live their daily lives. The Krebs analysis highlights the importance of behavioral changes in future energy efficiency progress. As we've just seen, much of the rich world's energy efficiency progress over the past 50 years has been driven by technology. Better, more efficient ways of doing the same thing using less energy. Consumers may have had to pay more money for their energy efficient appliances and lighting, but they didn't have to change their lifestyles. They could still have their cars, houses, and vacations, and they even saved money on their electricity bills. But as we approach technical limits on efficiency gains in many areas, future energy efficiency progress required in scenarios like those presented by Krebs will require consumers in rich countries to make real changes in their behavior, such as living in smaller houses and more dense communities, giving up ownership of a private vehicle, sharply reducing travel, reduce diversity of food supplies, and other conveniences that many take for granted in the 2020s. People in lower income nations will be asked to delay attaining rich world lifestyles if diverse energy sources, including fossil fuels, are not available to them. Other behavioral factors can also have profound effects on energy efficiency. The COVID-19 crisis in 2020-21 nearly eliminated commuting to work and attending social events and delayed investments in new, more energy-efficient equipment across many sectors of the economy. Economists are still not certain what the longer-term effects will be. Will everything return to normal? Or will people adopt new behaviors that significantly change their use of energy? Let's sum up on energy efficiency. Improved energy efficiency and profound energy demand reduction are required to achieve many goals in the 21st century energy transition. While we have made tremendous gains in energy efficiency since the beginning of the 20th century, most of these gains have been driven by technology with relatively little inconvenience or expense to consumers. There are absolute technical limits on how efficient many processes can be. So once we approach those, we have to look elsewhere to continue making efficiency gains. To achieve the additional efficiency gains envisioned in many scenarios, people will be asked to make significant lifestyle changes. These may include giving up many things that are taken for granted as part of modern life, such as homeownership, private vehicle ownership, vacation travel, and availability of foods from around the world. Energy efficiency is a critically important component of the 21st century energy transition. As the behavioral changes required to limit energy demand become more apparent and immediate to voters, governments will be challenged to create policies to encourage them.
