Marie Donnelly is currently Chairperson of Renewable Energy Ireland. She is also a non-executive director of Tipperary Energy Agency. Marie gives her thoughts on Energy Efficiency Post Covid.
‘Stop the world and let me off, I’m tired of going round and round’
How prophetic were the words of Waylon Jenning’s 1960s hit song? Did any of us ever think the world could stop?
The catastrophic impact of a miniscule virus – each coronavirus virion is around 120 nanometers in diameter, meaning about 750 of them could fit across the width of a human hair – is beyond unbelievable yet it is happening. It is changing our lives today and will change them forever into the future.
On a date in the middle of March 2020 (depending on where you live in Europe), radical measures were introduced to the way we live and work. They were presented as temporary and exceptional but in truth they will last a long time because the conditions that created them will last a long time. On top of that, these measures, while containing the pandemic, will fundamentally alter our economic model. Just like Humpty Dumpty the economy cannot be put back together again in the same way. The reality is that we will never return to February 2020.
But the pandemic should not take our attention away from the other ‘known’ threats to society particularly climate and environment challenges. It is imperative that society and governments turn this disaster into an opportunity by making the right choices now for our future.
First the (almost) good news. We have seen the future, now we must make it happen!
Every winter, during Chinese new year, the country closes down for a week, with shops and construction sites closing and most industries winding down operations. The holiday has a significant short-term impact on energy demand, industrial output and emissions. This year the usual fall in energy use has been prolonged due to Covid-19: because the government extended the annual holiday to try to get the epidemic under control and demand has remained subdued. Taken together, the reductions in coal and crude oil use have reduced CO2 emissions by 25% or more, compared with the same two-week period following the Chinese new year holiday in 2019 i.e. as much as 250MtCO2 – equivalent to half the annual carbon emissions of the United Kingdom.
Meanwhile, in the European Union, declining power demands (between 15% and 25%) and depressed manufacturing could cause emissions to fall by nearly 350 million metric tons this year, a figure that represents about 9 percent of the EU’s cumulative 2020 emissions target.
In Ireland the EPA has carried out a comparative analysis of ambient nitrogen dioxide, comparing January to April 2019 with 2020 (thus far). There has been a decrease of up to 50% of NO2 emissions as a consequence of reduced traffic volume and congestion. However a similar analysis for particulate matter has not been so positive. Domestic use of solid-fuel (coal, peat and wood) is the main contributor to this form of air pollution and levels in Ireland have not changed due to Covid-19.
Clearly, this planetary breather is nothing to celebrate. And it could be a short-term blip: in China, emissions are already rebounding as the country restarts its factories.
In the absence of strong governmental support for clean energy moving forward, the pandemic won’t reverse the upward march of global carbon emissions, something that needs to happen immediately in order to help the world meet its climate targets. The risk is that government’s economic stimulus in response to the disruption could outweigh these shorter-term impacts on energy and emissions, as it did after the global financial crisis. Governments will need to intentionally design economic recovery packages that support the most vulnerable, promote innovation and clean technologies as the moving force of the economy, while removing subsidies from polluting industries.
The ‘State’ has taken increased control of society. On the supply side of the economy, governments are keeping many businesses on life support with state aids, unsecured loans and debt deferrals. For a wide range of businesses, the combination of a 2-3 month shutdown followed by an inestimable period at slow speed (due to social distancing and lack of business and consumer confidence) will overturn their cost and revenue structures. Business-to-business demand is being kept alive by state supports.
However, in the new economy it is consumer demand that will need to be grown.
So, let us focus on a pivotal intersection for both economic stimulus and clean energy – energy efficiency in our housing stock. Given the crash in demand, oil, gas, coal and carbon prices are likely to remain low for some prolonged period, reducing the economic rationale for energy efficiency. However, it is the one accelerator pedal from which we absolutely must not take our foot. Otherwise, when demand does eventually bounce back, we will find not only that emissions soar again, but that energy prices do too, acting as a brake on economic recovery. They say you should mend your roof when the sun shines – well you should tackle the challenges of our building stock when there is excess capacity in the construction industry.
