Danfoss – Danfoss: Radical rethinking on energy efficiency needed by leaders at COP28
- The International Energy Agency’s Energy Efficiency 2023 report shows that not enough progress is being made on energy efficiency.
- Danfoss President and CEO, Kim Fausing calls on governments to double the pace of efficiency improvements. He says the world needs a radical rethinking of energy efficiency to achieve net zero by 2050.
- It is vital to double annual improvements in energy efficiency – from 2% in 2022 to 4% per year on average between now and 2030.
Today’s release of the International Energy Agency’s (IEA) Energy Efficiency 2023 report shows that not enough progress is being made on energy efficiency. The report reveals a slowing in global improvements in energy intensity – the IEA’s primary measure of energy efficiency – and, in response, Danfoss President and CEO, Kim Fausing is calling on governments to commit to doubling the rate of energy efficiency improvements by 2030 at COP28 to limit global warming to 1.5C.
Much stronger policy packages of information, regulations and incentives, and a tripling of global investment in energy efficiency and electrification, is vital to double annual improvements in energy efficiency – from 2% in 2022 to 4% per year on average between now and 2030.
One of the most crucial keys to meeting climate goals will be energy efficiency as it is the single largest measure the world can take to reduce energy demand, says Kim Fausing, President & CEO of Danfoss. He says energy efficiency is, and always should be, the ‘first fuel’ for clean energy transitions.
Kim Fausing, President and CEO of Danfoss, says: “We need to see direct action on energy efficiency from leaders at COP28 if we are to limit global warming to 1.5C. We have virtually no chance of meeting our future energy needs, and certainly no chance of achieving net zero by 2050 if we don’t radically rethink energy efficiency as a key tool to decarbonize society.”
“As the IEA stated in their Energy Efficiency 2023 report, we need much stronger policy packages of information, regulations and incentives, and a tripling of global investment in energy efficiency and electrification, to double annual improvements in energy efficiency – from 2% in 2022 to 4% per year on average between now and 2030. The Sønderborg Action Plan, developed by the IEA is a great place to start,” adds Kim Fausing. “By doubling the rate of energy efficiency improvements by 2030, we can save the equivalent of all global oil used in road transport today. That’s 40 million barrels of oil per day saved. We have the technology, and it’s the quickest and most cost-effective carbon mitigation option.”
The International Energy Agency (IEA) states that doubling the rate of energy efficiency globally to at least a 4% energy intensity improvement each year up to 2030 is needed to put the world on track to reach net zero.
Renewable energy and energy efficiency go hand-in-hand
To move to an energy system based on renewable energy, everything across society, apart from those most hard-to-abate industries, must be electrified. Most renewable energy sources produce electricity, meaning that there is a crucial need to electrify wherever possible to make it possible to use that green electricity.
In fact, by transitioning from a fossil energy system to a fully electrified one, it’s possible to cut up to 40% of final energy consumption. This means electrification is itself a form of energy efficiency, as most electric technologies have a lower rate of energy loss than a fossil-driven equivalent. An obvious example is electrical vehicles that convert 77% of the electrical energy to the wheels. In comparison, conventional gasoline vehicles convert about 12%-30% of the energy stored in gasoline to power the wheels.
Using energy at the right time can save 40 millions tons of CO2 emissions in the EU & UK
Meanwhile, simply using energy at the right time by utilizing demand-side flexibility technology can save 40 million tons of CO2 emissions each year by 2030 in the EU and UK. Additionally, the EU and UK can achieve an annual societal cost savings of €10.5 billion by 2030 and €15.5 billion by 2050. These savings already account for the majority of implementation cost of demand-side flexibility infrastructure and it can be assumed that a similar logic would prevail in other countries around the world.
“Seeing is believing, and, if climate ministers, energy ministers and finance ministers don’t know that we already have most of the solutions we need to double annual improvements in energy efficiency by 2030, I hereby invite them to visit our sites around the world to see the solutions in action.” says Kim Fausing.
Policy recommendations for leaders at COP28
Incentivize energy use during times of plentiful renewable energy with dynamic energy pricing
Peak energy consumption periods must be reduced through demand-side flexibility, that is using energy at the right time when renewable energy is plentiful. It doesn’t make sense that energy costs the same regardless of when you use it. Both consumers and industry should be incentivized with dynamic pricing to use electricity when there is an abundance of renewable energy in the grid.
