The United Nations Industrial Development Organisation's Rana Ghoneim argues that there are may barriers to implementing industrial energy efficiency, which could reduce industrial greenhouse-gas emissions by 25%

Despite offering so many benefits, industrial energy efficiency is among the most underrated opportunities to reduce emissions. It not only mitigates the impacts of climate change, but also saves companies money, improves productivity and helps generate new jobs.

The industrial sector contributes about one-third of the world’s greenhouse-gas (GHG) emissions, which primarily come from burning fossil fuels for energy. Even so, in many countries, the industrial sector is lagging behind in adopting energy efficient technology, processes and management systems which can significantly reduce GHG emissions. In fact, the Intergovernmental Panel on Climate Change notes that industrial GHG emissions could be reduced by about 25% through energy efficiency.

With so much to gain, why is industrial energy efficiency seemingly overlooked?

One explanation is that it is largely an invisible solution. It often comes down to changing people’s behaviour and mindsets. Further, the interventions are often technical – retrofitting the insulation level of pipes or replacing an old, inefficient boiler is not as appealing as installing solar-powered panels or as noticeable as saving forests.

There are also many barriers. In some countries, where sophisticated efficiency targets and regulations are already in place, a lack of financial incentives and market interventions such as fuel subsidies often stand in the way. Perhaps the most frustrating barrier is the lack of action and awareness around what is essentially a cost-effective win-win solution for everyone involved. Unlike other efforts to mitigate climate change, industrial energy efficiency offers a relatively rapid return on investment. A large-scale shift towards such practices would enable businesses and industry to slash their power bills, in some cases by up to 30%.

The International Energy Agency calculates that, with the right policies, the global economy could double in size by 2040 while still maintaining broadly the same level of energy use as today. Those policies alone would enable the world to achieve more than 40% of the emission cuts needed to reach international climate goals using cost-effective technologies already available.

In South Africa, the impact of this ‘invisible solution’ is being demonstrated through the Industrial Energy Efficiency (IEE) Project, which was recently recognised as the Energy Efficiency Project of the Year by the Southern African Energy Efficiency Confederation.

Between January 2016 and April 2018, the IEE project supported about 80 companies in saving 335 GWh of energy and 334.1 t of carbon dioxide (CO2) equivalent emissions. This translated into financial savings of R293.7-million. Cumulative savings from the launch of the project in 2010 to March this year amounted to R4.6-billion (4.6 tWh and 5.6 t of CO2 equivalent). This is equivalent to the electricity required to power 790 000 – or 18% of middle-income – South African homes for 12 months. To date, the project has guided six companies in obtaining ISO 50001 certification and has trained 5 300 professionals and 188 experts, 47% of whom are women. Accredited South African experts now offer energy efficiency training elsewhere in other participating countries.

The IEE project is one of only two African recognition projects on the United Nations Framework Convention on Climate Change’s Nationally Appropriate Mitigation Action (Nama) registry. Nama refers to a set of policies and actions undertaken by countries as part of a commitment to reduce GHG emissions. The project is funded by the Global Environment Facility with cofunding through the Department of Trade, Industry and Competition, and is implemented by the United Nations Industrial Development Organisation, the National Cleaner Production Centre South Africa, the Department of Mineral Resources and Energy and the South African Energy Development Institute.

Imagine if results like these were mainstreamed worldwide, particularly in developing countries, where demand for energy is forecast to boom in the coming decades as these countries seek to reduce energy poverty and keep up with population growth.

For this industrial revolution to be achieved, leadership from across the divide is required. Governments need to support policy implementation, mandate efficiency standards, set targets and incentivise best practice. CEOs need to kick-start a cultural shift in their companies by prioritising energy efficiency and empowering their teams to become part of the solution. Critically, those in the development community must move beyond discussing the potential and towards demonstrating this hugely compelling and uncontroversial climate solution.

Ghoneim is chief of the energy and infrastructure division at UNIDO. This is an edited version of an article that first appeared in Issue 27 of MakingIt, a quarterly magazine of UNIDO.