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2023-01-01 publication

Energy Transition: Cutting back to move forward

We cannot achieve our climate targets without reducing the demand for energy. Business, industry and private households all have a role to play. We look at which technologies can help, where savings are already being achieved – and where progress is lacking.

by HANNS-J. NEUBERT

First the good news: in the first half of 2022, Germany used 3.4 percent less energy. The decline in consumption can be traced both to the relatively mild winter and to consumer restraint, since energy prices had risen significantly even long before the outbreak of the war in Ukraine.

The bad news, however, is that there has been backsliding on the vital climate change mitigation objective of limiting emissions of greenhouse gases such as carbon dioxide (CO2). When gas stopped flowing through the pipelines from Russia, coal-fired power plants started up again, and 9.2 percent more black coal and 10.6 percent more lignite were used to generate heat and electricity.

We don’t yet know how economical electric cars are when all is said and done. What is certain is that their share of the car fleet is currently lower than many hoped for, at 1.3 percent. Meanwhile, the demand for solar technology is high – often greater than the supply.

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Political measures have yet to bear fruit

Today, Germany’s power plants emit around 760 million tons of carbon dioxide equivalents per year to generate heat and electricity. Only 438 million tons will be allowed in the year 2030 – a necessary step towards making the country climate neutral by 2045. Germany now has only seven years to achieve this substantial reduction in emissions. This was once on the political agenda as a 25-year project. The effort increases with each year it gets kicked down the road. The supply of green energy is not growing to the extent that companies and citizens would like, and not enough to maintain the production levels and standard of living we are used to.

The previous government did launch some energy-saving programs and climate protection measures. They failed to have a great impact, however, as the German Council of Experts on Climate Change criticized in its biennial report at the beginning of November. Hans-Martin Henning, chairman of the council and director of the Fraunhofer Institute for Solar Energy Systems (ISE), summarized the findings as follows: “In general, we observe that many policy instruments were ultimately unable to fully achieve the desired effects.”

Change is needed in all sectors – but not all are playing their part

In the transport sector, for example, energy consumption has not dropped at all for ten years. And in the building sector, more efficient heating and insulation in residential buildings is offset by the trend towards larger homes, with greenhouse gas consumption falling by only 14 percent since 2015. Rebound effects (see box) have also been detrimental, with energy-efficient technologies like LEDs being offset by increased consumption – more lighting. The report divides energy consumers into sectors and sets emission savings targets for each category according to the respective demands and opportunities on the path to climate neutrality by 2045.

The energy sector, industry, buildings, transport, agriculture and waste management are to contribute in different ways. Energy providers face a particularly steep climb – in 2030, they will be allowed to emit greenhouse gases at levels 77 percent lower than in 1990. The permitted levels for industry are 58 percent lower; for the building sector, 68 percent lower; for transport, 48 percent lower; for agriculture, 32 percent lower; and for waste management, 89 percent lower. While some, like the energy sector, are on a promising path with the switch to renewable solutions, others have been doing little for years. Take the building sector, for example. Property owners dragged their feet on heating upgrades. In rental properties, for example, this is due to the difficulty of transferring investments to tenants in such a way that insulation and heating refurbishments pay off in the short term. In condominiums, negotiations in the owners’ associations often take years. For many privately owned properties held for retirement provision, the owners have no interest in making even greater investments when they are almost ready to sell. The incentives for energy-saving renovations are not sufficient to outweigh these and other obstacles. In the meantime, increasingly strict regulations have raised the pressure to renovate – but Germany now lacks the necessary army of builders and other skilled workers to do the work.

Rebound and Backfire

By increasing efficiency, companies can offer products or services while consuming fewer resources. This often also saves money. In turn, these savings impact purchasing behavior and how products are used.

For example, if cars get cheaper thanks to improved efficiency, you might choose a larger model the next time you’re purchasing a vehicle. A fuel-efficient car has lower fuel costs per kilometer driven. That usually influences driving behavior: people more often choose to go by car and drive longer distances, while public transport or bicycles are used less often. As a result, the technically feasible efficiency gains are often not achieved in practice because the product is used more frequently or more intensively.

Beyond the immediate change in how the product is used, other environmentally relevant changes in demand patterns are possible. In this example, the money saved from driving could be spent on air travel (indirect rebound).

Empirical estimates of these rebound effects depend on the methods used and the effects considered. It’s especially difficult to clearly distinguish rebound effects from the respective impacts of growth or structural change.

Direct rebound effects for space heating can reach 10 to 30 percent. In the case of transport, studies suggest that rebound effects caused by energy efficiency are somewhat lower (up to about 20 percent).

If indirect rebound effects are included in the analysis, an even greater portion of the efficiency gains can be canceled out. In individual cases, rebound effects may even exceed the original efficiency savings, a phenomenon referred to as backfire. However, this case is the exception. Backfire is associated with growth and structural change, so it can no longer be considered solely a rebound effect.

Source: German Environment Agency

Were hopes too high for electromobility?

