Rising investment in renewables has pushed energy efficiency down the climate agenda, but, as Mark Hillsdon reports, there are major wins to be had in carbon emissions and cost savings, and cities are leading the way
“How many electricians does it take to change a light bulb?” runs the age-old joke.
“None,” is the new green answer, “because they had the foresight to use a LED bulb in the first place.”
Amid the global push for renewable power, energy efficiency has dropped down the sustainability agenda. Yet super-efficient LED lighting is a technology that needs to become standard in homes, offices and factories around the world to cut the carbon footprint of buildings, which are currently responsible for one-third of global energy demand, and one-quarter of the world’s greenhouse gas emissions.
If energy efficiency best practices were implemented on a large scale, building energy demand could be reduced by one-third by 2050 globally
According to the World Green Building Council (WorldGBC), if well-known energy efficiency best practices were implemented on a large scale, building energy demand could be reduced by one-third by 2050 globally, delivering 5.8 billion tons of CO2 emissions savings.
On the face of it, the figures around energy-efficient lighting seem reassuring. According to Harry Verhaar, head of global public and government affairs at Signify (formerly Phillips Lighting), the global market for incandescent light bulbs stood at 12 billion units, and lighting accounted for 19% of global electricity use in 2006.
In 2018, the figures had dropped to 2 billion and 13%, respectively, while by 2030 lighting is expected to account for only 8% of energy use.
Still, Verhaar maintains, LED adoption has to grow faster to reap the potential savings in energy and CO2 emissions.
He says the problem is that only 1% of the world’s buildings are new build, and have had to comply with more energy-efficient standards. The other 99% are all existing and so need to be renovated to improve their efficiency.
Other barriers include a hesitancy to invest in new technologies, for the fear that they will soon become outdated.
The difficulty with the energy-efficiency story is that it requires a whole range of players to come together
To solve this, he believes that public procurement policies could go much further, with more emphasis on long-term efficiencies rather than short-term cost savings. New models need to be introduced for how we pay for lighting too, he says, particularly mechanisms to help overcome the conundrum that the landlord’s investment only ever financially benefits the tenant.
Ian de Cruz is a global director at Partnering for Green Growth and Global Goals 2030 (PG4), a forum for developing public/private partnerships to help deliver the Sustainable Development Goals.
“The difficulty with the energy-efficiency story is that it requires a whole range of players to come together – property developers, investors, people who rent buildings, builders,” he says.
But once you begin to make energy efficiency an attractive proposition, he continues, you start to get some key corporate businesses, particularly property developers, seeing the value of going down this path.
Debbie Weyl, manager of building efficiency at the World Resources Institute (WRI) Ross Center for Sustainable Cities, says improving building efficiency involves minimal investment yet brings high rewards.
It can bring new resilience to the grid, create local jobs and improve air quality and peoples’ health. “The fact that you make these changes and then all of these myriad benefits accrue locally is really critical.”
We help cities to convene local stakeholders, to figure out what their priorities are on buildings
The WRI manages the Building Efficiency Accelerator (BEA), which supports local and regional authorities around the world and is currently working with 37 states and cities, and 40 global organisations.
“We help cities to convene local stakeholders, to figure out what their priorities are on buildings,” says Weyl, with local coalitions involving NGOs, private-sector companies, associations and universities.
“Cities have a lot of jurisdiction on actually making the changes to buildings,” she continues. “You need the national government to put in place policies and resources that can create an enabling environment, but at the end of the day it’s cities that are going to be implementing building codes [and] that have a lot of building stock themselves, [so] that they can lead by example and show what's possible.”
Juanita Alvarez, regional head of the WorldGBC Americas Network of Green Building Councils, says the private sector is also crucial, particularly in countries that are not yet ready to start implementing a net-zero carbon building commitment: “We are looking to bring the private sector into the conversation so that companies can give their support to cities in terms of leadership, technical expertise and market development,” she says.
Bogota is the world’s highest capital, a lofty position that gives the city a relatively cool year-round climate, making the heating and cooling of buildings less energy-intensive than other Colombian cities. However, a knock-on effect of this is that when city chiefs began to implement the new national building code, they found that it lacked essential elements like guidance on where to set the baseline for energy efficiency.
The city authorities began working with the BEA, bringing together local stakeholders to decide on how revising the legislation could make it more workable for the local construction sector. The result is a policy that has been adapted to the city’s specific needs and is expected to reduce energy and water use in new buildings by 20% and 30%, respectively.
Mexico City has an ambitious commitment to renovate and retrofit every public building to the highest standards of energy efficiency
Bogota is set to see huge growth over the next 30 years, too, with estimates suggesting a doubling of the housing stock to some 5.3 million dwellings. Importantly, the new policy for energy-efficient construction has also been worked into the city’s master plan, ensuring that this growth doesn’t come with an accompanying surge in energy demand, and choking levels of air pollution.
The new policy has also set a precedent that is encouraging other cities and regions to look at energy efficiency, and help Columbia meet its national climate commitments.
Mexico City is also inspiring national change, with its ambitious commitment to renovate and retrofit every public building to the highest standards of energy efficiency, beginning with the city hall, which has now achieved the gold standard from green building certifier LEED.
