RCEM: Views on Energy News

In November, Paris will be hosting the United Nations Climate Change Conference. This will be the 21st yearly session of the Conference of the Parties, also known as COP21, and the 11th session of the Meeting of the Parties (CMP 11) to the 1997 Kyoto Protocol.

The conference is expected to deliver a “New Kyoto”, a binding agreement between member nations on their commitment to reduce carbon emissions. This would be the result of a long and tedious process started in 1992 and without a doubt one of the main geopolitical achievements of the year. However, reducing CO2 emissions is not a benign task and therefore assessing the potential impact of an international agreement is critical for policy makers, business owners and any individuals interested in affordable access to energy and energy-supply security.

Since the first Kyoto agreement, adopted on 11th December 1997, the scientific consensus on the anthropogenic nature of climate change has grown to 97% of climate scientists agreeing that climate-warming trends over the past century are very likely due to human activity¹.

The political response has been strong, and the pledges for the second round of the protocol maturing in 2020 are much more ambitious than those of the first round, which matured in 2012, with a commitment to reduce GHG emissions by 20% in comparison to levels in 1990. This commitment coincides with the European Union ‘2020 Climate and Energy Package’, which includes three key objectives: a 20% reduction in EU greenhouse gas emission from levels in 1990; an increased share (20%) of energy consumption produced from renewable resources; and a 20% improvement in the EU’s energy efficiency².

In addition to those international commitments, a law was drafted and adopted by the French parliament on 14th October, 2014. The so-called ‘Projet de loi relatif à la transition énergétique’ fixes several ambitious targets for 2030:

  • Reduce final energy consumption by 20% from 2012 levels
  • Reduce GHG Emissions by 40% from 1990 levels
  • Reduce fossil fuel primary consumption by 30%
  • Increase the share of renewables in the net energy consumption to 32%
  • Limit power generation from nuclear plants at 63.2GW (current installed capacity) or 50% of France’s electricity production from 77% in 2014

The law recognises that two factors are critical if we wish to meet these targets: reducing overall energy consumption and decarbonising energy mix. However, each of the targets represents a colossal shift in our relationship with energy.

Let us focus on the first target. As we all know, energy consumption and GDP are directly correlated. No economic output can be created without energy and, if we want to maintain our current living standards, we must act decisively on improving our energy efficiency. At the current pace of 1.3% annual improvement in energy efficiency, a stagnation of the French economy over the next 15 years would be necessary to reach the government target of 20% reduction by 2030. In the event of a 1.6% annual GDP growth, as forecasted by the French Strategic Research Centre³, an annual improvement in energy efficiency of 3% must be reached, more than twice the current level.

Historically, energy efficiency improvement has been largely due to the expansion of the service sector versus the industrial sector. As the share of the service sector now reaches 78.5%⁴ (World Bank) of France’s GDP, this trend is no longer sufficient. At current levels of energy intensity, a complete move from industry to services would save 276TWh, i.e 15.48% of France’s energy consumption or the equivalent of a 1% improvement in energy efficiency over the next 15 years.

The second factor has been an improvement in energy efficiency through technical innovation. However, the real impact of improved energy efficiency has been a major point of controversy in economics which can be summarised by the Jevons paradox: by making a resource more cost-effective, innovation ultimately leads to a long-term increase in the use of this resource.

The targets sets by the French government and the European Union are based on the 2°C global warming targets. However, it seems that governments have not yet realised the extent of the structural and behavioural transformation that would be required to reach those targets. Relying on investment incentives and expecting technological progress to solve all our problems is not a viable energy policy. It is critical that scientists, engineers, policy makers and all citizens come together to better understand the conundrum in which we find ourselves and decide what type of society we want to build.

Isaac Pete is a student on ESCP Europe’s MSc in Energy Management (MEM) and Visiting Consultant at E.ON Inhouse Consulting GmbH. If you would like to know how our graduates are making an impact across the sector, please click here. If you want to pursue a career in the Energy industry, there is still time to join the next intake: our final deadline for applications is 28th August. Find out more or begin your application now!

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¹J. Cook, et al, "Quantifying the consensus on anthropogenic global warming in the scientific literature,"Environmental Research Letters Vol. 8 No. 2, (June 2013)

²EU Climate and Energy Package, December 2008

³Centre d’analyse stratégique, « France 2030: cinq scenarios de croissance », Benoît Coeuré, Vincent Chriqui

⁴World Bank, National Accounts data 2014

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