Why do we need strategic planning for energy efficiency?

I  heard that there is another study on the national energy policy up to 2050 is being carried out now at the national level. Another consultant has been engaged to conduct the study and surely to come up with recommendations for the government to consider.

I support the effort and hopefully this time they will give due attention on the demand side of energy rather than only on supply side of energy alone.That have been so obvious in the past when any study carried out with regard to energy industry in Malaysia especially in electricity sector.

Why energy efficiency must be in covered in our national energy policy?

Before we discuss further on the above questions, below are some definitions that I sourced from Wikipedia which I believe are quite relevant to this topic

Sustainable Development

In 1987, the United Nations released the Brundtland Report, which included what is now one of the most widely recognized definitions: "Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs."

Sustainable energy is the sustainable provision of energy that meets the needs of the present without compromising the ability of future generations to meet their needs. Technologies that promote sustainable energy include renewable energy sources, such as hydroelectricity, solar energy, wind energy, wave power, geothermal energy, and tidal power, and also technologies designed to improve energy efficiency.

Energy efficiency and renewable energy are said to be the twin pillars of sustainable energy. Some ways in which sustainable energy has been defined are:

• "Effectively, the provision of energy such that it meets the needs of the present without compromising the ability of future generations to meet their own needs. ...Sustainable Energy has two key components: renewable energy and energy efficiency." – Renewable Energy and Efficiency Partnership(British)

• "Dynamic harmony between equitable availability of energy-intensive goods and services to all people and the preservation of the earth for future generations." And, "the solution will lie in finding sustainable energy sources and more efficient means of converting and utilizing energy." – Sustainable energy by J. W. Tester, et al., from MIT Press.

• "Any energy generation, efficiency and  conservation source where: Resources are available to enable massive scaling to become a significant portion of energy generation, long term, preferably 100 years.." – Invest, a green technology non-profit organization.

• "Energy which is replenishable within a human lifetime and causes no long-term damage to the environment." – Jamaica Sustainable Development Network

While policy makers in the government are still struggling to  have common ground in sustainable energy in Malaysia, across the business communities in  the private sector have already embarked on their sustainable energy initiatives strategically.

This is quite obvious especially among big corporate organizations and multinational companies operating in Malaysia where they have started years ago and already reaping the benefits of being the front runners in implementing sustainable energy practices and investments in their operations. A quick example that can be seen is due to the relatively low energy prices in Malaysia, they managed to improve much their profits significantly due to their energy efficient operations.

In many countries,sustainable energy efforts generally started with attention given to efficient utilization of their energy resources at the demand side or consumers.

In other words, energy already started to be treated as a first fuel instead of other actual fuels from fossil, renewable and other alternative sources.

Every single energy or fuel unit of quantity is saved  from any activity or operation  is actually can be a source of energy for other activities or operations .It means, more you save, more fuel can be used for other purposes instead of looking for additional sources of energy/fuel supply. 

It many countries that have been successful in their sustainable energy efforts, energy efficiency initiatives implemented through strategically planned actions and implementation frameworks.

Once the potentials from energy efficiency have been identified and then almost fully maximized, they enhance their sustainable energy efforts by looking into  other sources of cleaner and renewable sources to reduce dependence on  polluting and depleting fossil fuel sources.

What have made them successful? 
Many studies at these countries indicate some common elements. A top to bottom approach  and  the government lead by example initiatives have been some of the approaches. Energy efficiency has been taken as a strategic matter at the national level and included in their energy planning.That normally strengthened with strong  accountability by a dedicated agency and regulatory framework to ensure all that have been planned implemented according to the targeted timeline. 

To support all that and to make it technically and financially, feasible, well structured capacity building programs and variety of innovative financing mechanisms introduced to the market for industry players, consumers and financial institutions to participate. Along the line, on-going awareness and education programs have been  made available to ensure current and future generations  are and will look at energy efficiency as apart of their lifestyle and common practices.

Similar elements and evolution could also be seen in many private or government organizations that have been successfully implemented energy efficiency or sustainable energy programs as well.

