The First Fuel

The energy transition isn’t just about new ways of generation, it’s also about maximizing what we already have

Efficiency is the hallmark of many a successful venture, and when it comes to fighting climate change, energy efficiency is a secret weapon of sorts. Getting more out of what we already generate is a way to cut emissions without adding more capacity, buying time for the installation of more renewable infrastructure and smarter grids. Energy efficiency is the “first fuel” in clean energy transitions, the IEA says, “as it provides some of the quickest and most cost-effective CO2 mitigation options while lowering energy bills and strengthening energy security.”

While there is deservedly a great deal of emphasis on adding renewable capacity, making the most of the existing energy system is just as critical.

“We need to make energy efficiency as sexy as wind turbines,” said Sofie Irgens, head of the climate solutions accelerator at Danish multinational Danfoss, told Reuters.

Energy Efficiency 2.0

Danfoss’ whitepaper “Energy Efficiency 2.0: Engineering the Future Energy System” lays out four basic ways to maximize efficiency.

The first is to electrify wherever possible. Since most electric technologies have a lower rate of energy loss than fossil-fuel equivalents when performing the same tasks, a fully electrified energy system can cut final energy consumption by up to 40%.

Demand-side flexibility is another way to use energy in a better way. Rather than straining energy grids during peak hours, there are creative ways to prepare during off-peak hours, and then turn off or lightly run devices during times when demand is typically high. One example of this flexibility Danfoss gives is supercooling refrigeration systems in supermarkets during off-peak hours. Automated systems like Alsense can lower temperatures below what’s required. During peak demand hours, markets can shut the refrigeration off and be confident that food will remain fresh until peak hours end and the refrigeration turns back on. “Though the system uses more electricity than conventional refrigerator systems, by using energy when it is renewable and plentiful, supermarkets can help reduce the need to resort to carbon-intensive energy sources by lowering demand peaks,” Danfoss says.

The third pillar of efficiency is the better use of hydrogen. Danfoss identifies it as the most promising renewable alternative for heavy industry, long-distance shipping, and aviation. Producing it, though, requires a lot of electricity. By performing hydrogen electrolysis during periods of excess renewable capacity (extra windy or sunny days), we can produce enough green hydrogen to meet high demand and decarbonize hard-to-abate sectors.

The last pillar is integrating sectors by capturing and reusing excess heat. As things stand, by 2030 more than half of global energy input will go to waste as excess heat.

Implementing these measures, the U.S. could realize an annual savings of $107 billion on energy bills and reduce carbon emissions from buildings by 91% by 2050.

Wasted Heat

In power plants, about two thirds of the energy used to create electricity is lost in the conversion process, the Environmental and Energy Study Institute reports. Cogeneration systems, also known as combined heat and power, can capture the heat that would otherwise go to waste and use it to heat the power plant and buildings connected to it by district heating. This method can increase energy efficiency in power generation by anywhere from 33 to a whopping 80%.

In homes and office buildings, replacing gas boilers or electrical resistance systems with heat pumps can increase energy efficiency by three to five times. Because they transfer heat rather than generate it, heat pumps can operate much more efficiently than gas furnaces, lowering emissions by 20 to 80% depending on how clean the electricity they’re using is.

Better insulation in buildings can lower energy demand, and better insulated wiring can keep energy from escaping through leaks.

“This excess heat is a sleeping giant of energy efficiency; when strategically captured and deployed as energy, it has incredible potential to replace significant amounts of valuable energy sources such as fossil fuels and electricity, thereby saving both money and reducing GHG emissions,” Danfoss says.

Investing in Efficiency

Energy efficiency rates improved 2% in 2022. That was double the speed of gains the previous five years, but they dipped to a 1.3% improvement in 2023. At the U.N.’s COP28 in Dubai in December, more than 115 countries supported a pledge to improve rates by 4% each year through 2030, which would make a massive difference in optimizing energy usage. The U.S. hit that 4% rate in 2023, with funding from the Inflation Reduction Act playing an important role. The EU increased its energy efficiency by 5% in 2023.

Since 2020, about $1 trillion worldwide has been invested in energy efficiency improvements. In 2022, investments in things like building retrofits, public transportation, and EV infrastructure topped $500 billion worldwide, the IEA reported. That was an increase of 16% from the previous year, though investment dipped slightly in 2023.

“Amid today’s energy crisis, we are seeing signs that energy efficiency is once again being prioritized,” IEA Executive Director Fatih Birol said. “Energy efficiency is essential for dealing with today’s crisis, with its huge potential to help tackle the challenges of energy affordability, energy security, and climate change.”

Increased efficiency can start with changes such as switching to Energy Star appliances and LED lighting. Then it can ramp up to increased adoption of EVs, which use about 77% of their stored energy to power the wheels, far more efficient than gas-powered cars, which can only harness up to 30% of the energy in their fuel. From there, capturing wasted heat and generating more clean hydrogen can really help efficiency take off.

“We don’t just need to change the way we generate electricity,” Larissa Gross of climate think tank E3G told Reuters. “We need to change the ways we use it.”