As COP26 comes to a close, Martin Rossen, Senior Vice President, Head of Group Communication and Sustainability at Danfoss reminds us in a powerfully persuasive way why the most direct route to net-zero is managing consumption. Inspired by a glaring omission by Bill Gates in his recent book, Rossen draws our attention to the futility of developing new tech if we don’t prioritise making use of readily available energy efficiency solutions. According to IEA figures almost half of emissions reductions must come from efficiency and the solutions are already at hand. Article promoted by Danfoss.

The Glaring Omission

The summer of 2021 was the first time in a while that I not only felt the urge but also had time to read a book. No more government files and committees. I read Microsoft founder Bill Gates’ newest book “How to Avoid A Climate Disaster: The Solutions We Have and the Breakthroughs We Need.” I chose it because Bill Gates’ entrepreneurial spirit and community engagement have always fascinated me. He approaches society’s biggest challenges with equal parts curiosity, optimism and determination. This is also the case when he takes on the climate crisis.

In the book he asks the blatantly right question: How do we reach net zero – in other words, reach a point where we don’t emit more greenhouse gasses than the world can absorb? And achieve it in a way that ensures that developing countries who shoulder the least blame for global warming are not restrained in their growth and development? Many decision makers are guaranteed to pick up the book, too, for that is the exact question they’re struggling with in the EU, at COP26 in Glasgow in November and in most national and international forums.

Because of this, I gifted the book to a teenager. I think it as well received. The gift recipient supports the call for climate action that is widespread among the younger generations. They take to the streets, demonstrate for climate action and force political leaders to shift from talk to action.

However now, after reflecting on the book, I almost regret gifting it. Even though the book is undoubtedly recommendable, it has one major shortcoming that my young friend and millions of other readers will take with them: Bill Gates basically ignores that the greenest and cheapest energy is the energy we don’t use. I will get back to that, but let’s first look into climate action according to Bill Gates:

Primary Energy Consumption virtually unchanged through 26 years of COPs

The world works through devices, machines and materials. The heated living room, the cooled freezer and the car in the driveway are powered by energy. The concrete in the foundation and the bricks in the wall are produced by using energy. But what is painstakingly clear to us all, too much of that energy is derived from burning fossil fuels that emit greenhouse gasses.

We must replace burning fossil fuels with tapping into renewable energy sources like solar and wind. And we need to ensure that all the devices and machines across the world can be powered by renewables. The car in the driveway should drive on wind power and the living room should be kept warm by surplus heat from the local supermarket. We need to electrify the world and use our energy smarter.

The question is: How can we make that happen? We are facing an enormous challenge, and to be honest, a concern lurks beneath the surface. According to the British economist Helen Thompson, fossil fuels constituted 86% of the world’s primary energy consumption when COP1 was held in Berlin in 1995. What is the progress today, 26 years later? The answer is almost nothing. According to the latest numbers, fossil fuels now constitute 84% of the world’s primary energy consumption.

Reversing the Energy Density Trend

Czech-Canadian environmental researcher Vaclav Smil, of whom Bill Gates is big fan, says the underlying challenge is the fact that humanity historically has moved in the direction of more and more energy-intense energy sources. From firewood, sun and the raw power of the ox to oil, gasoline and natural gas. For the first time in history, development must go in the opposite direction. That means, for example, that a future powered by renewables will require more than 100 to 1,000 times additional land to be allocated to energy production. It is unlikely that there will be less conflict between energy producers who need land for setting up solar and wind and local communities that prefer it not being built in their own backyard.

As Bill Gates mentions, we have many great green solutions today. And it is the ultimate responsibility of politicians to push for change and pave the way for regulation to promote – rather than counteract – an increased use of green solutions. Moreover, politicians, business leaders and decision makers must become much better at convincing everyday people of the benefits of going green.

