There’s a disjoint between the emissions cuts
countries say they’re going to make and what needs to be done to
avoid the worst impacts of climate change, according to the latest
annual update to the United Nations Environment Programme’s (UNEP)

Emissions Gap report

To close the gap and limit climate change, the
world is going to have to get a lot better at using energy smartly,
it says.

Each year UNEP takes a different aspect of the
world’s energy economy to examine, in order to show how emissions
could be curtailed. This year, it’s the turn of energy efficiency.
So what’s the calculus on how using energy more intelligently could
get us closer to two degrees?

Emissions gap

The impetus for this report is simple. Unless
global emissions peak and decline in short order, the world will
pass a point where global warming can be limited to two

The Intergovernmental Panel on Climate Change’s
recent report calculated the
remaining amount of carbon dioxide humans can emit

and still have a likely chance of limiting global warming to
less than two degrees. It comes to about another 1,000 gigatonnes
of carbon dioxide.

In 2012, global emissions of greenhouse gases
like carbon dioxide and methane were around 54 gigatonnes of carbon
dioxide equivalent. To meet that “carbon
budget”, UNEP calculates global emissions must be no
higher than 44 gigatonnes in 2020, and 42 gigatonnes in

But current climate targets don’t stick within
these limits. World leaders are currently committed to targets that
imply global emissions will be 52 to 54 gigatonnes of carbon
dioxide equivalent in 2020, and 56 to 59 gigatonnes in 2030. UNEP
says that leaves an “emissions gap” between where we’re headed and
where we need to be.

Energy efficiency

UNEP identifies a range of options for countries
to cut their emissions and stay within the carbon

In previous reports it has focused on
agricultural emissions
or increasing
renewable electricity generation
. The 2014 report
focuses on ways to use energy more efficiently, which is going to
be vital if countries are going to avoid blowing the carbon budget,
UNEP says.

UNEP says energy efficiency could be responsible
for up to a fifth of the cuts countries need to make to stick to
the carbon budget and have a range of benefits that go beyond
avoiding the worst impacts of climate change.

Energy efficiency improvements could prevent 22
to 24 gigatonnes of carbon dioxide emissions between 2015 and 2030,
UNEP estimates, with new energy efficiency policies reducing energy
demand by about five to seven per cent.

There are a number of ways this could be
achieved, UNEP suggests. Countries expecting to construct lots of
new homes should ensure they are as energy efficient as possible by
implementing building codes. Those with lots of older houses should
commit to retrofitting the buildings with insulation and better
heating systems.

Fuel economy standards could also ensure
vehicles use as little fuel as possible, and governments should
support the retirement of old power plants to be replaced by low
carbon more efficient alternatives, UNEP says. Governments could
also require companies to undertake regular audits to see where
they can save energy and find a way to finance them to make the
improvements, it suggests.

Making it work

That all sounds great. But there are some
caveats to UNEP’s analysis. To make wide ranging new energy
efficiency policies cost effective, there will need to be a strong
carbon price of about $70 per tonne. That increases the value of
each unit of energy saved due to efficiency policies, and makes
them more cost effective.

This is a long way from the current European
carbon price, which is sitting around €7 ($9). None of the world’s
carbon markets currently operate with a price near UNEP’s

There’s also an issue with access to finance.
Rolling out energy efficiency policies on a large scale relies on
governments being able to persuade people and businesses to
participate in and pay for the up-front cost of the

Nevertheless, those that stress the importance
of energy efficiency will be encouraged by the findings of a recent
report from the International Energy Agency that showed global
efficiency policies have already
saved a continent’s worth of energy
But policy success varies across different countries.

Germany’s policies are probably the
most effective
. Its public
investment bank, KfW, spent €16 billion on grants and loans to
improve energy efficiency in 2013. In contrast, the
UK’s energy efficiency schemes have been
for years, with the
recently cutting
one of its main home
improvement schemes.

So while energy efficiency policies have
tangible benefits, governments are yet to work out how to implement
them to the extent UNEP says is necessary to keep within the carbon

Common ground

Negotiators are set to resume talks on a new
global climate deal in Lima later this month. It may be that
working out ways to use energy more efficiently will provide some
rare common ground between developed and developing

UNEP’s report is a useful annual reminder that
whatever progress has been made on climate policy over the past
twelve months, countries will need to do more on a number of fronts
to cut emissions in the next couple of decades.