Energy-efficient tech can help solve the energy crisis

Energy plays a peculiar role in human life: it’s both central to our well-being and largely ignored. Energy is so fundamental to daily life that it’s often taken for granted. Most people expect that it will always be there at the flick of a switch, the turn of a knob, or the squeeze of a lever.

Not so in Europe and elsewhere over the past couple of years, due to the precipitous rise in energy costs for both households and businesses. This rise has many causes, some of them global, such as the faltering post-COVID-19 economic recovery and the war in Ukraine.

Between the first half of 2021 and 2022, the cost of natural gas increased an average of 35% across the European Union, but with much local variation. On the high end, Estonia was hit with a 154% increase, while the increase was a more modest 9.8% in Portugal. In the United States, consumers have faced double-digit increases in electricity and gas bills since the end of 2021. 

This means that energy is suddenly visible, as millions of people face unsustainable increases in their monthly bills. 

Energy security has always been a political issue, but recent events have triggered permanent changes in energy policy in both Europe and North America. In 2022, the US passed the landmark Inflation Reduction Act, which earmarked almost US$400 billion in spending on clean energy. This act, according to the White House, will be “the single largest investment in climate and energy in American history.”

While the US has laid down the gauntlet by offering generous subsidies to domestic and foreign companies, these incentives have a shelf life. Making energy security part of a government’s annual budget could deliver long-term benefits, especially if funds are explicitly directed towards clean and efficient sources. 

Supply-side responses to the energy crisis are necessary: we must rapidly replace fossil fuels with clean energy sources, not just in the US but around the world. But demand-side responses that reduce energy consumption are equally necessary. That means increasing the use of energy-efficient products and technologies while at the same time making net-zero carbon emissions an explicit and achievable goal.

Many European countries have responded to the energy crisis by subsidizing consumer bills. This move is understandable, but it does nothing to reduce dependence on fossil fuels. Those funds might be better spent on structural solutions like subsidizing the switch to connected LED lighting, heat pumps, electric vehicles, and other energy-saving technologies.

Recent research from the International Energy Agency (IEA) backs up this view. Its analysis found that subsidies for the fossil fuel industry hit a record high of US$1 trillion in 2022, driven by the energy crisis. This extraordinary sum could have been a game-changer had it been directed toward green energy solutions as part of an energy efficiency program. 

Data from our own research and analysis demonstrates how a wholesale switch from conventional lighting to LED could play a significant role in conserving electricity, and reducing both energy costs and emissions around the world. Switching all light points in all 27 EU member states to LED could reduce energy costs by €65 billion annually, and lower carbon emissions by 51 million tons per year. Similarly, the US could save US$31.5 billion in energy costs, with the biggest savings in the residential and manufacturing sectors.

Despite its enormous potential, energy efficiency has not played a central role in Europe’s response to the energy crisis. European Commission President Ursula von der Leyen recently announced a new European Green Deal Industrial Plan aimed at making the EU a more attractive and competitive place for clean tech investment. The announcement is a clear shot across the bow of the fossil fuel industry, but it makes no mention of energy conservation or efficiency.