Yes, We Need to Talk About Cutting Energy Demand


Germany put its energy sector on war footing last week, warning of impending shortages as Russia further tightens deliveries of natural gas to Europe. By reducing Europe’s ability to fill inventories that will be needed when winter comes, Russia is boosting its leverage to weaponize energy exports as part of its campaign to conquer Ukraine and break Western resistance. In escalating the gas system to the second-highest “alarm” stage—one step away from government energy rationing—German Energy and Economics Minister Robert Habeck called on Germans to “make a difference” by voluntarily changing their consumption behavior to conserve energy.

Habeck hit on a critically important and underappreciated solution to today’s energy crisis. Unlike many approaches being adopted, increasing efficiency can simultaneously reduce Russian leverage, counteract high energy prices, and curb carbon emissions to address climate change. In fact, efficiency and conservation gains—from adjusting the thermostat and driving less to smart digital controls and insulating buildings—are among the fastest, cheapest, and easiest ways to deal with all of these challenges. With a far worse energy crisis still to come, policymakers around the world should make reducing energy consumption in the short, medium, and long term a central component of any strategy. Unfortunately, Germany’s call on citizens and companies to conserve energy is the exception to the approach being taken by most countries to cope with looming energy shortages.

European fears that Russia would cut gas supplies to the continent became a reality in recent weeks. After selective cuts to a few European countries, Russia slashed capacity through its main gas pipeline to Germany by 60 percent and cut exports to many others. European natural gas prices rose more than 50 percent, and power prices rose to their highest level since December 2021. In response, 10 European Union member states have declared various stages of a gas emergency.

Germany put its energy sector on war footing last week, warning of impending shortages as Russia further tightens deliveries of natural gas to Europe. By reducing Europe’s ability to fill inventories that will be needed when winter comes, Russia is boosting its leverage to weaponize energy exports as part of its campaign to conquer Ukraine and break Western resistance. In escalating the gas system to the second-highest “alarm” stage—one step away from government energy rationing—German Energy and Economics Minister Robert Habeck called on Germans to “make a difference” by voluntarily changing their consumption behavior to conserve energy.

Habeck hit on a critically important and underappreciated solution to today’s energy crisis. Unlike many approaches being adopted, increasing efficiency can simultaneously reduce Russian leverage, counteract high energy prices, and curb carbon emissions to address climate change. In fact, efficiency and conservation gains—from adjusting the thermostat and driving less to smart digital controls and insulating buildings—are among the fastest, cheapest, and easiest ways to deal with all of these challenges. With a far worse energy crisis still to come, policymakers around the world should make reducing energy consumption in the short, medium, and long term a central component of any strategy. Unfortunately, Germany’s call on citizens and companies to conserve energy is the exception to the approach being taken by most countries to cope with looming energy shortages.

European fears that Russia would cut gas supplies to the continent became a reality in recent weeks. After selective cuts to a few European countries, Russia slashed capacity through its main gas pipeline to Germany by 60 percent and cut exports to many others. European natural gas prices rose more than 50 percent, and power prices rose to their highest level since December 2021. In response, 10 European Union member states have declared various stages of a gas emergency.

Oil prices, meanwhile, also remain at near-record highs, with global supply growth constrained, Russian exports curtailed, and refining capacity limited. High gasoline and diesel prices are contributing to inflation, straining pocketbooks, and creating political headaches in capitals around the world. In Washington, for example, U.S. President Joe Biden recently called on Congress to suspend the federal gasoline tax.

Countries are largely responding to the crisis by seeking alternative sources of oil and gas—and ramping up coal use. Along with recent U.S.-German long-term deals to supply liquefied natural gas (LNG) by ship, European countries are pursuing similar contracts with Qatar. Germany, the Netherlands, Finland, France, and other nations have announced plans to build new LNG import facilities. Germany, which still doesn’t have a single LNG import terminal and has thus made itself even more dependent on Russian pipeline gas, is now planning three such terminals, and the government recently chartered four floating storage and regasification units—specialized ships that can be set up more quickly to import gas while the terminals are under construction. The Netherlands is considering reopening its largest onshore gas field, shut down due to earthquakes likely caused by gas extraction. Germany, Austria, Italy, and the Netherlands have all announced plans to resurrect old coal plants (but not nuclear ones, with Germany inexplicably still planning to shut down its last two such plants later this year). And last week, Biden convened oil industry executives in an effort to find ways to boost U.S. oil production and refining.

All of these steps are appropriate, if lamentable, responses to the current crisis. As we have written in Foreign Policy, the hard truth is that offsetting the loss of much of Russia’s energy supply to ensure secure and affordable fuel for consumers will require tapping other sources of fossil fuel supplies and investing in more infrastructure, at least in the near to medium term. The push for more energy supplies also extends to clean energy, of course, with Europe increasing investments in zero-carbon energy and bringing its targets forward.

But all these efforts to drill and pump, push refineries to the limit, construct multibillion-dollar LNG facilities, and hasten clean energy supply in Europe must also be paired with much more significant programs to cut energy use. Amid the focus on boosting renewable energy sources and fighting fossil fuels, the world has sadly lost sight of one of the most important energy facts: Efficiency investments and demand conservation are often the cheapest and quickest ways to cut the use of oil, gas, and coal—and to reduce the need for replacing Russian supplies (not to mention carbon emissions).