Make a plan for electrification
The potential for electrification goes beyond electric passenger vehicles, and includes many parts of industry, marine transportation, trucks, and construction machinery. To prepare for a future based on renewables we must plan to electrify all aspects of society apart from those very hard-to-abate sectors. Leaders must immediately work on making strategies and realistic timelines for electrification, identify obstacles to electrification, and address them.
Include flexibility solutions in energy policy at all levels
To mediate the relationship between supply and demand of renewable energy and to ensure energy security, the new smart grid must include load-shifting and peak-shaving technologies. Introduce demand-side flexibility guidelines in building and industry regulations guiding consumers to implement flexibility solutions faster. Give both consumers and producers access to consumption data, facilitating active participation and opportunities for system operators to further integrate demand-side flexibility solutions.
Read the International Energy Agency (IEA)’s Energy Efficiency 2023 report here.
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More information on Danfoss: See the full profile on EMR Executive Services
More information on Kim Fausing (President and Chief Executive Officer, Danfoss): See the full profile on EMR Executive Services
More information on COP28 – Climate Change Conference (30 November to 12 December 2023, Dubai, United Arab Emirates): https://www.cop28.com/ + The 28th session of the Conference of the Parties (COP 28) to the UNFCCC will convene from 30 November to 12 December 2023. It will take place in the United Arab Emirates.
In the three decades since the Rio Summit and the launch of the United Nations Framework Convention on Climate Change (UNFCCC), the Conference of the Parties to the Convention (COP) has convened member countries every year to determine ambition and responsibilities, and identify and assess climate measures. The 21st session of the COP (COP21) led to the Paris Agreement, which mobilized global collective action to limit the global temperature increase to 1.5C above pre-industrial levels by 2100, and to act to adapt to the already existing effects of climate change.
More information on Dr. Sultan Ahmed Al Jaber (President-Designate, COP28 UAE + Minister of Industry and Advanced Technology, UEA + Managing Director and Group Chief Executive Officer, ADNOC): https://www.cop28.com/en/cop28-presidency#leadership + https://www.linkedin.com/in/dr-sultan-al-jaber/
More information on IEA (International Energy Agency): https://www.iea.org + The IEA is at the heart of global dialogue on energy, providing authoritative analysis, data, policy recommendations, and real-world solutions to help countries provide secure and sustainable energy for all.
The IEA was created in 1974 to help co-ordinate a collective response to major disruptions in the supply of oil. While oil security this remains a key aspect of our work, the IEA has evolved and expanded significantly since its foundation.
Taking an all-fuels, all-technology approach, the IEA recommends policies that enhance the reliability, affordability and sustainability of energy. It examines the full spectrum issues including renewables, oil, gas and coal supply and demand, energy efficiency, clean energy technologies, electricity systems and markets, access to energy, demand-side management, and much more.
Since 2015, the IEA has opened its doors to major emerging countries to expand its global impact, and deepen cooperation in energy security, data and statistics, energy policy analysis, energy efficiency, and the growing use of clean energy technologies.
More information on the IEA Energy Efficiency 2023 Report: https://www.iea.org/reports/energy-efficiency-2023 + Energy Efficiency 2023 is the IEA’s primary annual analysis on global developments in energy efficiency markets and policy. It explores recent trends in energy intensity, demand and efficiency-related investment, policy and technology.
- Efficiency policy momentum builds, but global energy intensity progress slows.
- Policy action is translating into investment and deployment.
- The deployment of efficient technologies is curbing energy demand and heralding the peaking of fossil fuels.
- The world is seeing record hot temperatures, boosting the need for cooling and lowering the need for heating.
- Doubling efficiency progress could cut energy bills by one third and make up 50% of CO2 reductions by 2030.
More information on the IEA Sønderborg Action Plan 2022: https://www.iea.org/reports/the-value-of-urgent-action-on-energy-efficiency + Set of strategic principles and policy toolkits developed by the IEA that can help governments seeking to implement efficiency policies rapidly.
More information on Dr. Fatih Birol (Executive Director, International Energy Agency): https://www.iea.org/contributors/dr-fatih-birol
More information on Net Zero by 2050 by the United Nations: https://www.un.org/en/climatechange/net-zero-coalition + Put simply, net zero means cutting greenhouse gas emissions to as close to zero as possible, with any remaining emissions re-absorbed from the atmosphere, by oceans and forests for instance.
