The age of Sustainalism: a new growth model for the 21st century

By Harry Verhaar, Head of Global Public & Government Affairs at Signify and Chair of the EU-ASE Board.

It is becoming ever more clear that the major global trends which are having the greatest impact on the world around us are not only increasingly intertwined, but are also becoming ever broader in their impact, affecting a greater number of regions and citizens.

Global hunger is on the increase, for the first time in over a decade. According to the annual United Nations report on world food security and nutrition, this increase is primarily due to climate-related shocks and the growth in the number of violent conflicts. The report also points to concern at the number of overweight children and obese adults, with changes in dietary habits and economic slowdowns cited as some of the drivers of these trends. The authors of the report state that the world will not “end hunger and all forms of malnutrition by 2030 unless we address all the factors that undermine food security and nutrition. Securing peaceful and inclusive societies is a necessary condition to that end.”

We need a paradigm shift – slightly revised capitalism or moderated socialism are not going to suffice.

The impact of climate change has thus far been most keenly felt by the citizens in the developing world. However, last year’s intense and destructive hurricanes, which tore through the Caribbean and then hit the southern United States, suggest that even the wealthiest country on the planet is not immune to the consequences of a changing climate.

Chicago skyline
The Chicago skyline lights up as dusk falls. Globally, lighting accounts for about 15 per cent of all electricity consumption. (Source: Pixabay)

It should be clear that we cannot continue to look at the challenges facing the world in isolation. It may be comforting to do so, as focusing on a single issue can provide for greater clarity and easier communication. But this approach has the danger of simply storing up trouble for future generations.

Our focus on measuring global success through GDP growth has trapped us in a linear view of society – focused on extracting, consuming and emitting resources from energy to water, materials and food. We need to become much smarter, more resource-efficient and change from a linear approach to a circular society, in which long-term quality of life becomes the most important metric. This would ensure that while economic competitiveness remains important, our society would have at its core the health and well-being of all our citizens.

By adding a focus on social equity and inclusiveness, we can enter an age where the socio-economic model becomes about Sustainalism, building on the foundations laid by capitalism and socialism, but taking the broader view which the challenges of today and tomorrow demand of us.

No one is unaware of the need for our products and processes to become more energy efficient and yet, often due to a focus on the short term, there remains a reluctance to make the transitions required.

To arrive at a carbon-neutral world by 2050, we need to drive overall energy efficiency improvements of at least 3 per cent per year. “We” – industry, transport, public infrastructure, homes – must at least double the rate of energy efficiency improvement, primarily by accelerating infrastructure renovation to around 3 per cent per year. In parallel with this we also need to be moving to clean energy sources at a rate that also equates to 3 per cent of our energy mix per year.

Critically, the current rate of energy efficiency improvement hovers at around 1.5 per cent per year. At the same time, demand for energy continues to rise at about 3 per cent per year driven by population growth, increased prosperity and mobility. Simply doubling the rate of energy efficiency improvement would reduce global energy costs by more than $2 trillion by 2030, slash the average household energy bill by a third, and create more than six million jobs by the end of this decade.

Simply adopting LED in place of incandescent lighting would reduce energy consumption by a massive 53 per cent and carbon dioxide emissions by 1,400 megatonnes.

There are two main elements required to double the rate of energy efficiency improvement. The first is accelerating the renovation of existing infrastructure in developed countries. Secondly, there needs to be a focus on helping developing countries leapfrog to clean technologies such as solar-LED and combine these with new business models. It is a sad fact that many of the countries which have suffered the most from climate change have been least responsible for creating it. It is vital that developing countries do not follow the same destructive phases that the richer nations of the world have been through.

When speaking about energy we often talk about individual technologies and their potential in their respective silos. In reality we must pursue them all. Energy efficiency, renewable energy and carbon engineering are all needed. Only by enacting all of them in unison will we be able to achieve the ultimate goal of carbon neutrality in the coming 40 to 50 years. The International Energy Agency projects that energy efficiency needs to do over half of this job. One could say that by combining energy efficiency and renewable energy we can decarbonize society twice as fast and twice as cost-effectively.

The fact is that many of the technologies we need already exists, all that’s required is to take a longer-term view, and use it.