But existing solutions are not sufficient. It will take technological breakthroughs to get to net zero. Because of this, Bill Gates encourages decision makers around the world to make big investments in new technologies. Bill Gates subscribes to the hockey stick model that prescribes – at least in my interpretation – investing now to reap that benefits of better technologies and lower prices before it is too late. It wouldn’t be the first time in history that this sensible approach led to solutions to society’s great challenges. Take the digitalization of the public sector in Denmark as an example. Based on a bold political vision, innovative companies started developing a series of breakthroughs so that Denmark today, 20 years later, was declared the IT champions of the world by the UN.

The green transition must also be fair. This thought permeates Bill Gates’ book, and I strongly agree. Developing countries must not be restrained in their development. And we need to take care of all the people who risk their jobs in the green transition, like employees in the coal and oil industries. We must not place the economic burden on the shoulders of people who already are suffering because of the change. It is essential that we don’t underestimate the destructive potential of great societal transformations like the one we are facing: the polarization between cities and rural areas. Between responsible political parties and populism. Between the winners and losers of globalization. Between rich and poor countries. In 2050, it will not be enough that we have averted a climate catastrophe, we must also still have strong welfare states, democratic institutions and responsible parties to solve other challenges the future brings.

It is the synergy between the market, politics and technology that will lead to a successful green transition – and do so without compromising fairness along the way.

IEA’s “Green Equation”

So, what’s the plan, I’m tempted to ask? To a large degree, I agree with Bill Gates’ conclusions – but I can’t help being a bit disappointed by the fact that he essentially ignores the importance of energy efficiency to the green transition. Bill Gates briefly mentions that energy efficiency could make the green transition easier, but after that, it is left out of his analysis.

Yet the International Energy Agency (IEA), a central source in the book, mapped out the cheapest and most effective path to reach the goals of the Paris agreement – let’s call it the green equation – like this: 36% of carbon reductions must come from renewable energy, 2% from switching fuels, 6% from nuclear power, 9% from carbon capture ands, 3% from other sources – and the biggest chunk, with a total of 44% reductions, has to come from energy efficiency. In other words, we can’t merely build windmills.

The world’s energy consumption has risen dramatically since 1945. For each day that passes, the green transition challenge we face is growing – and so is the need for the technological breakthroughs that Bill Gates calls for. The costs of the transition will also grow since it is expensive to build and maintain renewable energy infrastructure. The Energy Island in the North Sea that is projected to deliver electricity to 3 million European households costs 28 billion euros. And in the US, the price of a 100% green energy infrastructure is estimated at 4.5 trillion dollars. That is why it is important we become better at creating more societal value by using less energy, for example, by recycling it.

Now to the good news

Solutions already exist. In Denmark, we know that. We often live in an energy efficient manner – in bright, well-isolated homes with a secure water supply. This didn’t come by coincidence, but out of necessity.

During WWII, the Danes rationed. This included use of energy, so the living room temperature was to be kept at about 18 degrees Celsius. On a farm on the island of Als in the corner of Denmark, Danfoss’ founder Mads Clausen had the idea to develop a thermostatic expansion valve, which automatically keeps a constant temperature. The result? An improved indoor climate in millions of homes all over the world, as well as energy bills and emissions that have dropped. It was a green breakthrough before we knew we needed it. Today, the island of Als is one of the global centers of energy efficiency.

The solutions vary, but at their core, they are the same – they provide energy efficiency. According to the IEA, these are the solutions to be put into play if we are to overcome the many barriers on the road to climate neutrality.

The population is growing, and more and more people need a roof over their head. According to Gates’ book, the world will build the equivalent of an entire New York City every month for the next 40 years. Every new square meter emits greenhouse gasses when it is constructed and when it is heated, cooled or filled with white appliances and devices. Today, buildings account for 38% of the world’s energy-related emissions. If we are to turn the tide on development, every square meter of new floor space needs to function using less energy. That requires taking action anywhere we can.

Buildings

Millions of homes are without the thermostatic expansion valve that many of us take for granted. Here, the only temperature regulation on a cold day is a window that is either opened or closed, while the radiator is running at full capacity. In Europe alone, there are 500 million radiators that are either incapable of – or very hard to – regulate. According to The European Building Automation and Controls Association, we could save 29 million tons of CO2 if they were replaced. At the same time, reduced energy bills would save EU citizens €12 billion. Not bad at the end of the month.

