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Energy productivity as a new paradigm for sustainable energy transitions

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1. Energy productivity is a new policy paradigm that focuses on improving the value obtained from energy consumption through greater energy efficiency, structural economic reforms, and other energy and climate policies. 2. A report by KAPSARC and UNESCWA examined energy productivity in Saudi Arabia and found that diversification efforts and energy efficiency are transitioning the country to a lower energy intensity pathway in line with its Vision 2030 goals. 3. The report discusses how industrial strategy and policy can further increase Saudi Arabia's energy productivity by developing higher value added industries and strengthening local supply chains.

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Energy productivity as a new paradigm for sustainable energy transitions 4th Arab Forum for RE and EE, Kuwait, May 2018 nicholas.howarth@kapsarc.org
2 Presentation Overview 1. Energy productivity: A new concept with energy efficiency and diversification at its heart - enhancing value from energy consumption economically, socially and environmentally. 2. Some findings from KAPSARC- UNESCWA report 3. Critical policy questions for discussion
3 Energy productivity is a new policy paradigm for realising energy transitions through energy efficiency, structural reform and other energy and climate policies Improving energy efficiency – or energy productivity – is a key pillar of Sustainable Development Goal 7. It is also a key foundation of Sustainable Energy for All’s work.
4 KAPSARC-UNESCWA report: Towards a more sustainable growth model for KSA Answer Increase energy productivity: the value society gets from energy consumption KAPSARC workshop series KAPSARC discussion and academic papers 1. How to achieve economic prosperity through industrial energy productivity improvement 2. Energy productivity as a new growth paradigm in the GCC 3. Global shift: The energy productivity transformation 4. Energy productivity: From policy goal to reality 5. Energy Productivity Aligning global agendas 6. Measuring the energy intensity of nations: Towards a framework for transparent comparison 1. Energy productivity as a growth model for GCC countries 2. Energy productivity in the GCC: Evidence from a Kuznets curve analysis 3. Evaluating building energy efficiency options for Saudi Arabia 4. Impacts of energy efficiency on growth and welfare across generations in Saudi Arabia 5. Investing for energy productivity in the GCC: Financing the transition 6. Growth investment and the low carbon transition: A view from Saudi Arabia 7. Economic development and energy consumption in the GCC: An International sectoral analysis 8. Energy pricing in Gulf countries: Explicit subsidies or forgone revenues? Question How can the Kingdom’s energy policy best support Saudi Vision 2030 goals? Synthesis Report
5 Sources: KAPSARC, Energy Foundation China based on Climate Policy Initiative Energy productivity is an indicator capturing important areas of economic reform focused on how maximum value can be created from energy consumption
6 Energy productivity functions at different levels
7 Diversification and energy efficiency efforts are transitioning Saudi Arabia towards a lower energy intensity (higher productivity) growth pathway Source: KAPSARC based on Enerdata 0.08 0.09 0.10 0.11 0.12 0.13 0.14 0.15 2000 2002 2004 2006 2008 2010 2012 2014 2016 Energyintensitytoeper10002015USDPPP G20 Average (~2.5% p.a.) Saudi Arabia ~1% p.a. ~4% p.a. Transition
8 Energy productivity Kuznets curve curves for GCC and selected advanced economies (1971-2014) Source: 2016, Galeotti, Howarth and Lanza, KAPSARC Discussion Paper, Energy Productivity in GCC Countries: An International Kuznets Curve Analysis
9 Energy productivity growth models within a Kuznets curve framework Source: KAPSARC, based on Galeotti, Howarth and Lanza, 2016
10 0 200 400 600 800 1000 1200 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 CarbonDioxideemissions(MtCO2-e) Non-energy intensive pathway Diversification into high value manufacturing and service sectors. Strong investment into energy efficiency and renewable energy. Increase or maintain oil export revenue Energy intensive pathway Prioritize expansion of energy intensive industry. Higher domestic energy consumption. Downwards pressure on oil export revenues for government. Saudi Arabia’s Nationally Determined Contribution to the UNFCCC Paris Accord outlines two development pathways and ambition to avoid 130MtCO2-e per year by 2030 off a dynamic baseline The future energy productivity pathway will also be a key driver of CO2 emissions Source: KAPSARC based on Enerdata and Saudi Arabia’s Nationally Determined Contribution (NDC) to the UNFCC under the Paris Accord
11 0 50 100 150 200 250 300 350 400 Energyproductivity Totalrevenue($)/EnergyUse(toe) Develop high value downstream industries Strengthen local supply chains Maintain competitiveness through energy efficiency Basic energy intensive products Chemicals Steel Aluminium Food products TransportUtilities FertilizersCement Higher value added industries Beverages Engineering, construction Automotive Health care equipment Household goods Specialty chemicals Aerospace and defence Textiles ICT industries Refining Industrial conglomerates Packaging and containers Industrial strategy should seek to build on the region’s strengths, strengthen local supply chains and develop end use markets to drive demand Source: KAPSARC based on Climateworks Australia
12 A more integrated policy paradigm is needed for managing sustainable energy transitions in the GCC Source: KAPSARC
13 Some questions for discussion arising from the report 1. What is the potential for more GCC countries to recast their growth oriented economic plans which have environmental co-benefits through a higher profile climate change / green growth narratives (e.g. UAE) 2. Energy intensity/productivity is a well discussed indicator, globally and in the region. What is the potential for GCC countries to set national targets similar to other G20 countries? 3. Will higher oil prices dampen the drive for domestic energy price reform and efforts to diversify the economy as they have in the past? What are the domestic energy pricing models which could best keep up momentum given energy market volatility? 4. Significant value is created from oil by using it in a non-combustible way in the production of petrochemicals. With demand growing faster than GDP and efforts to move up the value chain of production – how can the petrochemical industry best position itself within sustainable development strategies being pursued in the region?