LED lighting is a perfect example. LED street lighting uses at least 40 per cent less energy than conventional lighting and has been around for years, and yet we still cling to outdated and inefficient technology. Globally, lighting accounts for about 15 per cent of all electricity consumption. We project this will decline to 8 per cent in 2030 while over the same period the global tally of light points will have increased by 50 per cent to 70 billion. Simply adopting LED in place of incandescent lighting would reduce energy consumption by a massive 53 per cent and carbon dioxide emissions by 1,400 megatonnes.

Streetlights
Energy-efficienct street lighting can deliver social, economic and environmental benefits. (Source: Pixabay)

Moreover, innovation brings benefits beyond energy efficiency. Looking at lighting specifically, around one in seven of the world’s population (some 1.1 billion people) are trapped in light poverty because – cut off from the grid – they have no access to electric light. As a result, they are forced to use alternatives such as kerosene lamps and candles to light their homes – which claim an estimated 1.5 million lives every year through respiratory illnesses and fires.

But off-grid solar LED lighting solutions can help to end this injustice, at a fraction of the long-term cost of kerosene or typical infrastructure, while stimulating social and economic development as communities are brought out of the dark.

However, in all these cases what can hold the development back is the initial upfront cost. The cheapest individual lightbulb to buy remains the incandescent bulb – yet viewed over any length of time, it becomes the most expensive.

It is also extremely limited technology. In contrast, LEDs can now be embedded with sensors and intelligence so they can be connected wirelessly and managed remotely via the internet. This connected lighting for smart buildings and smart cities can further boost the initial energy savings by up to 80 per cent.

The benefits of this connected technology can be measured in much greater terms than simple energy savings. Businesses can enable employees to personalize their lighting and temperature at their workspaces via a smartphone app, with associated improvements in both productivity and employee well-being. In addition, building managers can receive real-time data on how the office is being used, how much space is required, and how to optimize the space they have.

The benefits of connected lighting can be seen on a city-wide scale. For instance, the City of Los Angeles has converted 140,000 street lights to LED and has 110,000 nodes connected and managed through a Philips Lighting CityTouch connected street lighting management system. Not only does this allow the city to remotely manage and monitor the lighting, acoustic sensors can be used to detect vehicle collisions and thus reduce the emergency response time. Other benefits include a 21 per cent reduction crime in areas where the improved lighting was introduced and a 30 per cent reduction in night-time traffic accidents.

We need to become much smarter, more resource-efficient and change from a linear approach to a circular society, in which long-term quality of life becomes the most important metric. 

Buenos Aires is another city that has retrofitted its street lighting system with connected LED lighting, creating a safer, more welcoming environment to improve the quality of life of its residents, while also saving 50 per cent in operating costs.

Better lighting can also have a significant impact in schools. In a year-long trial in a French primary school, a new system that allows the teacher to optimize the classroom ambience found that reading speed increased by 35 per cent, while frequency of errors dropped by nearly 45 per cent and hyperactive behaviour by 76 per cent. All of these factors can provide a major boost to children’s enjoyment of their school day and their ability to learn.

The key in encouraging the adoption of this type of technology is delivering the message that it does not require a sacrifice, or that we are looking at experimental concepts, but that the technology is already available and simply needs accelerating. This must take place through replicating best practice, putting the right policies in place, and communicating effectively.

We need to convince society’s “eco-majority” – those who are aware of the need to act, are willing to do so, but are uncertain about the steps to take. Creating momentum with this group will help embed Sustainalism as the new mainstream economic model.

We need a paradigm shift – slightly revised capitalism or moderated socialism are not going to suffice. We need Sustainalism, a new, inclusive and more equitable socio-economic model of a twenty-first century that can meet the needs of the 10 billion people who in just a few decades from now will  share the single planet that we call home.

This article was originally published here. Courtesy of Climate Change – the New Economy.

Energy Efficiency and Electric Vehicles: How Buildings Can Pave the Way for the Global EV Revolution

The electric vehicle (EV) revolution is here, and countries around the world have set aggressive EV goals and targets as a means to cut carbon, improve air quality, and accelerate a renewably powered electricity grid. The cheapest and quickest way to free up electricity for EVs is to save it in our buildings. RMI’s latest report, in partnership with Signify, details key policy approaches to capture the reinforcing benefits of building efficiency and EVs.

