Insights: Why we must double down on energy efficiency to honour Paris Agreement

The UNFCCC Global Stocktake report, released ahead of COP28 in the UAE, highlights the urgency needed if we are to have a chance at meeting the Paris Agreement target of limiting global warming to 1.5 degrees.

The data is clear as day; we need at least a 43 per cent reduction in annual global emissions by 2030 to keep 1.5C on the table. We have just over six years to almost halve global emissions. We are simply not on track yet.

No doubt the need to reduce emissions will be a focus when we meet in Dubai, UAE in November. As Dr Fatih Birol, executive director of the International Energy Agency (IEA), said in June, what needs to happen globally by 2030 is two things. We need to double the rate of energy efficiency progress and triple total renewable power capacity.

The good news is that it is still possible and it’s even good business. But we need more action. As we write in the open letter from the Alliance of CEO Climate Leaders – representing $4 trillion in revenues and 12 million employees – the world needs “transformative policies and actions” to stand a chance of winning the race to net zero. Every fraction of a degree counts.

Energy efficiency to fuel green transition

One of the most crucial keys to success will be energy efficiency as it is the single largest measure the world can take to reduce energy demand. Energy efficiency is, and always should be, the ‘first fuel’ for the green transition. We have the technology, and it’s the quickest and most cost-effective carbon abatement option.

The IEA’s own findings have concluded that doubling efficiency improvement to above 4 per cent per annum this decade could lower global energy demand by 190 EJ, and CO2 from combustion by almost 11 Gt by 2030.

Indeed, even though global energy demand grew by 1 per cent in 2022, this could have been almost three times higher without the current progress we have made on energy efficiency.

Take cooling as just one example amongst many. Demand for cooling could make the second-largest contribution to the overall rise in global electricity demand over the coming decades. In Dubai, for instance, 70 per cent of electricity is consumed by air conditioners. But we can prepare for future heatwaves by employing energy-efficient cooling solutions that already exist today make it possible to keep cool with fewer emissions.

We also encourage the strong support shown already for the Global Cooling Pledge because cooling must no longer be seen as a luxury; it is a public health necessity. And yet, there remains an alarming lack of understanding of the global climate impact of cooling.

Meanwhile, Dubai’s digital economy is expected to reach more than $140bn in 2031, up from today’s nearly $38bn, and to respond to this rapid digital growth there will be a significant need for new data centres to be built, thus increasing energy use and emissions.

Data centres rank high in global electricity use

Data centres currently represent around 1.5 per cent of global electricity use. With AI, applications such as Chat GBT and Google’s Bard, as well as 5G mobile networks and streaming services, data centre energy use has the potential to grow substantially. An AI model, for example, can consume tens of thousands of kilowatt-hours.

Datacentre operators have already started to proactively address this trend, but we need to speed things up and work in partnerships across borders and industries. We must revolutionise how we build data centres and put energy efficiency at the heart of their construction.

As one of the founding companies that recently launched the Net Zero Innovation Hub For Data Centers, we recognise the power of partnership.  No one company can do it alone and we must work together to boost efficiency, increase resilience, and reduce emissions from data centers – while making a strong business case.

The Innovation Hub is a neutral meeting place where key players can enter into collaboration to build better and more sustainable data centres.

Many of the best opportunities for decarbonisation exist in cities. There are already cost-efficient technologies out there that can cut emissions sufficiently to meet global climate goals.

Prioritising energy efficiency makes even more sense when building new neighborhoods in existing cities or when planning entirely new cities.

Leaders in new megacities such as those being constructed in Indonesia, Egypt, or Saudi Arabia can already reduce emissions and save money by implementing energy-efficient technologies today.

Decision-makers are getting better at setting climate ambitions high, but we still need to see much more attention on follow-up, implementation, and execution.

We already have all the technology we need to make energy efficiency a global success story. Let’s make it happen.

The writer is the president and CEO of Danfoss.