Mike Underhill, Chief Executive, Energy Efficiency and Conservation Authority
Climate change talks in Paris at the end of 2015 marked an evolution in global thinking about how energy use impacts climate.
EECA’S WORK TO PROMOTE energy efficiency and renewable energy has always been intertwined with carbon emission reductions and climate change issues, but the Paris talks raised the profile and importance of good energy management.
Not only can householders and businesses invest in energy efficiency on the strength of its cost-saving and national benefits, but I’m predicting that the prospect of reducing carbon dioxide emissions will become increasingly important.
Managing the growth of energy consumption is the most cost-effective way for us to address our carbon challenge. According to analysis by the International Energy Agency (IEA), energy efficiency is the most effective tool to reduce energy sector emissions to limit global warming to 2°C or below, providing potentially over 40 percent of the required reductions.
From a climate change perspective, not all energy is equal. A unit of electricity has a significantly lower carbon content than a unit of oil or coal. EECA therefore sees the greatest potential to reduce carbon in our transport and process heat sectors. Both have a much larger proportion of non-renewable energy than electricity, making both significant emitters.
While agriculture produces half our total emissions, these are more difficult to control. New Zealand has a strong and ongoing commitment to exploring innovative and technical solutions to solving this problem, but it will take time. EECA’s programmes are delivering complementary carbon dioxide reduction benefits. In looking to the future, a good place to start is the $9 billion-worth of oil that is imported into New Zealand each year, half of which goes into private vehicles.
Global interest in electric vehicles is surging ahead, making local options for a greener transport system more practical and viable. Figures from the Ministry of Transport indicate that up to 95 percent of daily travel needs could be covered by electric vehicles, including virtually all daily commutes. Running costs have definite appeal – EECA estimates the average electric vehicle would cost the equivalent of just 30 cents a litre to charge. There is also security in having a reliable source of domestic fuel – we have enough consented renewable generation to run our entire fleet of cars on electricity.
Our high rate of renewable electricity generation means electric vehicles have 80 percent fewer carbon dioxide emissions compared with petrol vehicles when driving in New Zealand, and produce 60 percent fewer emissions over their full life cycle including vehicle manufacture.
By changing 300,000 light vehicles to electric vehicles (10 percent of our current fleet) we could save one million tonnes of carbon dioxide a year. Changing one car to electric saves two tonnes of carbon dioxide each year – more than the weight of the car.
Since company car fleets make up 70 percent of new car purchases, EECA is actively promoting electric vehicles to fleet managers. We recently launched an online tool to help them compare the costs of buying and running electric, petrol and diesel vehicles.
Taking a longer term view, New Zealand has significant raw materials for biofuels, such as waste or by-products from our forestry blocks or meat, dairy and agricultural sectors. This will enable both cars and trucks to substitute imported, fossil fuel oil with a New Zealand-based renewable fuel.
Our second key opportunity lies with industrial heat. It is all pervasive, used in huge quantities in our manufacturing sector in activities ranging from taking the liquid out of milk to make milk powder, to creating steam for wood and food processing, through to heating our large commercial buildings.
Many industrial heat demands can be easily and cheaply reduced with efficiency measures such as boiler turning and regular maintenance, and many could be replaced with renewable energy sources, such as changing a coal-fired boiler to wood energy.
Where’s our next opportunity? Unlike the US and China our electricity system is 80 percent renewable, with a target of 90 percent by 2025. There are still savings to be made through electricity efficiency; EECA programmes across the electricity sector this year alone have the potential to save more than 180,000 tonnes of carbon dioxide a year.
EECA also targets carbon dioxide emissions through a programme of direct engagement with our biggest energy users. We have long-term energy management partnerships with large energy-using organisations representing nearly 40 percent of all businesses’ energy use. They included large companies such as Fonterra, Alliance Meats, Waterfront Auckland, insurance company IAG and Orora Packaging. Once these programmes have been implemented, we will potentially see combined annual energy savings of around $14 million and 30,000 tonnes of carbon dioxide. This is a large saving yet it’s the tip of the iceberg – climate change is a long game. What’s important at this stage is building willingness to do things differently, and awareness that energy efficiency is a powerful solution.
As we reduce carbon, of course there are other benefits too.
Being efficient with energy is cheaper than buying energy or building more generation capacity, so it makes compelling market sense. EECA research shows out of the $20 billion this country spends on energy a year, we could potentially save $2.4 billion.
Commercial buildings are estimated to use approximately 20 percent of total electricity, costing as much as $800 million a year. EECA estimates 20 to 25 percent of this could be saved through investment such as upgrading to energy efficient technologies or retuning existing systems, particularly in lighting and heating, ventilation and cooling.
Simply measuring energy use by installing monitoring systems can be enough to save five percent of costs, by ensuring discrepancies are picked up and fixed quickly.
Every day we receive feedback on the market’s appetite for energy management. Without doubt, we’ve seen the sector’s interest and understanding grow even over the past 12 months.
The momentum shows no signs of slowing, as our business team continues to work with dozens of large organisations on unlocking the benefits of improved energy management. What’s in it for them? A straw poll at the Large Energy Users Forum hosted by EECA Business in September 2015 suggested most are driven by cost savings and a competitive edge – no surprises there. Reduced carbon emissions didn’t feature highly, but ultimately it doesn’t matter whether we’re motivated by saving money or reducing carbon. Energy efficiency does both.
Having said that, I will be interested to see if businesses’ awareness of their carbon footprints ranks more highly when we hold the forum again in 2016.
Taking every opportunity to focus on good energy management and to substitute fossil fuels with renewable energy offers significant potential to reduce carbon dioxide emissions, as well as our dependence on imported oil and prepare us to compete in a low carbon global marketplace.
We have access to technology, the right expertise and renewable resources – it makes good economic and environmental sense to use them.