Why It Matters

As more EVs hit the road requiring electricity, and building energy use continues to rise, city, state, and national leaders are forced to evaluate where all of this electricity will come from, how it will impact climate goals, and how much it will cost. Capturing these benefits will require a step change in policy approaches to building energy efficiency and EV deployment and adoption.

Eurostat and the EIB launch a new Guide on the Statistical Treatment of EPCs

Eurostat, the Statistical Office of the European Commission, and the European Investment Bank (EIB) launch a new Practitioner’s Guide on the Statistical Treatment of Energy Performance Contracts 

The new Guide follows the Eurostat Guidance note on the revised treatment of Energy Performance Contracts in government accounts, issued in September 2017, and explains its practical application, making use of technical assistance resources from the European Investment Advisory Hub (EIAH). The guide is available here.

Marianne Thyssen, Commissioner responsible for Eurostat, said: “I am very pleased to launch a new guide today that clarifies how investments in energy efficient infrastructure should be statistically treated. This will help all stakeholders involved in commissioning, financing and undertaking energy performance contracts. This is a win-win for public authorities and private stakeholders, with a clear understanding of the impact on the national budget. I am confident this new guide will encourage both private and public project promotors to step up investments in energy efficiency projects.

Commissioner for Energy and Climate Action, Miguel Arias Cañete, added: “Thanks to this guide, it will be easier for schools, hospitals, and other public buildings – which make up more than 10% of the overall EU building stock – to invest for the purpose of improving energy efficiency. Energy efficiency measures are also an important means to combat energy poverty, which this Commission aims at tackling at the roots.

Andrew McDowell, EIB Vice-President with oversight for Energy, said: “Managers of public buildings – such as schools, hospitals and other public agencies – often lack the budget and technical expertise to design and secure finance for energy savings projects that reduce carbon emissions, save taxpayers’ money and make buildings more comfortable for staff and public service users. This new Guide aims to help public authorities to prepare and finance projects, by mobilising private capital and expertise for the benefit of the public sector under Energy Performance Contracts. This is one of many steps that the EIB is taking through our joint “Smart Finance for Smart Buildings” initiative with the European Commission to unlock more energy efficiency investments in public and private buildings.”

The Guide explains in detail how Energy Performance Contracts work and gives a clear overview of the potential impact on government finances. This will help Member States and other stakeholders to better understand the impact that the different features of these contracts have on the classification of the investment undertaken, on or off government balance sheet, and will assist public authorities in taking better-informed decisions when preparing and procuring their EPCs. This Guide is also a helpful tool to provide clarity to public and private promoters in the context of the Investment Plan and remove perceived barriers to investment.

About 97% of EU’s building stock, not considered energy efficient

Roughly 97% of the European Union (EU)’s building stock, amounting to over 30 billion m2, is not considered energy efficient, and 75 to 85% of it will still be in use in 2050.

Defining a pathway towards a ‘highly efficient and decarbonised building stock by 2050’ is a fundamental pillar of the revised Energy Performance of Buildings Directive (EPBD), requiring the transformation of the majority of buildings from highly inefficient to, at least, nearly zero-energy buildings.

This is an opportunity to significantly improve the quality of the building stock and the living conditions of all Europeans. However, to achieve this goal, the multiple barriers building owners face when planning a renovation must be overcome. One of the main barriers to renovation is the lack of knowledge about what measures to implement and in which order. Building renovation is often considered a burden that many associate with time-consuming planning, uncertainty about the value of the planned measures, dust and unreliable professionals.

The iBRoad EU-funded project works on eliminating these barriers by developing an Individual Building Renovation Roadmap for single-family houses. This tool provides a customised renovation plan over a long-term period (10-20 years). The roadmap is at its core a home-improvement plan which considers the occupants’ needs and specific situations (e.g. age, financial situation, composition and expected evolution of the household, etc.) and avoids the risk of ‘locking-out’ future renovation solutions due to a lack of foresight.

The renovation roadmap is combined with a building logbook, a repository where all the building-related information can be stored and continuously updated. The type of information stored in the logbook and its functionalities can evolve over time and could range from energy production and consumption to equipment maintenance, as well as insurance, property plans and obligations, energy bills, smart meter data and links to available financing options for renovation projects (e.g. green loans, incentives, tax credits).

