Huge gap between energy demand and supply from renewables

    A new whitepaper from Danfoss, the Danish family-controlled engineering group, highlights the dramatic increase in global demand for energy and argues that, without urgent action to curb energy demand, the build-out of renewables will be insufficient to meet the needs of a growing population. 

    As the world leaders discussed during COP27 in Egypt, Danfoss says it wants to offer practical policy recommendations for urgent action that political, corporate and community leaders must consider before, during, and after COP27.

    Statistics show that the current build-out of renewables won’t be even near sufficient if we don’t at the same time curb our demand for energy, referring to the drastic acceleration in demand for cooling in the Global South as a case in point.  

    President & CEO of Danfoss, Kim Fausing, called for an urgent need for climate leaders to include energy efficiency measures and electrification in immediate future after the conclusion of COP27. 

    Kim Fausing, President & CEO, Danfoss says, “The world, particularly Europe, is following a one-sided approach to the energy crisis, focusing solely on the supply of energy, not enough on demand. For every dollar spent on energy efficiency, we can avoid spending more than 2 dollars on energy supply. Technology is available, and energy efficiency solutions can be used today across all sectors. If we don’t act now to address the growing demand for energy it will be extremely difficult and more expensive to meet the Paris Agreement goal of staying below 1.5 degrees warming. “

    Ravichandran Purushothaman, President- of the Danfoss India region said, “Primarily of all the solutions to accelerate India’s green transition that exists in the world today, energy efficiency is the fastest, the easiest, and the most impactful. It can deliver nearly 40% of the total emission reductions needed for us to reach the net zero target. Danfoss’ whitepaper highlights the need for urgent action to address the growing demand for energy. With the energy crisis looming high in many nations, rapid action on Energy is both necessary and achievable for our sustainable transition to a carbon-neutral future.

    Need for urgent focus on the demand side

    The whitepaper, titled ‘The neglected demand side of the green equation’, delves into the details of how energy efficiency is an enabler of electrification. To reach net zero, experts agree that we must substitute fossil energy with renewable sources and electrify everything across all sectors. 

    However, to grow the role of electricity in the energy mix it is a fundamental, yet overlooked, the fact that we need to reduce energy demand first. Green energy comes in peaks and is used in peaks. Energy efficiency shaves these peaks and reduces the systemic cost of electrifying. 

    Still, the world’s buildings, infrastructure, transport networks, and vehicles continue to operate with great inefficiencies, wasting energy and heat on a grand scale. This new whitepaper tackles this problem head-on by providing clear and practical policy recommendations for fixing the currently unbalanced equation, and by highlighting the key data and figures that should inform collective decision-making on these issues. For example:

    • Energy efficiency solutions, if deployed on a global scale, can take the world one-third of the way towards Net Zero (according to IEA)
    • For every dollar spent on energy efficiency, we can avoid spending more than 2 dollars on energy supply
    • In the IEA’s net zero scenarios, by 2030 the global population will grow by 750 million people and the economy will be 40% larger than today, but final energy demand will need to be 5% lower
    • Cooling is a global blind spot in climate change mitigation. As economies grow and adapt to a warmer climate, especially in the Global South, growing demand for cooling has the potential to drive one of the most substantial increases in greenhouse gas emissions we have ever seen. 
    • Policymakers must urgently deploy solutions to reduce energy waste and electrify transport, industries, and buildings. 
    • For households alone, enhanced efficiency and related avoided energy demand could help contribute to reducing global household energy bills by at least USD 650 billion a year by 2030 in the net zero scenarios. 
    • Adding to this, higher investments to achieve these energy savings can support an extra 10 million jobs by 2030 in efficiency-related fields such as new construction and building retrofits, and manufacturing and transport infrastructure.

    Kim Fausing says: “In short, if we don’t curb our demand for energy, the build-out of renewables will not be even near sufficient. We simply will not have enough green energy to meet the demands of a growing population. One overlooked fact is that renewable energy comes in peaks and is used in peaks. Energy efficiency allows us to shave these peaks, for instance by reusing the excess heat from industries, supermarkets, and data centers to heat our homes. Energy efficiency is fundamental for full electrification of our society.”

    Kim Fausing adds: “Despite recent encouraging measures being taken in the EU, the current investment levels in energy efficiency are far from enough to meet our global climate goals. Governments have made headlines with mid-century targets but to a large extent failed to implement the immediate solutions we have at hand.  As US President Biden said at COP26 in Glasgow last year, the eye of history is watching. It’s time to step up, act and enshrine minimum energy efficiency requirements into law. The greenest energy is the energy you don’t use, but in the current energy crisis, it’s also by far the cheapest, and it’s imperative if we want to meet the Paris Agreement goal. “

    ‘The neglected demand side of the green equation’ is available for download here

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