Based on 2012 The Outlook for Energy: A View to 2040 by Exxon

• Global energy demand will be about 30 percent higher in 2040 compared to 2010, as economic output more than doubles and prosperity expands across a world whose population will grow to nearly 9 billion people. Energy demand growth will slow as economies mature, efficiency gains accelerate and population growth moderates. By 2040, electricity generation will account for more than 40 percent of global energy consumption.

• Gains in efficiency through energy-saving practices and technologies – such as hybrid vehicles and new, high efficiency natural gas power plants – will temper demand growth and curb emissions.

• China’s drop in emissions will be brought about by many of the same trends at work today in the OECD. The biggest factor is improved efficiency: vehicles with better fuel economy, more efficient power plants and new technologies and practices that save energy across all end-use sectors.

• Because of efficiency and a shift to lower-carbon fuels, from 2010 to 2040, the rate of increase in global CO2 emissions will be about half the rate of growth in global energy demand.

Based on findings in the report published  by Exxon, it is so obvious that energy efficiency is one of the key and important  factors in meeting our future energy needs and mitigating impacts from CO2 emission in the world in the way forward. Ignoring the facts on its importance of energy efficiency by not taking more concrete actions now, is equal to deny our future generation to have enough energy resources and environmentally safe environment to live with. They will inherit the world from us and it's up to us to something right about it now.

We just should not delay our actions to ensure sustainability of our energy resources and efforts to consume our energy efficiently either as individual, organization and most importantly as a country. More we wait, more we will lose the  opportunities to make it right and that definitely will affect us and future generations negatively in a long term. Why?

Because our indegenious energy sources are depleting and the costs to  explore to get new sources either from non renewable or renewable sources are not getting easier and we have to compete for them too.

Before I elaborate further on my views in the importance of strategic planning to ensure the sustainability of energy efficiency initiatives, I sourced some definitions of strategic planning itself as follows:

Wikipedia

Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. In order to determine the direction of the organization, it is necessary to understand its current position and the possible avenues through which it can pursue a particular course of action.

In many organizations, this is viewed as a process for determining where an organization is going over the next year or—more typically—3 to 5 years (long term), although some extend their vision to 20 years.

businessdictionary.com

Strategic planning is a Systematic process of envisioning a desired future, and translating this vision into broadly defined goals or objectives and a sequence of steps to achieve them. In contrast to long-term planning (which begins with the current status and lays down a path to meet estimated future needs), strategic planning begins with the desired-end and works backward to the current status. 

It may be a little bit difficult to convince policy and decision makers to integrate energy efficiency in their strategic planning if we look at energy efficiency at a stand alone subject matter.It need to be packaged together with bigger subject which sound and look more appealing to others.After all, energy efficiency is one of the key pillars in sustainable energy and sustainable energy is a concern of all including countries and business communities.

I read with a great interest at the analysis report by Accenture prepared for United Nation Global Impact titled Sustainable Energy For All: The Business Opportunity. This report highlights that under current Secretary General, United Nations is trying to mobilize private an public sectors and civil society  in a major Global initiative namely Sustainable Energy For All. The objectives to be achieved by 2030 from the initiative are to ensure universal energy access to modern energy services, doubling the rate of improvement in energy efficiency and doubling the share of renewable energy in global energy mix.

The summary of the objectives extracted from the report is shown below.

Another interesting source on how Sustainability has taken another level of attention from the highest level corporate leaders is The Business Case for

Corporate Sustainability Tools White Paper by Reg Shiverick, President, Dakota Software. Below are some of the highlights from the paper:

i)      In the Carbon Disclosure Project’s 2012 Global 500 Report, findings indicated that not only were S&P listed companies making progress in taking sustainability into account, but were doing so at a swift rate. The CDP designates a disclosure score to companies on a scale of 1 to 100, with 100 being the best. In the 2012 report, the average score had increased by 13%t to 70% in just one year. 52% of companies reported emission-reduction activities, compared to 35% in 2011. 73% of respondents had also incorporated climate change into business strategy, 65% had done so in 2011. Notable companies included Microsoft and UPS, both had a score of 99, Sempra Energy, 97, and Air Products and Chemicals, 95.

