Investments in renewable energy have exceeded $1 trillion over the past three years. Solar and wind, along with hydro and geothermal systems, are providing low-cost alternatives to fossil fuel-based energy.

With the rapid fall in the cost of energy storage, the prospect of transitioning grids to full reliance on renewable energy is now closer than ever. Governments from the United Kingdom to New York State have pledged a net-zero carbon economy by 2050, an unthinkable goal just a few years ago.

Image: BloombergNEF
Image: BloombergNEF

In this race to a net-zero carbon economy, energy efficiency and infrastructure maintenance will play a fundamental role, on a scale similar to the construction of green field renewable energy projects. Estimates show over one third of energy in American residential and commercial buildings is wasted, from lights in unoccupied rooms, to poorly insulated buildings and inefficient air conditioning systems.

Investments in energy efficiency can reduce electricity demand and allow the early decommissioning of the remaining coal and fossil fuel plants. And consumers will gain from the transition to a low carbon economy: $5 LEDs can save hundreds of dollars in energy costs over several years.

The lifetime costs of incandescent vs compact fluorescent lightbulbs (CFL).
Image: Natural Resources Defense Council

Lighting fixtures and other building systems often remain in use well beyond their useful life, leading to increased maintenance costs and avoidable carbon emissions. In fact, in the United States alone, overall deferred maintenance on infrastructure is approximately $4.5 trillion, with more than half, or $2.5 trillion, concentrated in municipalities, government and schools.

What's the World Economic Forum doing about the transition to clean energy?

Moving to clean energy is key to combating climate change, yet in the past five years, the energy transition has stagnated.

Energy consumption and production contribute to two-thirds of global emissions, and 81% of the global energy system is still based on fossil fuels, the same percentage as 30 years ago. Plus, improvements in the energy intensity of the global economy (the amount of energy used per unit of economic activity) are slowing. In 2018 energy intensity improved by 1.2%, the slowest rate since 2010.

Effective policies, private-sector action and public-private cooperation are needed to create a more inclusive, sustainable, affordable and secure global energy system.

Benchmarking progress is essential to a successful transition. The World Economic Forum’s Energy Transition Index, which ranks 115 economies on how well they balance energy security and access with environmental sustainability and affordability, shows that the biggest challenge facing energy transition is the lack of readiness among the world’s largest emitters, including US, China, India and Russia. The 10 countries that score the highest in terms of readiness account for only 2.6% of global annual emissions.

To future-proof the global energy system, the Forum’s Shaping the Future of Energy and Materials Platform is working on initiatives including, Systemic Efficiency, Innovation and Clean Energy and the Global Battery Alliance to encourage and enable innovative energy investments, technologies and solutions.

Additionally, the Mission Possible Platform (MPP) is working to assemble public and private partners to further the industry transition to set heavy industry and mobility sectors on the pathway towards net-zero emissions. MPP is an initiative created by the World Economic Forum and the Energy Transitions Commission.

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Multiple innovative funding solutions have been employed to help these often cash-strapped institutions update facility infrastructure and realize the benefits of modernized, energy-efficient equipment. For example, as part of a usage-based model, outside capital has been used to purchase and take ownership of new energy efficient equipment. With this outsourced solution, it allows the public entity to pay for its actual usage of this equipment – akin to their other utility bills. Such creative solutions allow these institutions to focus their capital capabilities on mission-critical priorities within the communities they serve.

A recent example of a project involving outside capital with significant environmental and social benefits is a school district in the western suburbs of Chicago, Illinois. With 1.4 million square feet of school facilities, the district is comprised of 23 schools with over 14,000 students from pre-kindergarten through high school. The school district recently began a large-scale energy upgrade on essential facility infrastructure, which upon completion, is estimated to reduce their energy dependency by 50-60%, thus reducing their carbon footprint by approximately 50%.

This example shows the scale of the opportunity to reduce electricity demand and carbon emissions through efficiency investments. In 2017, global use of LEDs reduced carbon emissions by 570 million tonnes, nearly 2% of total emissions. Investments in efficient HVAC systems or boilers could lead to carbon emission reductions on a similar or even greater scale.

As leaders gather for climate week, it’s time to revisit the ambition of advancing creative climate solutions. The hundreds of billions of dollars needed for energy efficiency and infrastructure maintenance represent a significant challenge that needs to be addressed in achieving a net zero carbon economy.