Advancing energy efficiency

Experts say that energy efficiency could be increased by 20-30 percent over the next two or three decades and gains could be even higher in Central and East Europe. Government subsidies mean current energy prices are not realistic. A public information campaign is required to train people and businesses to adopt less wasteful attitudes to energy.

In the long term, energy policy will increasingly focus on the development of technology programmes for improved energy efficiency and renewable energy, a less carbon-intensive energy structure, and improving and introducing economic instruments to allocate the full environmental and economic costs of energy use. In the countries in transition too, efforts towards sustainable economic development are expected to incorporate higher energy efficiency, including changes in consumer behaviour. In this context, market-based prices for energy will set appropriate incentives.

Energy efficiency in all economic sectors – energy production, industry, households and the rapidly growing transportation sector – as well as an environmentally sound energy system would provide a triple environmental dividend by reducing acidification, ground level ozone pollution, and global warming. If properly structured, it could also provide an economic dividend by creating new jobs, reducing environmental costs and securing supply. A fundamental and necessary step to achieve these goals would be to remove the subsidies to environmental unsound forms of energy production, such as nuclear power and fossil fuels, that distort the optimal allocation of resources.

Encouraging energy efficiency is a promising strategy for the global insurance industry. Energy consumption is the largest contributor to global climate change, as a result of which the insurance industry faces great financial risk from extreme weather events, including windstorms, drought and floods.

The aim is efficiency, not austerity. Conservation may be a sign of personal virtue, but it is not a sufficient basis for a sound, comprehensive energy policy (Dick Cheney, US Vice-President, 2001).

In a St Petersburg flat it was cheaper for residents to keep four gas burners going than to turn them off, said World Bank Vice President for Europe and Central Asia region Johannes Linn (1998).