ii)          Wal-Mart, an often-cited leader in the drive for corporate sustainability, recently announced it would save $150 million thanks to sustainable initiatives like solar and wind energy, fuel cell installations and a zero waste program.

iii)  University of Missouri researchers found consumers would be more willing to pay between 15-20 % more for retail products from companies that support sustainable practices

iv)     In a 2012 survey by Ernst & Young, 66%of executives who were polled said they saw an increased amount of sustainability-related inquiries from investors in the past year.

v)         In a survey by the United Nations Global Compact of 766 CEOs worldwide, 93% of CEOs said sustainability issues will be a critical factor to the future success of their business. 91%  said they would employ various sustainable technologies like renewable energies in the next five years; 96% said sustainability should be fully integrated in business strategy; and 88% said sustainability should be integrated into the supply chain.

Findings and conclusions from those reports have clearly  indicated  that energy efficiency has been positioned among other things  at the highest level of business planning as it has started to be strategically packaged with more attractive subject which will draw more attention and actions. The global trends towards mitigating impacts through green movements and committment making it more pressing for any party for not participating.

As the closest example and reference on how energy efficiency has been implemented strategically from the top to bottom, I would like to draw our attention to Thailand although Thailand is a net oil importing country.

About 60 percent of the total commercial energy supply for Thailand have been imported. When they started their strategic actions for energy conservation , industrial, residential and commercial sectors have been the main important energy consumers and specifically targeted by the enforcement of the Energy Conservation Promotion Act (ECP Act).

To facilitate the implementation of energy conservation activities, an Energy Conservation Fund has been set up by the Act which has been  utilized to promote efficient uses of energy, development and uses of renewable energy, dissemination of energy conservation technologies and the environment protection. The Fund can is  be used to create public awareness and to administer the Act .

The fund would be allocated to financially support 3 main programs namely a Compulsory program, a Voluntary program, and a Complementary program.

The Compulsory Program covers the implementation of energy conservation activities in designated factories and buildings as stipulated by the Act as well as in selected medium size government buildings.

The Voluntary Program covers activities concerning new and renewable energy for rural and small industry, research and development and demonstration of technologies and energy conservation business facilitation for private sectors.

The Complementary Program covers activities concerning public relations, human resource development, and administration of the Act as well as monitoring the implementation of the Fund.

The figure below presented impacts achieved by Thailand from the strategically planned initiatives from the beginning and the following figure is the one that I  keep seeing it  for Malaysia year by year on BAU basis.

Trend on performance of energy consumption in  Thailand with strategically planned energy efficiency initiatives. The results clearly indicated significant reduction through performance measurement at the national level.

Trends on final energy use in Malaysia by sectors  with unclear goals and plans in energy efficiency initiatives

I don't want to elaborate more on how successful is Thailand since their efforts have been published and presented in many printed and online media and energy related events in Malaysia and at regional level.

Other than Thailand, more and more countries in this region such as Singapore, Vietnam and Indonesia have already started  to implement their own energy efficiency programs strategically and in more sustainable manners.

At the organizational level especially for energy intensive facilities, the analysis by Accenture from global market highlights the following conclusions.

1. According to the recent United Nations Global Compact-Accenture CEO Study, 91 percent of CEOs will employ energy efficiency measures to address sustainability issues over the next five years.
2. The potential energy savings for industry could equal the total annual electricity consumption of the US and China combined.
3. To mitigate energy costs, companies from a range of industries can take basic actions,such as implementing enterprise energy management processes to better understand and manage energy use, which have the potential to drive 10-35% reductions in energy usage. Although results vary according to each industry,enterprise energy management can drive significant benefits to many sectors :

• Mining sector: 10 - 15 % reductions in annual energy spending
• Chemical sector: 10 -15% percent reductions in annual energy usage
• Retail sector: 15-20% reductions in annual energy spending
• Utilities sector: 20-25% reductions in annual energy usage
• Business / public building portfolios: 25-35% reductions of energy and building maintenance costs

The above findings should be seen by Malaysian policy makers and  companies as potentials to be exploited in order to improve our competitiveness to compete at global scale. 


