Energy efficiency in advanced countries


Muhammad Shahbaz

ENERGY plays an important role not only in stimulating economic activity but also in maintaining living standards in developed and developing economies. The question is how developing nations may attain optimal benefits from existing energy sources by using them efficiently while exploring new sources of energy. There are multiple ways in which the concept of energy efficiency is contextualized and operationalized. Energy efficiency means lesser use of energy for the same level of services or output. Energy efficiency is a way to manage and restrain the growth of energy consumption (demand), therefore its importance is paramount for social and economic concerns.
Households expenditure on energy efficiency appliances by making energy-efficient home improvements and taking energy-efficient actions on a daily basis leads to net savings. On average, US households spend $ 5,550 every year on energy, whereas in Pakistan, 14.2% of monthly income is consumed by electricity bills provided that if your income is PRS 71, 000 per month. In the current economic environment, this is a significant portion of household income. This ratio may increase in the coming months due to electricity price rise. Therefore, it is important to use energy resources more efficiently and draw on the experiences of developed countries. For instance, in the USA, energy (efficient) star bulbs help households for saving $ 75 each year. Similarly, in daily actions, washing clothes with unheated water can save $ 63 per year. The use ofLEDs (light emitting diodes) saves 30-80% of electricity bills.
Energy efficiency not only helps at the household level but also helps savings at the city, regional and national levels. For instance, the US economy (government, business and household) saves $ 500 billions by efficient use of energy. The energy efficiency projects have also created hundreds and thousands of jobs. Energy efficiency stimulates innovations. For example, in 2012, the US government supported the innovation and use of LEDs which are 25% more energy efficient compared to traditional bulbs. The efficiency improvements have helped the US to decrease consumption by 60% and saving energy sufficient to power 12 states each year. Energy efficiency increases the longevity of available natural resources. Efficient use of energy saves environment by reducing carbon emissions. The USA reduced 1.1 Gigatons of greenhouse gas emissions by making investment in all big sectors of the economy, for example, environment-friendly trucks and cars emit very low carbon emissions. Energy efficiency contributes to national security. There is an indirect contribution due to efficient use of energy resources which then provides more budget space for the security spending but also there is a direct link. For instance, almost 80% of the fuel supply was carried via land-routes to armed troops in Afghanistan and Iraq. In 2011, fuel convoys were attacked 1100 times. This forced the USA to use electric and hybrid vehicles as well as energy efficient generators to control casualties occurring during convoy attacks. Fewer convoys led to fewer casualties. The quality of life is improved by energy efficiency, particularly in the strong climate condition such as those prevailing in Pakistan. Energy efficiency improves the productivity and workable environment to labour. Energy efficiency enables citizens that use smart growth technologies and transportation systems to utilize their time efficiently. Energy efficiency enables an economy to export energy. In specific to Pakistan, the burden of energy import bill is huge and can be reduced by efficient use of energy. Energy efficiency is measured by energy intensity.
Energy intensity is how much energy units are consumed to produce one unit of gross domestic product. High energy intensity indicates a high price or cost of converting energy into GDP and vice versa. Energy Intensity 1972 – 2017 Source World Development Indicator: High energy intensity for Pakistan is prima facie evidence that Pakistan is as much as five times energy inefficient compared to developed countries (USA, UK, France, Canada and Germany). This difference can be associated with economic development, technological advancement, energy sector’s innovations, human capital development and well management. Nonetheless, India which historically used to be comparatively energy inefficient than Pakistan until mid-1990s is now 13.56% more efficient than Pakistan. It is worth recalling that the issue of load-shedding started in the 1990s and became worst by 2010. This issue does not seem to be resolved within days and will take a number of years (long term project) to be resolved. In such a situation, the government should launch a long-term policy to increase energy supply as well as efficiency. In so doing, Pakistan should idealize developed countries as well as regional counterparts. In Pakistan, 91.6% of total energy consumption is by three sectors of transportation (34.4%), industry (34.2%) and residential (23%). These sectors need proper attention for energy efficiency.
Energy saving is not a government responsibility, but it is also a duty of every citizen to avoid energy waste. At the household level, the government should launch a campaign using electronic as well as print media to realize the importance of energy saving among citizens. Use of energy efficient appliances i.e. energy star bulbs (LEDs), energy start refrigerators, energy start washing machines etc should be encouraged. Pakistan also needs a comprehensive urban policy regarding building design. Pakistan is a resource-rich country and these natural resources can help in updating or designing energy-efficient buildings. Proper insulation, use of double pans windows and expand of green space is also helpful in decreasing heat absorption.
On the industrial level, the government should encourage industrialists to employ energy efficient technology and efficiency monitoring systems. The government should provide financial incentives (tax exemptions) to industries that adopt energy-efficient technology for production. In the USA, to improve environmental quality, nobody can directly use coal for production process without converting coal into green gas. Office and working building should be centrally heated in winter and cooled in summer seasons. Energy audits should be conducted for all the industries on a sub-annual basis. Easy energy documentation system and information system should be adopted. Although Small and Medium Enterprises Development Authority (SMEDA) has taken initiatives, more is needed for sustainable development in the long run. There is a significant level of energy inefficiencies in the transportation sector of Pakistan due to inefficient vehicles. The transportation sector consumes 34.4% of total energy and crude oil constitutes almost 1/3rd of import bill. For energy efficiency, the focus of public policy should be on the facilitation of energy efficient vehicles by effective taxation system and encouraging competition among manufacturers. The use of green public transport should be encouraged. In a nutshell, energy efficiency is the key for Pakistan to save on import bill, increase its industrial competitiveness by reducing cost, improving quality of life and achieving sustainable development.
— The writer is associated with Montpellier Business School, France, Department of Land Economy, University of Cambridge, UK.