Having just read ‘Made to Stick’ by Chip and Dan Heath I have been pondering how to make energy efficiency a stickier idea. We all know that efficiency suffers from being very dull as well as being too technical a concept for the person in the street and that ‘improving its image’ is essential. The term efficiency itself is abstract and as I say in my new book (gratuitous plug – out in October published by Gower – details on their web site) causes confusion even amongst professionals. Chip and Dan, like all good management writers, come up with a check list based around a mnemonic (SUCCES):

• Simple – find the core of any idea
• Unexpected – grab people’s attention by surprising them
• Concrete – make sure an idea can be grasped and remembered later
• Credible – give an idea believability
• Emotional – help people see the importance of an idea
• Stories – empower people to use an idea through narrative.

So here is my first pass on making efficiency stickier.

Simple – efficiency is about eliminating energy waste.

Unexpected – despite all of our advanced technology we waste 89% of the total energy that we use.

Concrete – this one is harder as it should really be situation specific, something like:

• ‘if we save 20% through improved efficiency (eliminating waste) we will add £x to your profit’
• ‘if you save 20% of your energy use you will be able to buy that foreign holiday/new whatever it is you want’.
• ‘if we save 20% of the country’s energy use we could save £20 billion a year, equivalent to the total cost of the war in Afghanistan from beginning to end’. (This one could be improved as £20 billion is still totally abstract and the Afghan war comparison is still hard to grasp).

Credible – this is all about who says it.

Emotional – it should be straight forward to find emotional stories about the effects of fuel poverty (unnecessary illness or death), the effects of going without electricity in a developing country, or the number of deaths a year caused by atmospheric pollution. To be really emotional, however, they should focus on individuals rather than macro numbers.

Stories – leaders tell stories rather than spout facts in order to inspire, lead and educate.

I am sure other people can do better so let’s hear any ideas about how to make the importance and imperative of improving energy efficiency a stickier idea.

I found this great example of all that is wrong with modern management in ‘Made to. Stick’ by Heath and Heath.

Compare the phrase in JFK’s great speech committing America to land on the moon;

‘put a man on the moon and return him safely to Earth before the decade is out’

And what the modern management speak version would probably be;

‘our mission is to become the international leader in the space industry through maximum team centred innovation and strategically focused aerospace initiatives’

That says it all about what our real problem in energy and all other areas is today, to much emphasis on so called management (most of which is bad management) and not enough leadership.

The American Council for an Energy Efficient Economy (ACEEE) recently published another excellent report (they are very prolific!). This one, “Calculating the Nation’s Annual Energy Efficiency Investments” by Skip Laitner undertook the ambitious task of documenting the annual investment in energy efficiency in the USA and the benefits. It found that in 2010 the USA invested between $479 and 670 billion on energy efficient goods and services and the incremental cost of energy efficiency was $90 billion (between $72 and $101 billion). This was about half the $170 billion spent on investments in conventional energy supply.

Since 1970 the amount of energy to produce one dollar of economic output in the US has been cut in half, from 15.9 thousand Btus per dollar to 7.3 thousand Btus. In that time demand for energy services has gone up by 3.18 times but energy use has only gone up 40 percent. The difference is the result of improved efficiency.

The difference between the energy that the US would have used if the economy had more than tripled (as it did) at the same efficiency level as in 1970, and the energy it actually used was a cumulative 2,198 quads or equivalent to 379 billion barrels of oil. The amount of ‘new’ energy consumption in that period, i.e. the cumulative total that led to the 40 percent increase, was ‘only’ 785 quads or 135 billion barrels of oil. Therefore energy efficiency met 74 percent of the total demand for energy services and new energy supply only met 26 percent.

So to sum up:

• between 1970 and 2010 energy efficiency (which for a large part of that period was largely ignored by policy makers) supplied three quarters of the demand for energy services.
• the energy efficiency was delivered at substantially lower cost than energy supply.
• the $90 billion spent on efficiency in 2010 was roughly half that spent on energy supply.

Skip Laitner thinks that the economically optimum level of investment in energy efficiency in the USA would be about $142 billion per annum compared to the 2010 level of $90 billion. This would drive US energy consumption in 2050 from the official forecast of 122 quads right down to 50 quads. This would generate up to 2 million jobs and save consumers a net $400 billion per year, or the equivalent of $2,600 per household per year.

The US seems to be firmly heading towards a more efficient future and I wouldn’t want to bet against them achieving something like that 50 quad level by 2050. A famous quote, usually ascribed to Winston Churchill says, ‘Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.’ It may turn out to apply in energy efficiency – meanwhile despite much talk I am not sure Europe is doing the right thing yet.

A UK version of Skip Laitner’s analysis would make very interesting reading.

One of the big issues with energy efficiency is that investors – either internal to the project host or external third party investors – don’t have enough confidence in the evaluation, implementation or measurement of projects. In the USA, the Investor Confidence Project (ICP) which is being sponsored by the Environmental Defense Fund is addressing this problem by bringing together the energy efficiency industry and interested investors to agree standard procedures and processes for developing energy efficiency projects. The ICP has already published its first protocol, for commercial office buildings. For details see:

www.eeperformance.org

This is vital work and we need a UK (and European) version of the ICP as soon as possible. I have asked people to support the idea and DECC to facilitate it (rather than run it). We will see what happens.

OFGEM (the energy regulator) is getting a lot of press today as once again it has highlighted the impending power crunch as the ‘supply margin’, the excess of available electricity supply over peak demand, continues to fall as large coal fired power plants come off-line due to the EU Large Combustion Plant Directive and older nuclear plant are taken off-line. This really has been a crisis that has developed in slow motion as seasoned energy analysts were warning the government of the day about it many years ago. With decent leadership we wouldn’t have got into this situation but we here we are.

The situation is:

• the electricity supply margin will hit a low somewhere between 2015-2017 and at that point there is an increased risk of power cuts.
• no nuclear capacity will come on line until about 2023 (and that assumes everything goes well which looking at the track record of new nuclear build programmes is highly unlikely).
• nuclear will only get built with a massive subsidy (even if it is not called a subsidy).
• we will have to use more gas which in the short-term at least will be imported (expensive) Liqueified Natural Gas (LNG).
• there may or may not be extensive reserves of shale gas under the UK. The evidence is that the reserves are there, the issue now is how to exploit it (some would say whether to exploit it).
• If the economy does start to recover the pressures will be increased as energy demand increases.
• Off shore wind and other renewables are intermittent and expensive – they all need subsidies.
• Energy prices have risen much faster than inflation and an increasing number of people are now in fuel poverty – having difficulty paying their energy bills and maintaining comfort conditions which has a huge hidden cost in health and benefits.

There is no one answer to this crisis, we definitely need more gas fired power station, we need to exploit shale gas in a sensible way and we need far more energy efficiency. The government has put in place some good foundations and raised efficiency up the energy agenda but now we need large scale programmes that deliver significant quantities of power savings, something like the 155 TWh (c.40% of demand) that was identified in McKinsey’s Electricity Demand Reduction project for DECC. One vital part of this is to ensure that the demand side (efficiency) can play in the electricity capacity market in exactly the same way as supply options. There is a limited window of opportunity to make sure this option is included in the Energy Bill. If we do that properly we can create a market for large scale electricity efficiency programmes, for example, lighting upgrades for a whole city or region. As well as energy savings these kinds of programmes would produce large numbers of jobs.

There are other things we can and must do but getting demand side properly into the Energy Bill is vital.