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How Energy Efficiency Cuts Costs for a 2-Degree Future

How Energy Efficiency Cuts Costs for a 2-Degree Future

Full Title: How Energy Efficiency Cuts Costs for a 2-Degree Future
Author(s): Fraunhafer ISI
Publisher(s): Fraunhafer ISI
Publication Date: November 1, 2015
Full Text: Download Resource
Description (excerpt):

About 40% of global greenhouse gas (GHG) emissions originate from energy use in industry, transport, and buildings, and another 25% from power generation (IPCC 2014). A highly efficient use of energy is thus fundamental to limit GHG emissions. Yet, energy efficiency receives much less attention than the decarbonization of the energy supply. A recent report by the International Energy Agency states that global energy efficiency (EE) investments since 1990 have avoided more than 870 MtCO2e (megatons of CO2-equivalent emissions) in 2014, while reducing fuel costs by 550 billion US Dollar (IEA 2015). For this reason, the IEA calls EE the “first fuel” in the context of decarbonization.

This study indicates that scenarios with higher EE mostly show lower abatement costs. This was the result of evaluating the large number of existing scenarios that comply with the internationally agreed 2°C target until 2050. The societal costs of decarbonization in these scenarios vary strongly and a detailed assessment of the potential cost reductions due to EE is lacking. In order to close this gap, this study estimates the global cost savings up to 2030 associated with a decarbonization pathway with a strong focus on EE measures. Based on an unpublished update of McKinsey’s bottom-up estimates of the potentials and costs of EE options and alternative decarbonization measures (McKinsey & Company forthcoming), this study compares the costs of an energy-efficient pathway with an energy-intensive pathway that focuses on decarbonizing the energy supply and only uses EE to the extent additionally required to keep emissions in line with the 2°C target.

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