The concept and applications of energy efficiency

Energy efficiency is a term that describes making the best use of energy and avoiding its wastage, essentially performing the same task with less amount of energy consumed in the process. This concept has created much emphasis on developing innovative and cost-effective solutions to tackle the widespread use of inefficient appliances and practices globally.

Today, about two-thirds of the entire primary energy reserves of countries is going to waste, according to data from the International Energy Agency (IEA). Countries are expanding their efforts in achieving national energy efficiency goals by including more recommendations and policies in their long-term climate agendas.

For a society to become energy efficient, it must incorporate suitable policy measures as well as apply innovative energy saving technologies in multiple sectors. Popular examples of such measures include proper thermal insulation and double-glazed windows for the building sector, the use of LED lights instead of incandescent light bulbs, and the introduction of efficient variable speed drives (VSDs) for heating, ventilating, and air conditioning (HVAC) appliances.

Furthermore, the transportation sector has been witnessing numerous developments, such as the manufacturing of more efficient engines, the spread of electric vehicles, the incorporation of smart navigation technologies, and the use of alternative sources of fuel such as hydrogen. Aside from technological developments, energy efficiency in the transport sector is also improved by attractive public transport offers and spatial planning as well as social policy measures that allow people to avoid journeys or shift them to more energy-efficient means of transport.

The prospects of adopting efficiency measures

Energy efficiency on its own provides notable financial benefits especially when complementing renewable energy projects, according to a report by the International Renewable Energy Agency (IRENA) which modelled energy use in several large economies, including Germany, China and the United States. The report shows that renewable energy deployment was the fastest and least expensive when paired with energy efficiency measures, and that options to scale up renewables and improve efficiency faster could reduce emissions by around one-third to one-half, compared to current plans and policies. However, despite the clear potential of energy efficiency, the global rate of energy efficiency improvement has slowed in recent years.

According to data collected by the IEA the rate of improvement has slowed from 2.3% between 2011 and 2016 to an average of 1.3% since 2017. Additionally, the Energy Efficiency study reports published annually by the IEA indicate that energy efficiency projects are still perceived to be too risky by investors and financing institutions, mainly due to the limited amount of statistical data collected to demonstrate their bankability.

To improve financing for energy saving projects, approaches from both a policy and market standpoint are to be considered. Policy initiatives focus on improving the certification process for energy efficiency and optimizing the use of investment funds directed towards them. Market approaches on the other hand aim to relate the increases in performance to energy efficiency investments, which increases the interest of investors in such projects. Energy experts suggest the development of suitable methods for data collection and storage from energy saving projects.

Another way to attract the financial sector to investments in energy efficiency is to present banks and investors with a comprehensive overview of the total costs as well as the payback opportunity resulting from reduced annual operating costs, essentially walking them through the process and presenting them with the expected outcomes. Furthermore, governments could develop standard protocols to facilitate measuring energy use before and after a project is implemented. The Efficiency Valuation Organization (EVO) states that suitable protocols are necessary to minimize the time needed for measuring baseline energy use and thus reduce the transaction costs associated with energy efficiency projects. Moreover, providing technical and financial training to lenders helps to increase awareness among financers regarding the profitability of energy efficiency investments.

Examining the experiences of Germany

Germany has implemented several energy efficiency initiatives as part of its ongoing efforts to achieve carbon neutrality in accordance with its climate action plan for 2050. The German National Action Plan on Energy Efficiency (NAPE) was established under the EU Energy Efficiency Directive and sets a strategy for enhancing energy efficiency in Germany, covering energy saving for buildings, companies, transportation, and regular consumers.

The action plan comes with multiple measures to achieve the targets, including the allocation of funds for building renovations, establishing energy efficiency networks for companies to share their experiences with energy efficiency, introducing several tax incentives for consumers and businesses, as well as launching competitive tender schemes for investments in energy efficiency projects. Since Germany expects to cut its primary energy consumption in half by 2050 compared to its 2008 levels, the country needs to ensure the effectiveness of the established measures by evaluating their progress and outcomes.

Energy consumption is planned to be reduced by half, while renewables are to provide 60% of the energy supply in Germany, refer to Figure 1.

The German NAPE allocates an annual funding of 1.8 billion euros to a number of energy efficiency programs, as stated by the Ministry for Economic Affairs and Climate Action (BMWK). The CO₂ Building Renovation Programme is the largest of these programs and offers low-interest loans and transfers subsidies to private individuals and housing companies. It is expected to be continued and expanded on during the implementation phase of the action plan. The national plan also supports awareness campaigns aimed at stakeholders and consumers, encouraging them to take action and pursue energy saving habits to reduce their energy waste. Germany’s energy policy is embedded into the EU-Framework, as illustrated in Figure 2.

Setting up a Jordanian roadmap

Jordan so far developed two National Energy Efficiency Action Plans (NEEAPs), which set the roadmap for energy efficiency improvements in key areas of the economy. The first energy efficiency action plan was established in 2011 and included eleven main measures with the target of saving 806 GWh of energy by 2014. According to an evaluation, it was estimated that about 40% of the first plan was accomplished. The second NEEAP was developed for 2017–2020 with a target of saving 2,000 GWh of energy by 2020. The second plan incorporated 35 measures covering the residential, tertiary, industrial, water-pumping, street-lighting, and transport sectors under the Arab EE guideline. The Jordanian Minister of Energy and Mineral Resources, Dr Saleh Al-Kharabsheh, announced plans for a third energy efficiency action plan. The Jordanian-German Energy Partnership and the German Energy Agency (dena) are currently co-operating to give advice to the ministry on establishing this third action plan and support the implementation of its measures.  

According to energy-jordan-germany.org