The Multiple Benefits of Energy Efficiency

On Monday 20th April, the International Energy Agency convened a workshop at its headquarters in Paris to discuss the state-of-the-art in evaluating the multiple benefits of energy efficiency. This workshop was attended by around 50 people: evaluators, policy makers and academics from over a dozen countries. The Sussex Energy Group was represented by Lee Stapleton.

Energy use avoided in 2010 by IEA countries (due to investments since 1974) exceeded the demand met by any single primary energy source e.g. oil and gas (IEA, 2014). Yet there is untapped efficiency potential because of barriers such as information failures. Beyond reduced energy demand and lower greenhouse gas emissions, energy efficiency delivers benefits in other areas such as energy security, employment and health and wellbeing. Importantly, these benefits are often overlooked despite their potential for increasing the justification for and adoption of energy efficiency interventions. Thinking in terms of multiple benefits also changes the way we think about the so-called rebound effect. Energy efficiency improvements reduce the effective price of energy services such as heating and cooling. This can result in a rebound, or take-back, whereby more energy services are consumed because they are cheaper. This has tended to be viewed negatively e.g. undermining efforts to curb greenhouse gas emissions. Taking a multiple benefits approach means, for example, acknowledging the potential positives of rebound e.g. reducing fuel poverty and increasing energy security. However there is much work still to be done to get a handle on the nature and extent of rebound in different contexts. Indeed, this is one of the focal points of research currently being undertaken in the Centre on Innovation and Energy Demand.

Perhaps surprisingly, the concept of multiple benefits is nothing new. Starting in the mid-90s, attention started to be paid to, what were then called, non-energy benefits. Over time, research has progressed from identification and conceptualisation, through to attempts at simultaneous quantification of these benefits. However we are still some way off comprehensive assessments of these benefits across individuals, sectors and spatial scales – not least because the non-market nature of many of these benefits makes them difficult to isolate and assess. Related to this is the issue of ‘attribution’: how do you determine the extent to which different benefits are due to particular energy efficiency interventions? There are often multiple potential methodologies available for assessing particular benefits, and individual methodologies are not static: they evolve. Energy efficiency retrofits in buildings, for example, can lead to improvements in the health and wellbeing of residents. Studies suggest benefit cost ratios for these retrofits as high as 4:1 with up to three quarters of the benefits attributable to health and wellbeing improvements (IEA, 2014). But how do you robustly monetise health and wellbeing improvements? To what extent should objective data (on the relationship between temperature and different health parameters for example) be used alongside subjective, survey-derived data which elicits the opinions of people about how their health and wellbeing has changed? In a sense there is not an end-point for research on these questions  — different people have different opinions as to the relative merits of these approaches, the balance of which changes over time as methods change and evolve.

Similarly, the nature and array of energy efficiency interventions changes as innovation occurs. What are the energy and non-energy benefits associated with the current roll-out of smart-meters in the UK and other countries? Large scale international trials of these technologies have tended to focus rather narrowly on energy saving benefits (or lack thereof) to the consumer and cost saving benefits to suppliers. Beyond smart meters, what will be the benefits of smart homes and smart systems, and where will they accrue? Perhaps even less appreciated than non-energy benefits are non-energy costs. Will, for example, the ‘smart-ing’ of different appliances infringe on privacy (objectively or subjectively) or exacerbate income inequalities because people in lower income quartiles face more barriers to adopting and engaging with these new technologies? In summary, there is much work to be done to understand the multiple benefits (and costs) associated with extant (and future) energy efficiency interventions.

About the author:Lee Stapleton

Dr Lee Stapleton was a Research Fellow at CIED.