Forever the Cinderella of
energy policy
, two reports published this
week say we should remember to invite energy efficiency to the

The International Energy Agency (IEA)
investing in efficiency can boost
growth, jobs, health, government budgets, industrial productivity –
and those are just the benefits backed by robust

Meanwhile left-leaning thinktank the Institute
for Public Policy Research (IPPR)
efficiency could
reduce EU reliance on Russian

It’s an impressive list of benefits. So what’s going wrong?

Multiple benefits

The positive effects of energy efficiency
investment are “a reality that is often overlooked” according to
the IEA’s report,
Capturing the Multiple Benefits of Energy
. Efficiency can make a major
contribution to five strategic aims shared by most governments
around the world, it says.

Top of the list is economic growth. The IEA says
energy efficiency can boost GDP, create jobs and improve trade
balances by reducing costly imports of fossil fuels. Its analysis
finds large-scale energy efficiency policies would boost GDP by
between 0.25 and 1.1 per cent per year.

Strained public finances can also be improved
through energy efficiency improvements, the IEA argues. This can be
directly through reduced public spending on energy. But treasuries
can also benefit from increased tax revenues as the economy expands
due to efficiency investment and reduced unemployment benefits as
workers are employed to install efficiency measures.

Even public health can benefit from energy
efficiency improvements, the IEA says, because indoor air quality
will be improved as a positive side effect. The health benefits
could save EU countries up to €190 billion a year, it

The IEA also challenges the idea that the benefits of energy
efficiency are undermined by the so-called rebound effect, where
money saved through wall insulation is spent in turning up the
thermostat, for instance. Positive impacts of rebound are possible,
it points out, with money saved being spent on health, poverty
alleviation or improving productivity.

These are just a taster of the fifteen different
types of benefit the IEA says can accrue from energy efficiency
investment. Its
full report
delves much deeper into the
evidence behind its claims and the methods policy-makers can use to
understand them.

Russian gas

The IPPR report highlights one of these fifteen
areas for particular attention – energy security. It says that more
ambitious energy efficiency efforts could cut EU gas usage by a
third, coincidentally the same amount that is currently imported
from Russia.

The IPPR report is cleverly piggy-backing on the
fact that energy security has become so central to the EU energy
policy debate in recent months that it is now considered ”

” to EU climate efforts. When
European Commission president-elect Jean Claude-Juncker appoints
his cabinet later this week he is
to create a new post of
vice-president for energy security.

In a comment on the report, former UK government
climate and energy security envoy Rear Admiral Neil Morisetti puts
it like this:

“Recent events in
Ukraine and the Middle East have served to highlight the
vulnerability of our energy supplies and the political straitjacket
that results from our over-dependence on fossil fuel imports from
these volatile regions. The quickest and most effective form of
energy security is to use less.”

The IPPR report uses the energy security hook to argue
for a more ambitious
EU 2030 climate and energy package
and an
EU energy security strategy
with energy efficiency at its
heart. It would like to see a 35 per cent energy saving target
rather than the 30 per cent that is currently on the table, along
with greater ambition on emissions cutting and renewables.

It may be hard to push that 30 per cent
efficiency goal higher, however. It was the product of
internal battles within the commission
must still be agreed by EU heads of state at a meeting of the
European Council on 23-24 October.

The ugly sisters

So if the benefits of energy efficiency are so
tangible, why is takeup slow?

Opposition to a higher energy saving target was
led by current European Commission president José Manuel Barroso,
who favoured a lower 27 per cent goal. His objection relates to the
perceived costs of increased ambition, and not everyone agrees with
the IEA’s analysis that efficiency investments will boost economic

The UK government is also less than enthusiastic
about energy efficiency targets. It favours a single EU 2030 target
for emissions with the market finding the cheapest means of meeting
that through efficiency, fuel switching, or whatever.

Another barrier standing in the way of
efficiency investment is identified by the IEA, which

“One main obstacle is
the lack of attention paid to energy efficiency investment
opportunities… relative to supply-side opportunities, including new
resources such as shale gas and oil.”

Efficiency lacks the excitement-factor of big
initiatives and ground-breaking solutions. Even if it works, the
savings it generates can be swamped by energy price increases, on
top of which the results tend to accrue over long time periods.
That makes spending today harder to justify, though the IEA says
investments can pay back more quickly than realised if its multiple
benefits approach is considered.

The failure of the government’s Green Deal home
energy efficiency scheme until it introduced – and then removed

cashback incentives
tells a similar story.
Both relate to humans’ inability to properly
weigh future benefits against current

Academics looking at the problem
say that
factors like decision-making inertia and a lack of good information
are also holding efficiency back.

The IEA’s solution to these challenges is to
spread improved knowledge about the multiple benefits of
efficiency. It says:

“Armed with more
comprehensive information about the value of energy efficiency,
countries will be better able to design energy efficiency policies
that maximise… positive impacts.”

That’s important, but as the IEA acknowledges it
will take time and “significant further work”. The IPPR approach is
to drive political action by linking efficiency to energy

The IEA says energy efficiency can meet 40 per cent
of the emissions-cutting challenge towards a two degrees target for
global warming. If that potential is to be met then both the IEA
and IPPR approaches to pushing efficiency will be needed – and
probably much more besides.