The rewards of sustainability and energy efficiency

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The United Nations Development Program (UNDP) contends that unsustainable patterns of energy production and consumption pose a threat to human health and quality of life. They also adversely affect ecosystems and contribute to climate change. Climate change has devastating consequences, such as rising sea levels that threaten to displace millions of people, and weather events becoming more severe and frequent.

“Sustainable energy, however, not only tackles these challenges head on, but is also an engine for poverty reduction, social progress, equity, enhanced resilience, economic growth, and environmental sustainability,” UNDP says on its web site.

The agency is working to increase the global share of renewable energy use, saying that heavy reliance on fossil fuels, as well on coal-fired power plants that are inefficient and outdated, is one of the reasons explaining the energy sector’s high contribution to global greenhouse emissions. There is a lot to gain from making more use of renewables — and less of fossil fuels.

According to a 2016 report by the International Renewable Energy Agency (IRENA), an intergovernmental organization advocating the adoption of renewable energy sources, accelerating the deployment of those sources will do the following things: fuel economic growth, create new employment opportunities, enhance human welfare, and contribute to a climate-safe future.

“Doubling the share of renewables in the global energy mix by 2030 would increase global GDP by up to 1.1% or $1.3 trillion,” the report said, adding that increased investment in renewable energy development is what driving most of the positive impacts on GDP.

The report also estimated that up to 24.4 million direct and indirect jobs will be generated by 2030. “Renewable energy jobs will grow across all technologies, with a high concentration in the same technologies that account for a majority of the employment today, namely bioenergy, hydropower and solar,” it said. Most of these jobs will come from fuel supply, installations  and equipment manufacturing.

Renewables will also benefit human well-being, with the IRENA report saying that doubling their share in by 2030 will help increase global welfare by 2.7%. “If achieved through higher electrification of heat and transport, global welfare would further rise by 3.7%,” the report added.

These benefits, however, are dependent on a number of enabling factors. Among the factors that the IRENA report mentioned are a diversified economy and a sufficient market capacity to absorb the opportunities for job creation, including the training and education needed to foster a skilled and versatile work force. “Economic growth also depends critically on an increase in investments in renewable energy deployment without reducing investment in other economic sectors,” the report said.

UNDP believes that energy efficiency is a key to the transformation of energy systems. It cited the World Energy Outlook 2015, which described energy efficiency as playing a critical role in limiting world energy demand growth to one-third by 2040, while the global economy grows by 150%.

“Energy efficiency can, for example, help to reduce energy expenditure and bring down the per-unit cost of lighting, heating, refrigeration and other services. It can also help reduce pollution and greenhouse gas emissions,” UNDP says.

It further says that energy efficiency offers a unique opportunity to reconcile economic competitiveness with sustainable development, and at the same time, reduces the cost of energy and increases productivity. “Improvements in residential and public sectors, for example, have delivered a wide range of social, environmental and economic benefits, including energy security, job creation, poverty alleviation, improved health, and reduced greenhouse gas emission,” UNDP says.

The International Finance Corp. (IFC), a member of the World Bank Group, noted in a 2012 publication that investment in resource efficiency is important for small and large companies alike. “It helps them strengthen their competitive advantage. Studies have shown that improvements in resource efficiency in energy and water have led to significant cost savings and lower environmental impact,” IFC said.

One example it cited is DuPont, a large American chemical company. The company managed to cut costs by $2 billion in a span of a decade by investing in energy efficient equipment, while reducing its greenhouse gas emissions by 75%.

IFC also said that in that publication that sustainability has become an important factor in business strategies, with both large and mid-sized corporate entities taking a long-term view toward managing environmental and social risks. “Many companies recognize that by addressing environmental and social issues, they can achieve better growth and cost savings, improve their brand and reputation, strengthen stakeholder relations, and boost their bottom line,” IFC said.

It continued: “Strategic integration of sustainability prepares companies to better anticipate and understand long-term trends and the effect of resource use, and to address stakeholder expectations.”

In order to accommodate constraints on natural resources in a way that allows them to make products, services and business models that are innovative, IFC said companies are shaping their business strategies and are  capitalizing on local conditions. “This also provides opportunities to bolster their growth, profitability, and add societal value,” the institution said.