Friday 8 March 2013

In February 2002 the then US Secretary of Defense Donald Rumsfield made a very famous speech in which he said: ‘There are known knowns; there are things we know we know.  We also know there are known unknowns; that is to say, we know there some things we do not know.  But there are also unknown unknowns – the ones we don’t know we don’t know’.  He was roundly criticized for this but somewhat unfairly.  Geoffrey Pullum, who is a Professor of Linguistics at both Edinburgh University and Browns University disagreed, saying the quotation was ‘completely straightforward’ and ‘impeccable, syntactically, semantically, logically, and rhetorically’.


It is a statement that we can usefully apply to energy efficiency.  First of all let’s think about the known knowns.  The biggest one is surely the huge economic potential for energy efficiency to improve productivity, reduce costs, improve energy security, create jobs and reduce carbon emissions.  For 30 years there have been so many reports from credible bodies that no-one can realistically challenge the potential.  Likewise the generic barriers to achieving the potential have been studied to death.


If we want to scale up energy efficiency we need to scale up three things: demand, supply and the flow of finance into efficiency investments of all types.  A big known unknown is how do we increase demand, particularly in the residential sector.  Schemes like the Green Deal and equivalents have to face the facts that sometimes even when insulation and other measures are free people don’t take them up and – however much we may like them to do – the average consumer does not wake up in the morning and say, ‘I want to buy some efficiency today’.  It is not sexy, cool and desirable – however much we complain about our energy bills.   For every market segment we need to understand the enabling conditions that do make people buy energy efficiency in whatever form – the industry is a long way from that right now.


On the supply side there are a number of known unknowns, one being how do we standardize evaluation techniques and models.  Models that produce building energy use or Energy Performance Certificates (EPCs) can give widely differing answers for very similar buildings.  In California residential evaluation models have been found to be 50 per cent out 25 per cent of the time.  One major supermarket in the UK questioned the widely differing results for Energy Performance Certificates for sets of similarly sized, designed and constructed buildings.  On investigation much of the variation came down to the different software models being used and of course the parameters being fed into the models.  Standardizing models and input parameters greatly reduced the variation.


On the finance side the big known unknown is how do we get long-term low cost third party finance into energy efficiency.  Again a lot of this is around standardization of evaluations, contracts and documentation.  The money is there, it wants to invest, the industry needs to give investors the structures and the assurances that they needs and that comes from standardization.


So, that is just a few of the known unknowns.  As for the unknown unknowns – well who knows?  One thing is guaranteed – there will be surprises out there.

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Dr Steven Fawkes

Welcome to my blog on energy efficiency and energy efficiency financing. The first question people ask is why my blog is called 'only eleven percent' - the answer is here. I look forward to engaging with you!

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