Currently, the Earth is already about 1.1°C warmer than it was in the late 1800s, and emissions continue to rise. To keep global warming to no more than 1.5°C – as called for in the Paris Agreement – emissions need to be reduced by 45% by 2030 and reach net zero by 2050.
More than 140 countries, including the biggest polluters – China, the United States, India and the European Union – have set a net-zero target, covering about 88% of global emissions. More than 9,000 companies, over 1000 cities, more than 1000 educational institutions, and over 600 financial institutions have joined the Race to Zero, pledging to take rigorous, immediate action to halve global emissions by 2030.
EMR Additional Notes:
- Carbon Dioxide (CO2):
- Primary greenhouse gas emitted through human activities. Carbon dioxide enters the atmosphere through burning fossil fuels (coal, natural gas, and oil), solid waste, trees and other biological materials, and also as a result of certain chemical reactions (e.g., manufacture of cement). Carbon dioxide is removed from the atmosphere (or “sequestered”) when it is absorbed by plants as part of the biological carbon cycle.
- Biogenic Carbon Dioxide (CO2):
- Carbon Dioxide released as a result of the combustion or decomposition of organic material, that is biomass and its derivatives. Examples include carbon dioxide released during the combustion of wood and biogas generated by decomposition.
- Biogenic Carbon Dioxide (CO2) and Carbon Dioxide (CO2) are the same. Scientists differentiate between biogenic carbon (that which is absorbed, stored and emitted by organic matter like soil, trees, plants and grasses) and non-biogenic carbon (that found in all other sources, most notably in fossil fuels like oil, coal and gas).
- Carbon Capture and Storage (CCS):
- CCS involves the capture of carbon dioxide (CO2) emissions from industrial processes, such as steel and cement production, or from the burning of fossil fuels in power generation. This carbon is then transported from where it was produced, via ship or in a pipeline, and stored deep underground in geological formations.
- CCS projects typically target 90 percent efficiency, meaning that 90 percent of the carbon dioxide from the power plant will be captured and stored.
- Decarbonization:
- Reduction of carbon dioxide emissions through the use of low carbon power sources, achieving a lower output of greenhouse gasses into the atmosphere.
- Carbon Footprint:
- There is no universally agreed definition of what a carbon footprint is. A carbon footprint is generally understood to be the total amount of greenhouse gas (GHG) emissions that are directly or indirectly caused by an individual, organization, product, or service. These emissions are typically measured in tonnes of carbon dioxide equivalent (CO2e).
- In 2009, the Greenhouse Gas Protocol (GHG Protocol) published a standard for calculating and reporting corporate carbon footprints. This standard is widely accepted by businesses and other organizations around the world. The GHG Protocol defines a carbon footprint as “the total set of greenhouse gas emissions caused by an organization, directly and indirectly, through its own operations and the value chain.”
- Grid, Microgrids and DERs:
- The power grid is a network for delivering electricity to consumers. The power grid includes generator stations, transmission lines and towers, and individual consumer distribution lines.
- The grid constantly balances the supply and demand for the energy that powers everything from industry to household appliances.
- Electric grids perform three major functions: power generation, transmission, and distribution.
- A microgrid is a small-scale power grid that can operate independently or collaboratively with other small power grids. The practice of using microgrids is known as distributed, dispersed, decentralized, district or embedded energy production.
- Smart Grid is any electrical grid + IT at all levels . Micro Grid is a group of interconnected loads and DERs (Distributed energy resources) within a clearly defined electrical and geographical boundaries witch acts as a single controllable entity with respect to the main grid.
- Distributed energy resources (DERs) are small-scale electricity supply (typically in the range of 3 kW to 50 MW) or demand resources that are interconnected to the electric grid. They are power generation resources and are usually located close to load centers, and can be used individually or in aggregate to provide value to the grid.
- Common examples of DERs include rooftop solar PV units, natural gas turbines, microturbines, wind turbines, biomass generators, fuel cells, tri-generation units, battery storage, electric vehicles (EV) and EV chargers, and demand response applications.
- Distributed energy resources management systems (DERMS) are platforms which helps mostly distribution system operators (DSO) manage their grids that are mainly based on distributed energy resources (DER).
- DERMS are used by utilities and other energy companies to aggregate a large energy load for participation in the demand response market. DERMS can be defined in many ways, depending on the use case and underlying energy asset.