Covid-19 has changed how we live in and view our homes. They have forcibly mutated into school houses, offices, meeting places, gyms, arts and crafts, and many more uses than traditionally had been the case.
- Before Covid-19, the technology for home-schooling was absolutely woeful. It will improve quickly, potentially to the point where the model of obligatory daily schooling and long holidays looks old-fashioned;
- Home-working has been mandated during this crisis. Post Covid-19 people will demand it, at least for part of the week; and employers are getting more comfortable offering it (and calculating the cash benefits of smaller office space).
- As for business travel, Covid-19 has entirely shut it down for the moment, and it will never be the same again. Video-conferencing software is improving on a daily basis as both business and families shift to virtual meetings and gatherings.
- Much of primary medical care has gone mainly remote. With on phone sensors, hand-held cell scopes and AI, remote consultations are increasing. In-person provision of primary medical care could be the exception rather than the rule – not just because of infection risk but because it leads to better service, better record-keeping and better outcomes.
- Software could easily enable a massive shift of activity out of centralized locations reducing housing pressure in urban locations and valorising rural diversity.
All these changes mean that our homes must be flexible in their usage in addition to being safe, healthy and comfortable. This crisis happened in Spring, with particularly clement weather. But if it happened in the depths of winter what would happen to the particulate matter in our homes, the damp walls, the mouldy ceilings, the drafts around windows?
In the new economy how can demand led consumption meet the objectives of economic stimulus and green agenda through the retrofit of our housing stock? Strong pillars are needed:
- Align the forces. Covid-19 has demonstrated the power of people working together, for themselves, their community and their society. Capturing that spirit of participation is a key first step and should be launched by a comprehensive state supported citizen engagement program.
- Support consumers through dedicated local or regional one-stop-shops for project developers, covering the whole customer journey from information, technical assistance, structuring and provision of financial support, to the monitoring of savings.
- Aggregate demand. Larger scale projects can reduce costs through efficiencies, bulk purchasing and professional roll out. Local authorities acting in their local area can deliver scale projects, ensure that standards and methods ensure value for money investments only are supported that do not cause homes to be excluded or forced to make un-necessary investments
- Financing flow. Many workers and home owners have lost jobs and income during this crisis. It is clear therefore that a debt-driven approach to financing will not work. There is an essential role for the State to act in this context:
- Front loading investment through targeted grants, tax credits and other fiscal incentives;
- Sourcing and supplying funding at (near) sovereign terms – very low interest rates, very long terms, very low conditionality. This could include National Bonds;
- Utilising State agencies, particularly utilities, to structure and offer ‘pay as you go’ options to consumers.
Tipperary Energy Agency is perfectly positioned as a key actor in this new economy. With more than 20 years of serving the community they have the knowledge, skills and capability to deliver. But more importantly, they are driven by the desire to make a difference, to improve people’s lives leading to a better future.
The agency provides a one-stop-shop (OSS) for customers, with transparent and easily accessible advisory tools from the clients’ perspective; and innovative business models from the suppliers’ perspective. This allows them to overcome the market fragmentation on both the demand side and the supply side by offering holistic, whole-value-chain renovation solutions. Their internal design office encompasses residential and non-residential capabilities to provide a full end-to-end service – a one-stop-shop development where their staff can do an energy audit, design a retrofit, apply for grant support, procure, manage the project, and sign off the investment.
Tipperary Energy Agency is all about supporting people to make the energy transition, make their home warmer, or their business more efficient.
Housing retrofit is a major part of the Government’s Climate Action Plan with the objective to retrofit 500,000 homes to a Building Energy Rating (BER) of B2 by 2030 as well as the installation of 400,000 heat pumps, to replace older heating systems. Refurbishment of our houses should therefore be a priority in the resurgence of our economy. Energy efficiency is a positive net value investment – such that a big stimulus package would eventually recoup its costs – but unlocking it is hard. Now is the time for a massive, coordinated effort involving policy-makers, industry, financiers and consumers.
We are seeing, smelling and hearing the benefits of clean air during this pandemic – it is like a postcard from the future! Let’s learn from the experience and invest accordingly.