There’s also plenty of untapped potential in the transport sector. Here, too, the rebound effect plays a role, starting with vehicles with internal combustion engines (ICEs). The engines are becoming more efficient, but the cars are getting heavier and stronger – the trend toward larger ICEs continues unabated. The hope now lies in electric cars. However, that market is gaining momentum more slowly than many had hoped. Although a record of around 356,000 electric cars were registered in Germany in 2021 (the figure is expected to be higher in 2022), their share of all cars on the road is small, at 1.3 percent in 2022. Even if the cars are running on a mix of electricity with a growing proportion of renewables over the next few years, it is not yet clear whether this will be as climate-friendly overall as hoped. Battery production is energy-intensive and generates its own share of emissions. According to a study by the Fraunhofer Institute for Production Technology (IPT), it takes roughly 42 kilowatt hours of energy to produce a single kilowatt hour of battery capacity. If the energy comes from gas – as is largely the case in Germany for now – this leads to emissions of more than ten kilograms of CO2 equivalents per kilowatt hour of battery capacity. The figure is less than half that in Sweden, which has largely electrified its battery production.

Companies are reluctant to participate

The German Environment Agency has identified enormous savings potential in the areas of heating fuels, production processes and workshop heating. Business, trade, services and industry consume around 54 terawatt hours a year, enough for more than 12 million four-person households. Industry and trade use around two-fifths of Germany’s total electricity consumption to operate pumps, lighting, ventilation and compressed air systems. In many cases, air conditioning and ventilation systems for offices, public buildings and companies account for up to half of the respective electricity bill. According to the Agency’s calculations, more energy-efficient appliances could save a total of 26 terawatt hours of electricity annually. This enormous savings potential has largely gone untapped so far, because many company managers have no idea exactly how much energy is being wasted and where. For a detailed overview, they could consult resources such as the ISO 50001 energy management standard – which has been in use for ten years.

Widespread digitalization is another factor. Germany has around 3,000 large data centers that collectively consume 16 billion kilowatt hours of electricity per year: as much as the whole city of Berlin. When politicians discuss encouraging energy discipline with legal requirements, though, industry stakeholders bristle. Such was the case when the German Federal Ministry for Economic Affairs and Climate Action released a draft plan to massively reduce energy consumption in the data centers. But some operators are already demonstrating that natural cooling, improved interaction among cooling water circuits, chillers and air flows can save both energy and money. What’s more, waste heat from the computers can be sold and fed into local heating networks. Many companies would rather invest in their core business, though. If they consider energy efficiency measures at all, they typically want very short payback periods of less than 1.5 years. They often lack information on how to take advantage of the numerous funding programs at state, federal and EU level – or they don’t want to deal with the bureaucracy.

Due to the growing demand for computing power – which is ten times higher today than in 2010 – the energy consumption of German data centers has increased by 60 percent since 2010. Some vendors already claim to operate CO2-neutral data centers in their advertising.

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Adjusting power consumption to availability

As higher and more fluctuating amounts of wind and solar power are fed into the grid and fossil-fuel power stations are wound down in the coming years, it will not be sufficient for business, industry and consumers to manage their own consumption responsibly – the electricity demand and supply must also be coordinated better. Providers such as Easy Smart Grid offer technical solutions for private households. The company has developed a technology that detects whether electricity levels in the grid are high or low. The idea: “Dynamic prices corresponding to the electricity supply can be used to control consumption behavior,” says Solutions Manager Stefan Werner. This doesn’t require complicated digital and Internet-based solutions. Even minimal fluctuations in the grid frequency around 50 Hertz could serve as price signals. “If the frequency is slightly higher than 50 Hertz, electricity becomes cheaper; if it is lower, it becomes more expensive,” says Werner. The major hitch: this will only work with nationwide dynamic electricity prices, which are only being introduced gradually. It is not clear whether the concept would result in savings in the end.

Using technologies, adapting infrastructure

Another approach from Easy Smart Grid is a small, affordable chip for consumer devices capable of ensuring that they react independently to power fluctuations down to the second. Batteries and heat or pressure accumulators can also be integrated. This makes it possible to balance the production and consumption of green electricity within a limited local or regional market. In a pilot project in Allensbach, Baden-Württemberg, the system is already running in a new residential area with twelve semi-detached houses, two apartment buildings and one older building. The housing development’s solar-paneled roofs, cogeneration unit, twelve heat pumps, charging stations for electric vehicles and a battery storage system are now intelligently networked with the household appliances. The photovoltaic systems and cogeneration units are expected to cover 50 to 80 percent of the residents’ electricity consumption. If the approach is successful and gets expanded, this would take a considerable load off the electricity grid.

Henning, chairman of the Council of Experts on Climate Change, has a reminder, though: “If we want to achieve the ambitious goals, we have to examine the consumption area, the demand area.” This means reducing the consumption of both resources and goods. A growing economy that overutilizes the world’s non-renewable resources cannot be managed by technology alone, and the blame for adverse consumption behavior cannot simply be passed on to the general public. “Many factors influence consumer decisions beyond individual preferences. Infrastructures influence how much living space is used or which means of transport are used,” according to the Wuppertal Institute, a think tank for applied sustainability research.

The project remains complex. The will is there in many places. We already have many technological instruments to save energy and make a decisive contribution to the success of the energy transition. It’s time to use them.

HANNS-J. NEUBERT is a freelance science and technology journalist based in Hamburg.

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