This report offers an overview of the process behind the creation of an Individual Building Renovation Roadmap and covers the key issues that need to be addressed to allow its development and implementation. Real-life examples based on four existing initiatives revolving around the concept of individual building roadmaps and passports are used in this report to demonstrate how the different elements can be designed and implemented: Denmark (BetterHome), Flanders (Woningpas and EPC+), France (Passeport Efficacité Énergétique) and Germany (Individueller Sanierungsfahrplan). These specific cases were chosen for their advanced phase of development; most are entering or have just concluded the testing phase and will soon start implementation. Two of the cases (Germany and Flanders) are driven by (regional) governments, while the others are initiated or driven by private actors (BetterHome in Denmark and Passeport Efficacité Énergétique in France).

 

 

New research finds USD 1.5 trillion in potential cost savings in office buildings

Eindhoven, the Netherlands – Businesses around the world could realize savings of up to USD 1.5 trillion in reduced rental costs alone if their office buildings were refurbished to the most efficient standards of today, according to new analysis1 from Philips Lighting (Euronext: LIGHT), the world leader in lighting. 

The findings, released by Philips Lighting in conjunction with World Green Building Week, show the impact that could be made on rents across the world’s offices if business owners replicated the efficient usage of space achieved in a leading green building. Deloitte accomplished a 50% reduction in space required per employee in The Edge building in Amsterdam compared to its previous premises The Chrystal Tower, through effective use of smart technology2. 

The Edge uses smart technology such as a connected LED lighting system from Philips Lighting that enables employees to personalize their lighting and temperature at their workspaces via a smartphone app, but also provides building managers with real-time insights on how the office is being used to help maximize operational efficiency. These insights are derived by the analysis of data collected by sensors embedded in the lighting.

Philips Lighting is calling for a doubling of the renovation rate of offices in developed countries to reach 3% per year, which it says will be a key factor in reducing emissions and offsetting increased demand for energy from population growth and urbanization. 

Moreover, the research findings highlight that in addition to reducing their carbon footprint, office tenants could see vast financial savings if their buildings were renovated in a way that uses space more effectively, particularly in buildings with a high number of empty workspaces and meeting rooms at any given time. 

But Philips Lighting says the potential rent reduction from optimizing offices is just a small proportion of the total potential financial benefit to businesses, which also includes lower utility bills and significant gains in the productivity of employees, the largest cost to most businesses. 

“Renovating buildings to make them more energy efficient can have a huge beneficial impact on the environment, and when they are renovated properly to encompass smart technology, the additional financial impact for businesses can also be vast,” explained Harry Verhaar, Head of Global Public & Government Affairs at Philips Lighting. 

The JLL 3-30-300 rule of real estate3 shows that a company’s typical costs per square foot per year are USD 3 for utilities, USD 30 for rent and USD 300 for payroll, highlighting that gains in employee productivity are worth far more to a company in financial terms than rent reductions or increases in energy efficiency of the same percentage. 

“Our research looks at the potential savings in rent by optimizing space,” Verhaar continued, “whereas this is just scratching the surface of the financial gains that can be simultaneously made by using smart technology. This can significantly reduce bills for energy, water and air conditioning, and generate even greater financial benefits by improving the productivity of employees through enabling them to do things like find a meeting room faster or adapt the light and temperature conditions at their workstation. We are calling for a doubling of the renovation rate of buildings primarily to help mitigate the harmful effects of climate change, but at the same time take advantage of some considerable commercial benefits to businesses.” 

Regional reductions

Asia Pacific is the largest market for office space, with a total of over 65 billion square feet of office space4. As such, it currently has a potential USD 977 billion of reduced annual rent for commercial tenants if buildings were optimized in line with best practice.  This is more than the total economy of Indonesia5. Europe has a total of USD 243 billion of potential savings, and North America USD 220 billion1.

Notes to editors

1 Philips Lighting analysis, applying the reduced space per employee in The Edge (footnote 2) and the average USD 30 per square foot per person per year rule of thumb from JLL (footnote 3) to Navigant’s dataset on the combined area of office buildings around the world (footnote 4) 

2 Source: Deloitte. In the Chrystal Tower, Deloitte used 15.3 m2 per full time employee. By September 2016 in The Edge, it was utilizing just 7.6 m2 per full time employee, a reduction of over 50%.

3 JLL 3-30-300 rule 

4 Navigant Research Global Building Stock Database 

5 Source: IMF