Is energy efficiency really cheaper than switching to renewable energy sources as a way of cutting carbon emissions?

Let’s face it: energy efficiency is boring when compared to the (relative) excitement of developing new sources of low-carbon electricity or heat. The popular science magazines are full of articles on new forms of solar panel and the latest designs for wind turbines. Improving the insulation of ordinary homes, shifting to LED lighting or increasing the take-up of heat pumps rarely command the attention of editors.


In a breathtakingly elegant paper in Energy Policy, Jonathan Cullen and Julian Allwood of Cambridge University try to persuade us just how wrong we all are.[1] The theme of the paper is that carbon emissions are far more responsive to changes in how we use energy than in how we generate it. They say that it will be cheaper, easier and quicker to make efficiency savings than to switch to renewable electricity or heat.[2] The scale of the loss from the raw energy value of a fossil fuel to its eventual productive use is enormous and the authors argue that cutting this gap is a far easier task than replacing the 50,000 fossil fuel power stations with millions of wind turbines and vast solar power plants strung across deserts to meet our emissions reductions estimates. Are they right? This article uses the Cullen/Allwood paper to look at the total potential saving that might reasonably be obtained in the next couple of decades if we make a determined effort to improve energy efficiency.

My very tentative conclusion is that we can look for a 40% reduction in current energy use if we pursue efficiency objectives enthusiastically. (I don’t look at the impact of economic growth in developing countries and the way this might substantially increase total energy demand.) Perhaps surprisingly, the cost of achieving even a 40% energy efficiency gain looks high to me, particularly compared to the cost of decarbonising electricity generation. Wind turbines probably give a better return on investment.

The background data for the Cullen/Allwood paper is not complex or controversial. The world uses about 475 exajoules a year, all but 100 of which are from fossil sources. Their contribution comes from rigorous quantification of how these energy sources are turned into things that we actually desire. First, the primary sources of useful energy are processed – usually burnt – in a variety of machines, such as a diesel engine or an oil burner. The eventual result is motion, steam, useful heat or cool, and the transformation of materials (turning ore into metal, for example). These things then deliver what human beings want – personal transport, a comfortable home, the ability to communicate, clothes and food.

What is an exajoule? A exajoule is a unit of energy. Therefore it can be converted into, for example, kilowatt hours, which is another way of describing an amount of energy. To be a really useful measure, an exajoule will usually need to be expressed as a number for a particular period of time such ‘exajoules per year’.
475 exajoules, the world’s yearly use of energy from primary sources such as coal and oil, roughly translates into a continuous power use of about 5.5 terawatts. To put this figure into context, this is about 120 times the average electricity demand on the UK power grid. 5.5 terawatts spread over the world’s population is about 2 continuous kilowatts a head, or about 17,000 kilowatt hours a year. For comparison, the UK continuous power usage is about 5 kilowatts a head – two and a half times as much – and therefore approximately 42,000 kilowatt hours a year.

The paper sets up a four-stage chain. Fuels are extracted or, in the case of renewables, collected and then converted in a machine that turns them into heat or other useful energy source. The process occurs in what the authors call a ‘passive system’ such as a vehicle or a hot water system. The final service is something directly desired by the individual consumer or business, such as transport or comfort. There are efficiency losses in this stage in the chain.

The paper estimates the volumes of energy being used by the world’s major energy conversion devices. The top six machines are as follows:

Table 1

Machine Exajoules per year
Diesel engine 58
Electric heater 58
Electric motor 56
Biomass burner 49
Gas burner 47
Petrol engine 41

These machines are directed towards producing about 233 exajoules of heat a year and about 175 exajoules of motion. The energy for motion will be accompanied by heat. For example, a car’s petrol engine produces far more heat than energy for motion. So, in the case of a diesel engine, the world’s most important energy conversion device, only about 25% of the chemical energy in the fuel gets turned into energy to move the car.

The service provided by the energy can then be described. Table 2 shows the useful things we get from the 475 exajoules each year.