More Related Content

Energy productivity as a new paradigm for sustainable energy transitions

  • 1. Energy productivity as a new paradigm for sustainable energy transitions 4th Arab Forum for RE and EE, Kuwait, May 2018 nicholas.howarth@kapsarc.org
  • 2. 2 Presentation Overview 1. Energy productivity: A new concept with energy efficiency and diversification at its heart - enhancing value from energy consumption economically, socially and environmentally. 2. Some findings from KAPSARC- UNESCWA report 3. Critical policy questions for discussion
  • 3. 3 Energy productivity is a new policy paradigm for realising energy transitions through energy efficiency, structural reform and other energy and climate policies Improving energy efficiency – or energy productivity – is a key pillar of Sustainable Development Goal 7. It is also a key foundation of Sustainable Energy for All’s work.
  • 4. 4 KAPSARC-UNESCWA report: Towards a more sustainable growth model for KSA Answer Increase energy productivity: the value society gets from energy consumption KAPSARC workshop series KAPSARC discussion and academic papers 1. How to achieve economic prosperity through industrial energy productivity improvement 2. Energy productivity as a new growth paradigm in the GCC 3. Global shift: The energy productivity transformation 4. Energy productivity: From policy goal to reality 5. Energy Productivity Aligning global agendas 6. Measuring the energy intensity of nations: Towards a framework for transparent comparison 1. Energy productivity as a growth model for GCC countries 2. Energy productivity in the GCC: Evidence from a Kuznets curve analysis 3. Evaluating building energy efficiency options for Saudi Arabia 4. Impacts of energy efficiency on growth and welfare across generations in Saudi Arabia 5. Investing for energy productivity in the GCC: Financing the transition 6. Growth investment and the low carbon transition: A view from Saudi Arabia 7. Economic development and energy consumption in the GCC: An International sectoral analysis 8. Energy pricing in Gulf countries: Explicit subsidies or forgone revenues? Question How can the Kingdom’s energy policy best support Saudi Vision 2030 goals? Synthesis Report
  • 5. 5 Sources: KAPSARC, Energy Foundation China based on Climate Policy Initiative Energy productivity is an indicator capturing important areas of economic reform focused on how maximum value can be created from energy consumption
  • 6. 6 Energy productivity functions at different levels
  • 7. 7 Diversification and energy efficiency efforts are transitioning Saudi Arabia towards a lower energy intensity (higher productivity) growth pathway Source: KAPSARC based on Enerdata 0.08 0.09 0.10 0.11 0.12 0.13 0.14 0.15 2000 2002 2004 2006 2008 2010 2012 2014 2016 Energyintensitytoeper10002015USDPPP G20 Average (~2.5% p.a.) Saudi Arabia ~1% p.a. ~4% p.a. Transition
  • 8. 8 Energy productivity Kuznets curve curves for GCC and selected advanced economies (1971-2014) Source: 2016, Galeotti, Howarth and Lanza, KAPSARC Discussion Paper, Energy Productivity in GCC Countries: An International Kuznets Curve Analysis
  • 9. 9 Energy productivity growth models within a Kuznets curve framework Source: KAPSARC, based on Galeotti, Howarth and Lanza, 2016
  • 10. 10 0 200 400 600 800 1000 1200 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 CarbonDioxideemissions(MtCO2-e) Non-energy intensive pathway Diversification into high value manufacturing and service sectors. Strong investment into energy efficiency and renewable energy. Increase or maintain oil export revenue Energy intensive pathway Prioritize expansion of energy intensive industry. Higher domestic energy consumption. Downwards pressure on oil export revenues for government. Saudi Arabia’s Nationally Determined Contribution to the UNFCCC Paris Accord outlines two development pathways and ambition to avoid 130MtCO2-e per year by 2030 off a dynamic baseline The future energy productivity pathway will also be a key driver of CO2 emissions Source: KAPSARC based on Enerdata and Saudi Arabia’s Nationally Determined Contribution (NDC) to the UNFCC under the Paris Accord
  • 11. 11 0 50 100 150 200 250 300 350 400 Energyproductivity Totalrevenue($)/EnergyUse(toe) Develop high value downstream industries Strengthen local supply chains Maintain competitiveness through energy efficiency Basic energy intensive products Chemicals Steel Aluminium Food products TransportUtilities FertilizersCement Higher value added industries Beverages Engineering, construction Automotive Health care equipment Household goods Specialty chemicals Aerospace and defence Textiles ICT industries Refining Industrial conglomerates Packaging and containers Industrial strategy should seek to build on the region’s strengths, strengthen local supply chains and develop end use markets to drive demand Source: KAPSARC based on Climateworks Australia
  • 12. 12 A more integrated policy paradigm is needed for managing sustainable energy transitions in the GCC Source: KAPSARC
  • 13. 13 Some questions for discussion arising from the report 1. What is the potential for more GCC countries to recast their growth oriented economic plans which have environmental co-benefits through a higher profile climate change / green growth narratives (e.g. UAE) 2. Energy intensity/productivity is a well discussed indicator, globally and in the region. What is the potential for GCC countries to set national targets similar to other G20 countries? 3. Will higher oil prices dampen the drive for domestic energy price reform and efforts to diversify the economy as they have in the past? What are the domestic energy pricing models which could best keep up momentum given energy market volatility? 4. Significant value is created from oil by using it in a non-combustible way in the production of petrochemicals. With demand growing faster than GDP and efforts to move up the value chain of production – how can the petrochemical industry best position itself within sustainable development strategies being pursued in the region?