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Exchequer funding for energy efficiency measures is a ‘no-brainer’

Posted on April 03, 2017 at 12:11 PM

The International Energy Agency recommends energy efficiency as the ‘first fuel’ in a country’s energy mix: the most cost-effective energy is the energy we do not use. IEA analysis also shows that energy efficiency has the potential to support economic growth, enhance social development, advance environmental sustainability, ensure energy system security and help build wealth.

Industrial efficiency can play a significant role in this area. SEAI advise that all significant industrial plants should be able to aim for 100% efficiency by converting waste energy to useful purposes - these can include conversion to electricity or district heating projects.

For these reasons, Exchequer funding for energy efficiency measures is a ‘no-brainer’. It enables us to maintain and increase our efforts to address the shortfall on our energy efficiency target. It is job-intensive and often involves cutting-edge technologies, in terms of the renovation, design, construction and use of our buildings.

And it reduces fuel poverty. There is clear evidence that living in a cold damp house is linked to poor health. The opportunity is there to address energy poverty through energy efficiency, and to fund once-off retrofit as opposed to paying ongoing fuel subsidies. Reducing energy bills permanently for those least able to pay is a way to address general deprivation. And increased comfort can result in better health and improved social inclusion.

However, the SEAI Annual Report 2016 shows that, while energy efficiency in the public sector has improved, on a ‘business as usual’ basis we will fail to meet our targets.

Falling short of national energy efficiency target by 5 percentage points could add as much as 2 percentage points to the effort we need to make to meet our renewables target.

Our progress on energy efficiency so far has come from the ‘low hanging fruit’, the lower cost, more accessible measures such as attic insulation.

We need now to achieve larger amounts of more durable energy savings from larger scale projects such as deep renovation of buildings and more sustainable new build.

But we should have learned enough by now to abandon the will o’ the wisp notion that, at least with current energy prices and interest rates, retrofit will ‘pay for itself’ and that the financial institutions will devise a win-win investment package that allows householders to borrow for retrofit and pay back the interest and capital from savings on their fuel bills.

The lessons learned from consumer inertia in regulated markets, and from pilot studies with ‘smart’ meters and so on, is that we cannot rely on energy efficiency being achieved simply by PR campaign and private sector financial and marketing initiatives.

In the construction sector, for example, the greatest opportunities to reduce lifecycle energy and carbon are at the design stages of new investments. Up to 95% of the lifespan cost is already committed at the end of the design process. Case study projects have demonstrated that savings available can range up to 50% improvement from a baseline design.

Incentives for design should be greatly improved. Design that utilises the best technological resources is expensive to provide and attracting the best talent also costs money. We could develop Ireland as a serious centre of advanced sustainable design with the right incentives. For example the VAT rate for sustainable design could be reduced from the current rate of 23%.

There is an EU requirement under the Energy Efficiency Directive for businesses to carry out energy audits. This provides information but does not by itself produce energy savings. The hope is that businesses will act on the results of their audits.

Maybe some will, but will enough of them, fast enough?

In the US, by contrast, there is reliance at federal level on voluntary and incentive-based energy efficiency standards for commercial and industrial buildings, with tax breaks, grants and loans. But there is also a more recent switch to mandatory requirements such as California’s new energy efficiency assessment regulation.

We need to consider now whether to shift emphasis from voluntary to mandatory energy management standards in the commercial and industrial sectors

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