According to the International Energy Agency (IEA), adjusting the thermostat for heating by just 1 degree Celsius (or 1.8 degrees Fahrenheit) in European buildings would curb gas use by 10 billion cubic meters per year. (For comparison, Biden pledged in March to deliver 15 billion cubic meters more gas to Europe this year.) And in the IEA’s road map to achieve net-zero emissions, energy efficiency delivers the second-largest contribution over the next decade through measures such as retrofitting buildings, switching to less power-hungry appliances, using higher fuel economy standards for vehicles, and improving the recovery of industrial waste heat. And while greater efficiency sometimes boosts energy use in response—something known as the “rebound effect”—the net benefits of efficiency and conservation are enormous, quick, and available at low cost.

To be sure, the European Union’s energy security plan—known as REPowerEU—includes a goal of hiking energy savings for efficiency from 9 to 13 percent by 2030 compared to the EU’s 2020 reference scenario. France, for example, has announced it will increase subsidies—first adopted in 2018—for apartment retrofitting and the installation of electric heating to replace less-efficient boilers that use gas. With its many old buildings, experts have identified France’s building stock as having some of the highest potential to reduce energy use. Despite these efforts—which can only be a start for securing efficiency gains—most European governments are still paying more attention to energy supply than to energy demand during this crisis.

The supply-centric response to the global energy crisis is even greater outside of Europe. The growth rate of investment in energy efficiency is set to slow in 2022, according to the IEA, and it is falling short of what is required to achieve the climate goal of net-zero emissions by 2050. According to the IEA, “[t]he cleanest, cheapest, most reliable source of energy is what countries can avoid using, while still providing full energy services for citizens.” A global push for greater efficiency is not only necessary to achieve climate goals but could free up much-needed energy supplies in the near term to help all consuming countries, especially those in Europe, cope with shortages from the loss of Russian oil and gas. It would also help keep prices down.

Today’s disproportionate focus on more extraction and infrastructure construction is not just worse environmentally, but, as energy iconoclast Amory Lovins warned a half century ago, it’s also harder and costlier. In a seminal essay in the wake of the 1973 oil crisis, Lovins beseeched energy leaders to take the “soft path” to meet the world’s energy needs—conservation, efficiency, and renewable energy—rather than the “hard path” of massive projects for mining, extraction, and industrial facilities.

In reading his essay again today, one is struck by just how prescient Lovins’s warnings were—and how much better off we’d be had we heeded them. Today, just as he wrote almost half a century ago, “[c]onservation, usually induced by price rather than by policy, is conceded to be necessary but it is given a priority more rhetorical than real.” He went on to lament that “[e]mphasis is overwhelmingly on the short term,” observing that in response to immediate political and economic fears, “aggressive subsidies and regulations are used to hold down energy prices well below economic and prevailing international levels so that growth will not be seriously constrained.” Indeed, in response to today’s high prices, governments are subsidizing energy prices and suspending fuel taxes—undermining efforts to curb demand at a time when market prices are rising to the levels needed to do just that.

Just as we see happening today, Lovins also warned about a shift to coal, “with the prospect then or soon thereafter of substantial and perhaps irreversible changes in global climate”—an early voice on the risks of climate change in 1976. He advocated the use of “transitional technologies that use fossil fuels briefly and sparingly to build a bridge to the energy-income economy of 2025”—something we recently argued for in Foreign Policy. To be sure, there is much to take issue with in Lovins’s vision, such as his staunch opposition to nuclear power. Still, it is sobering to think how much better equipped Europe and the rest of the world would be today to cope with the loss of Russian energy supplies had energy leaders not chosen the hard path over the past half century.

There are numerous reasons why energy efficiency and conservation have not been in the public and political focus despite their outsized effects on energy use and emissions. A landlord has to pay for insulation and retrofits while the tenant often profits from the resulting utility savings—known to economists as a “principal-agent problem.” Consumers tends to focus on the purchase price of an appliance rather than total power costs down the road—a behavioral phenomenon aptly known as “myopia.” Calls for conservation are also perceived as politically fraught, evoking painful memories of then-U.S. President Jimmy Carter, during the 1970s energy crisis, wearing a cardigan sweater and calling for sacrifice.

If the best time to have followed the soft path would have been decades ago, the second-best time is now. Although some people may associate efficiency and conservation with personal sacrifice and deprivation, more efficient economies need not demand a lower quality of life for citizens—only demand the use of less energy to produce the same or more output.

Even if some immediate conservation measures do require modest behavior changes, such as adjusting the thermostat, it is not too much to ask consumers in nations with the highest rates of per capita energy consumption to use a bit less when Ukrainians are paying the ultimate sacrifice with their lives. To better cope with the looming gas crisis this winter in Europe, cushion the blow to households of soaring fuel prices, and allow policymakers to impose maximum economic pain on Russia by stopping its flow of energy revenue, energy policy leaders around the world should quickly rediscover the value of energy efficiency—and use conservation as a powerful weapon in the fight against Russia’s aggression.

Source link


Leave a Reply

Your email address will not be published. Required fields are marked *

Previous post Malawi gets K14 billion drought insurance payout – The Nation Online
Next post Chinese military experts in Tanzania help rescue injured Chinese