The city has also launched a building challenge, asking companies to reveal data about their energy consumption, the different strategies they have in place to reduce it and their ambitions for net-zero carbon buildings
“What this gives is an amazing message,” says Alvarez, “they are leading by example.”
Sonora, Mexico’s second largest state, is also now taking up the challenge. The region’s extreme climate means that it consumes more electricity for heating and cooling than any other state in Mexico, but this also puts it in a unique position to make huge savings, and relatively quickly, says Alvarez.
The Green New Deal for America has at its heart a call to 'upgrade or replace every building in US for state-of-the-art energy efficiency'
There are also moves to harvest more of the benefits of energy-efficient buildings in the United States. In December last year, the Democrat’s Alexandria Ocasio-Cortez championed a new Green New Deal for America, which has at its heart a call to “upgrade or replace every building in US for state-of-the-art energy efficiency”. It envisages a future where buildings are not just built to new zero-energy standards but also act as mini power plants, generating energy that they then sell back to the grid, improving household incomes and creating jobs at the same.
Moves are also being made to phase out hydrofluorocarbons (HFCs), which are used in air conditioning and refrigeration systems, and are thousands of times more potent than C02 at trapping heat in the atmosphere. New York, Maryland and Connecticut are set to join California in banning them, in a move which could see manufacturers stop using them across the whole US market.
In Europe, there is more of an emphasis on finding ways to pay for greater energy efficiency. The Energy Efficiency Mortgages Action Plan (EeMAP) initiative is looking at ways that homebuyers could be offered better borrowing rates on mortgages in return for purchasing more energy-efficient homes, or committing to implement energy-saving work.
Utility companies, specialist energy-efficiency businesses and 42 banks with a combined lending power of over €3 trillion, equal to around 20% of the EU’s GDP, have signed up to road-test the guidelines.
Jennifer Johnson, deputy secretary general of the European Covered Bond Council (ECBC), which is helping to run the pilot, says there’s a strong business case as well as a philanthropic one for using mortgages as vehicles to improve the energy efficiency of building stock.
“If you're increasing the energy efficiency of a property, you're reducing the energy consumption of the household, so you're increasing their [the homeowners’] disposable income,” she explains. “This in turn means there’s more money to service the loan, which means lower risk of a default on the mortgage.”
Making a home more energy-efficient also increases its value which, in the world of finance, also appeals to lenders
Ultimately, this could mean that banks would need to set aside less capital to cover the loans, a major consideration from a risk-management perspective. Making a home more energy-efficient also increases its value, which, in the world of finance, says Johnson, also appeals to lenders should they ever have to repossess the property.
“It provides the lender with a lot of avenues to pass on benefits to the borrower,” she continues, such as lower interest rates or money to fund specific energy-efficient measures such as solar panels or a new boiler. “What we are doing is creating a value chain and everyone gets an advantage.”
A bigger challenge is establishing how the EeMap scheme could encourage renovation of older properties. “That's where the problem lies in the EU,” she says. “It is not new build because they are being built to particular standards… what's more of a challenge is the existing building stock.”
Cruz of P4G agrees: “Retrofit is hard, it’s not an easy win, but it still needs to be part of the solution.”
Europe’s housing stock is in a poor state, with a report by the Buildings Performance Institute Europe (BPIE) revealing that 97% of buildings are energy-inefficient and will need to be significantly upgraded to meet the 2050 vision of decarbonisation.
The International Energy Agency’s view is that in order to meet Paris Agreement objectives, around 250 million homes across the EU will need energy renovation; that’s almost 23,000 homes a day until 2050.
Lenders won't want to finance really deep renovation. The numbers don't stack up
“From a risk point of views, lenders won't want to finance really deep renovation,” says Johnson. “The numbers don't stack up.”
She says the pilot green mortgage scheme will try to provide some answers to questions such as: “How much finance can be released to finance a renovation for which there is then a reasonable payback? … Is it a new boiler? Is it cavity wall insulation?”
That’s why the involvement of local and regional authorities, which can offer subsidies and leverage public money, is so valuable.
Undeniably, people are more aware about their energy bills and consumption, says WRI’s Weyl, but she adds: “One of the acknowledged shortcomings of the energy efficiency space overall has been the PR and marketing around it. One of the things we really need is excitement and a groundswell of support from citizens.”
In other areas, she says, this often happens around technological innovations, such as electric vehicles. But with energy efficiency, “we're trying to get people excited about something they can't see, about having less of something.
“In the 70s, when fuel prices were really high, there was a lot of push around energy efficiency,” she says. This led to behavioural and institutional change because “there was a shock, a short-term shock that people could feel.” Today, she says, that shock is climate change.
And those LED lights? Weyl agrees they are a huge efficiency improvement, but at the same time, she says, “It’s critical to also think about what you can do to actually decrease the number of light bulbs you need in the first place.”
Mark Hillsdon is a Manchester-based freelance writer who writes on business and sustainability for Ethical Corporation, The Guardian, and a range of nature-based titles including CountryFile and BBC Wildlife.
This article is part the in-depth Built Environment Briefing. See also:
LED lighting energy efficiency WorldGBC PG4 Green New Deal World Resources Institute