New Delhi: Using Artificial Intelligence to control home comfort or HVAC (Heating, Ventilation, and Air Conditioning) systems and opting for centralised and more sustainable methods of heat generation. These are some of the suggestions that the World Economic Forum has given businesses to help cut down on energy usage and emissions while still being profitable enterprises.
In its new 45-page report titled ‘Transforming Energy Demand’ released Monday, the WEF, in collaboration with its International Business Council (IBC), and the international consultation firm PwC, suggests short-term and long-term interventions to help increase energy efficiency and meet the global sustainability targets set down at COP28 in December 2023.
The report was released ahead of the WEF’s annual meeting in Davos from 15 to 19 January.
The IBC, which backs the report, is a conference of WEF members and industry leaders that discusses economic and political issues. Significantly, according to the report, its executives represent businesses that account for 3 percent of global energy use.
According to the 2023 edition of the Emissions Gap Report, released just before COP28, emissions must be cut by 42 percent by 2030 to limit warming to 1.5°C above pre-industrial levels by the end of the century — a global benchmark set by the 2015 Paris Agreement.
To address high energy demand and achieve the Paris Agreement goals, the report focuses on three main sectors of energy use — buildings, industry, and transport. According to the report, these areas account for 94 percent of global energy demand.
The incentives to take such action are compelling, the report says — according to it, taking such measures by 2030 could mean “a possible 31 percent reduction in energy intensity and up to $2 trillion in annual savings”.
Besides recommending AIs for HVAC systems, the report also suggests retrofitting buildings with smart devices for short-term solutions.
In the long term, it suggests interventions in the form of value-chain collaborations between businesses and energy suppliers — that is, collaborations from the start to the finish of a product. For instance, it encourages businesses to collaborate and opt for district heating — a system that involves generating energy at a central location and then distributing it in a local area.
“The private sector can play a leading role in energy transition, which is why members of the IBC came together to focus on their businesses’ energy consumption,” Olivier Schwab, managing director of the WEF, said in a statement to the press.
According to Ramya Krishnaswamy, head of Institutional Communities and ESG Initiative and a WEF executive committee member, the CEOs at the IBC felt that energy demand “did not receive enough attention from either policymakers or business leaders when thinking of energy transition”.
“The main goal of the report was to raise awareness about energy demand. We want this to be an item on the agenda,” Krishnaswamy, one of the contributors to the report, told ThePrint.
The report will be discussed further by leaders of the IBC at the annual meeting of the WEF in Davos, the press release said.
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Challenges — government regulation, insufficient incentives
The much-lauded Global Renewables and Energy Efficiency Pledge, which was signed by 118 countries at COP28 in Dubai, calls for doubling the global average annual rate of energy efficiency improvements every year till 2030.
India abstained from the pledge but Indian companies like Infosys and Mahindra are represented at the IBC, which mentions the pledge in its report to say its aims are in line with global climate change mitigation goals.
While the report is authored by and targeted towards the private sector — specifically businesses — it also has a section on actions for governments and the public sector. Under this, interviews and surveys with businesses were used to gauge problems with implementing energy-efficient solutions.
According to the report, one of the main problems repeatedly highlighted by companies was the need for a supportive policy environment. While around 47 percent of respondents said that the lack of such regulation on energy efficiency hindered their actions, another 38 percent pointed to “insufficient incentives” to reduce energy and emissions intensity.
“It is crucial, therefore, that we work together with governments and regulators across both developed and developing markets to help accelerate progress on this issue,” Ana Botín, group executive chair of Spanish multinational financial services firm Banco Santander and chair of the IBC said in a press statement.
Although the report recommends government interventions and policies, governments were not consulted while it was being drawn up. Therefore, the next phase will be to focus on policymakers and engage with countries to promote these interventions, said Krishnaswamy.
India’s UJALA scheme
The report also uses examples to show why governments need to step up incentives for energy efficiency improvements and encourage energy audits for businesses.
For instance, the report cites the Indian government’s 2015 UJALA scheme to show how large-scale energy efficiency needs to be combined with economic growth in emerging markets and developing economies (EMDE).
According to it, in 2015, India recognised significant levels of wasted energy and cost in domestic lighting, “which represented 27 percent of domestic energy due in part to the fact that only 0.4 percent of the installed lighting base were efficient LEDs”.
“Uptake was prevented by the high cost of LED bulbs, even though they use 75 percent less energy and lasting around 25 times longer than incandescent bulbs,” it said.
The government overcame this in four ways, the report said: creating a tender for large-scale LED bulb procurement, signing value-chain agreements with state governments and utilities to distribute bulbs, providing two payment options — upfront and on-bill repayments — through electricity bills and building swap schemes for rural households where “one LED bulb could be swapped for a working incandescent bulb”.
“Creating economies of scale for LED bulbs lowered upfront costs per bulb to as low as $0.8. This drove the uptake of more than 1.15 billion LED light bulbs by 2020, resulting in annual savings of over $2.5 billion and around 47 billion kilowatt hours (kWh),” the report said, adding that businesses should strategise and commit to short-term energy efficiency targets while collaborating with policymakers for long-term actions that will help global energy transition.
According to Ramya Krishnaswamy, while WEF is open to working with any government on energy efficiency “markets like India is where the energy growth will be”.
“This is where buildings, transport, and industry will develop and where energy efficiency will be important,” she said. “We do desire engagement with EMDEs like India since energy consumption is so important to the country as well.”
(Edited by Uttara Ramaswamy)
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