Table 2

Useful output from our energy use Exajoules per year Percentage of total
Thermal comfort (heating and cooling) 90 19%
Sustenance (growing, preparation, storage, cooking of food) 84 18%
Structure (materials to provide structural support – a wall or a can for a drink or even a piece of paper to print on) 68 14%
Freight transport 64 13%
Passenger transport 64 13%
Hygiene (hot water, clothes washing, appliances) 56 12%
Communication (digital and written communications – e.g. computers, phones, etc.) 29 6%
Illumination 19 4%

Let’s look each output in turn. How much can we expect to be able to save through well-understood energy efficiency options? (Almost all of the figures in the following section are my estimates and are not from the Cullen/Allwood paper.)

Thermal comfort Few buildings anywhere in the world are particularly well insulated. The typical British home loses around 250 watts per degree Celsius of temperature difference between the outside and the inside of the house. This means an average input of heat of around 200 kilowatt hours a year per square metre of space, compared to best practice (Passivhaus) levels of less than a tenth of this figure. Say, as a simple approximation, that we tried to get UK housing down to a level of 100 kilowatt hours per square metre. This would be expensive and unpopular since it would need most brick-built houses to be clad with insulation materials. If this 50% cut was replicated elsewhere, and also applied to building cooling needs (and there is no reason why not), world energy demand would be cut by approximately 10% (19% times 50%).

Other major energy-use savings could be generated by large-scale switching to heat pumps for home and business heating. We could, in theory, push the energy needed for thermal comfort down very dramatically, but the changes to buildings and their heating systems would have to be enormous. So I have used an estimate of a 50 exajoules energy efficiency saving.

Potential saving from better efficiency: 50 exajoules?

Sustenance The average person needs about 2 kilowatt hours in food energy a day. (When talking about food, this 2 kilowatts is usually expressed as approximately 2,000-2,500 kilocalories.) The energy efficiency of food varies dramatically by type of product. Red meat might be 10% efficient (i.e. ten units of external energy are needed to produce one unit of food energy) whereas a grain such as oats, which is not generally heavily fertilised, might be as high as 500% (one unit of fossil fuel energy produces five units of food energy – most of the food energy comes from photosynthesis). About a quarter of the calories in the US diet come from meat and dairy products and a similar fraction in most of northern Europe.[3] If this figure fell to about one eighth, or if we switched from the least energy efficient meat (beef) to the best (chicken), the savings could be 40% of total energy consumption. Of course, a wholly vegan diet would increase these numbers hugely, but I haven’t assumed this.

Potential saving from better efficiency: 40 exajoules?

Structure The key improvements here are weight reduction in the structural materials and a move to ‘closed loop’ recycling. For example, creating metals from ore is generally an extremely energy-expensive process. Think of making aluminium from bauxite, for example. Once we have created a metal from ore, there is usually no good reason ever to dispose of it. But dispose of it we do. 50% of aluminium cans go into landfill in the UK. Even valuable metals such as silver, widely used in very small quantities in electronic devices, disappear as your mobile phone is tossed into the waste.

Almost everything can be reused several times and sometimes indefinitely; but almost nothing is. And as the world becomes virtual, physical structures (such as paper) can be replaced by digits or by transient appearance on a screen.

The Cullen/Allwood paper also mentions the importance of such things as the streamlining of cars, another way in which structural changes can reduce the total need for energy.

Potential saving from better efficiency (this is even more of a guess than other estimates): 30 exajoules?

Freight transport Freight transport is likely to remain as a major customer for fossil fuel suppliers for many decades. The diesel engine is only 25% or so efficient at turning the chemical energy into energy for motion, but only a huge rise in the price of oil is likely to prompt a switch to electric vehicles or electrically propelled railway trains. Diesel itself may be replaced by biologically derived oils, made from oil seeds or even algae. Whether these bio-oils can be described as more energy efficient in the language of the Cullen/Allwood paper is not clear. These forms of diesel are replacing fossil fuels with photosynthesis processes but the underlying efficiency of the engine remains the same.

In the medium term, it may be possible to switch diesel transportation to vehicles powered by hydrogen fuel cells. This would save energy since a fuel cell may offer twice the conversion efficiency of a diesel engine. Only half the energy is needed for the same amount of transportation

Potential saving from better efficiency: 10 exajoules?