But even in buildings with thermostats, heat pumps and other energy efficient solutions, we must take action. We need to equip our buildings with ‘intelligent’ systems – a ‘brain’ that links the buildings’ thermostats, heat pumps and air conditioning – as well as any other cooling and heating appliances– to big data that constantly optimizes energy consumption. The modern thermostat includes all factors in the equation – including the weather, showering habits of the inhabitants and expensive peak hours – and adjusts the consumption of energy accordingly. With solutions like this, according to the consultants ECOFYS, we can reduce CO2 emissions in Europe by 156 million tons – equaling the emissions of 82 million cars.

Industry, Transport and Food distribution

The industrial sector consumes a lot of energy and is responsible for one-fourth of the world’s emissions, so this sector demands our focus, too. Electric motors are a good place to start. In Europe alone, there are eight billion in use at the time of writing this. However, most of them only have two functions: they are either on or off. If electric motors were fitted with AC drives that enabled them to have adjustable speeds, the world’s demand for electricity could be reduced by 8%, according to the IEA – corresponding to the combined demand for electricity of India and France.

And then we have the transport sector that accounts for 24% of the world’s energy-related CO2-emissions. If cars are to be powered by electricity instead of gasoline, batteries and drives need to replace the combustion engine. This means that the gearbox of the future is a power module that converts power so the car can drive at various speeds. That movement is already on the way. What few people know is that Danfoss’ power modules already are installed in about 40 million cars, but there is still quite a way to go to replace the world’s 1.5 billion cars.

Electric vehicles do not only offer a climate benefit because they are powered by renewable energy. They also offer a climate benefit because they are energy efficient. The electric drive system of an electric vehicle is only responsible for 15% to 20% energy loss compared to 64% to 75% energy loss of a gasoline engine. Transport on water can also be electrified. In fact, the first completely electricity-driven ferry sails between the Danish islands of Ærø and Als. The increased use of that technology will put a dent in the more than 900 million tons of CO2 the shipping industry emits annually.

Massive amounts of the world’s resources go into the production of food that is lost or wasted in areas without proper cooling facilities. In India, more than a third of food is lost on the journey from fields to the hungry population. It isn’t hard to imagine farmers’ disbelief and frustration in the face of this inconceivable loss of value. In many developing countries, proper cooling facilities in the supply chain can reduce the blatant waste of food (and associated emissions) by up to 40%, according to estimates.

The Solutions are already at hand

These are big numbers, and I could go on, because it is the same in practically the entire economy. We are not using our energy wisely. This results in a massive waste of energy. It costs fortunes on the energy bills of families and companies all over the world. It results in the emission of many billion tons of greenhouse gasses. And it makes the renewable energy infrastructure bill much bigger than it has to be.

We need to take this in hand, particularly in the Western World. It is necessary if we are to reach net zero. But also, because net zero is a zero-sum game, imposing a certain responsibility on us. We need to make an extra effort in the green transition so developing countries are not held back in their efforts to reach the same level of prosperity that we are privileged with.

Luckily, there are various energy-efficient solutions from many competent companies, that have a payback time of only a few years. That’s good because there is plenty of work to be done.

According to the IEA, the steam has gone off investments in energy-efficient buildings, equipment and vehicles. Both literally and figuratively speaking, we are wasting our energy at the same time we should be doing the exact opposite. It is a huge challenge many seem to forget: the green transition, in a lot ways, neither requires technological breakthroughs nor revolutions. It simply requires that we apply readily available cost-efficient solutions – not the least within energy efficiency.

The fact that Bill Gates’ otherwise great book does not focus on energy efficiency – while giving nuclear energy a large and not very imaginative role – slightly annoys me. Because decision makers, young people, and many others will read the book and draw the wrong conclusions. But also, because it feels like a symptom of a broader issue: intellectually it is evident for most people that energy efficiency is a central, cost-effective and economically smart way to contribute to the green transition. Yet energy efficiency does not play a central role in many countries’ efforts to secure a green transition. It is as if they overlook the fact that the greenest and cheapest energy is the energy we don’t use at all.