I heard it myself that some quarters trying to justify our inaction on energy efficiency for many years as compare to Thailand because we are an exporter of energy while Thailand has no choice since they a net oil importing country like Japan.

At then I came across a slide on oil and gas reserves in Malaysia and findings from a research by Asia Pacific Energy Research Centre(APERC) which shown in the following figures.

Oil and gas reserve for Malaysia

Forecast on Net Import/Export of energy for Malaysia by APERC.

Based on the information above, reserves for oil and gas in Malaysia would last for about 19 years and 36 years respectively more based on 2008 data while we are expected to become a net importer of oil in 2020 or earlier if the demands grow more than the growth rate estimated in the research by APEC.

My questions to those who feel so comfortable about being a net oil and gas exporting country now are:

1. ARE WE GOING TO WAIT UNTIL WE BECOME AN OIL AND GAS IMPORTING COUNTRY FOR US TO TAKE STRONG AND STRATEGIC ACTIONS?

2. WHAT IS SO WRONG ABOUT DOING IT FROM NOW WHEN THE BENEFITS DEFINITELY WILL MAKE US TO HAVE BETTER ADVANTAGES ECONOMICALLY AND SOCIALLY?

Another quarters keep saying that the solution for energy efficiency is very simple. Everyone will resort to implement energy efficiency automatically the moment we increase the energy price. To me these statements are absolutely irresponsible,  arrogant and just in denial mode to justify our inability to stand up and really do it. As a responsible government, strategies  and planned actions are required to prepare the consumers from all energy using sectors and also for the government to prepare itself with the approach to implement and later to measure the performance that is expected to be achived from the plan. Yes, may be we have been too comfortable too long until we become so convenient for not doing anything about it.

Japan, as a developed country did it for over 30 years until they reach the level of energy efficiency that they are today.It took them some time to get their people to be on the same page and later walk together with the government to achieve what is the best for the country including energy efficiency. Thailand started more than 15 years ago and now reaping the enormous benefits and still improving  but Malaysia is not  even dare to really start yet and looking for more reasons to delay or not doing it instead. 

My conclusions

• We need a champion for this.Someone  who has the authorities, acessibility and passion  to convince the policy makers and then to the government to come up with more positive attitude towards the importance of energy efficiency through real actions for the country.

• The project based and inconsistency in implementing energy efficiency will not result into significant results in a long term. Yes, Malaysia is a net oil  and gas exporting country but would that last for long enough for our own children and grandchildren? We should not continue living in denial that will finally leave us with no concrete actions taken while others are leaving us  further behind.

• Energy efficiency is clearly an attractive option from sustainability and business perspectives. It will ensure the our efforts to prolong the availability of our energy resources and also able to create so much business potentials to grow our economy as well.This is exactly the main reason many economies have taken to so much efforts to look at  and implement energy efficiency as one of the important components in their future development at a country and organizational levels.

• I remember meeting quite a number of companies, big and small which "screaming" and " crying" whenever any news on the increase of energy price popped up. I also remember we declared to the whole world that we are committed to reduce carbon dioxide intensity emission by 40% in 2020 but where is our concrete action for that? What are the meaning of all that if we continue looking at energy efficiency just as a topic that nice to be talked about but actions may not be necessary now.

• It is good that we pay very much attention to technologies when we touch energy efficiency  topics but that need to be balanced with our attention to the strategic component of it in the way forward. Technologies will keep changing and without a long term plan and targets to be achieved, we may end up keep chasing technologies as we move on.

• The study by this centralized agency hopefully will include energy efficiency at the demand side as  one of the key factors in developing our new energy policy because as long as our own policy makers at the country's administration and executive level (politicians) are not on the same page on this, we will continue moving forward with our Business-As-Usual attitude with our  future generation will have to pay the heavy price for our arrogance and ignorance many years ago and today.