Passenger transport Passenger cars may switch to electricity and to hybrid electricity/fossil fuel. Both routes offer very substantial savings. Electric cars have approximately 80% conversion efficiencies (chemical energy to energy usable for motion) compared to 20% or so for petrol vehicles. This latter figure is rising quite fast as a result of innovations in materials, drive trains, aerodynamics, and other parts of the car. So a move to a car fleet that is battery equipped, possibly combined with a hydrogen fuel cell, may offer very substantial energy efficiency savings. Greater use of electricity for long-distance transport by rail and employment of fuel cells for urban buses will also help. But nothing in sight will reduce aviation’s energy use per passenger kilometre by as much as the use of electricity for cars.

Potential saving from better efficiency: 30 exajoules?

Hygiene The appliances of motors can be made more efficient but the heating of the water is now the dominant use of energy in ‘wet’ domestic appliances. And, unfortunately, the energy used to heat a litre of water through ten degrees is always going to be the same. It’s certainly true that washing machines, for example, can be programmed to run at lower temperatures and use less water, but the remaining savings above and beyond what is already achieved are probably not enormous.

The amount of hot water for bathing may be possible to reduce by the use of water-saving showers, but the savings are probably not substantial.

Potential saving from better efficiency: 15 exajoules?

Communication It’s not clear to me that large reductions in energy use are possible. As countries develop, they are also likely to devote a large fraction of their incremental national income to this category so total energy demand may rise, though this is not relevant to our estimate.

Potential saving from better efficiency: 10 exajoules?

Illumination In most countries of the world illumination comes by the burning of fats and oils. Only in rich countries does a reasonable fraction of fossil fuel energy get employed in providing lighting. In these places, the switch away from incandescent bulbs to more advanced light sources is moving rapidly. A compact fluorescent in the home will typically be four times as energy efficient as the older technology (in terms of lumens per watt of electric power). LED bulbs, just now beginning to come into use, may introduce another four-fold improvement in efficiency. LEDs are also useful in many non-domestic applications such as street lighting, car headlights, and traffic lights.

The scope for a large percentage change in energy use is high, but the absolute amount of the saving in energy is not as large as, say, thermal comfort.

Potential saving from better efficiency: 10 exajoules?

Summing up the estimates My highly tentative estimates suggest an approximate attainable saving of about 205 exajoules out of the annual global figure of 475. This is a saving of around 40% of current energy use. Let’s call the reduction 2.5 terawatts of continuous power

How much would it cost to achieve the same reduction in fossil fuel use by decarbonising our electricity use? The same net effect as saving 205 exajoules by energy efficiency would be provided by building about 2,000 nuclear power stations or about 2.5 million commercial-scale wind turbines. The cost of 2,000 nuclear power stations might be about £10,000bn ($16,000bn) or about £10,000 per person if divided among the richest one billion people on the planet. Wind might be about the same or even slightly cheaper if we could put most of the turbines onshore or in shallow and calm waters.

£10,000 per person is a large sum, even spread over 10 years. But it is probably less than the cost of achieving the energy efficiency gains mooted in this article. Take housing insulation, for example. Simple savings from wall insulation might only cost £1,000 or so, but generally wouldn’t achieve the 50% cuts in energy use I suggested might be possible in the section above. Really deep cuts in the energy that we use to keep ourselves warm might cost an order of magnitude more. So I want to suggest that even though some energy efficiency savings are cheap – and may even have a quick financial payback at current energy prices – the argument that ‘efficiency’ is always the cheapest way to reduce emissions is not obviously true. Beyond the easy savings from getting rid of gross inefficiency, investment in low-carbon energy sources may be a cheaper way forward. Footnotes [1] Jonathan Cullen and Julian Allwood, ‘The efficient use of energy: Tracing the global flow of energy from fuel to service’, Energy Policy, 38.1, pp. 75-81. [2] Two newspapers for which I occasionally write have now banned the phrase ‘low-hanging fruit’. So I don’t use it in the text even though any article on energy efficiency normally has to use it in the first two paragraphs. [3] Most of the figures in this paragraph are from Gidon Eshel and Pamela Martin, ‘Diet, Energy and Global Warming’, Earth Interactions, 10 (March 2006), pp. 1-17.