Energy efficiency has emerged as one of the most vital tools for combating climate change, reducing energy consumption, and promoting sustainable economic growth. Doubling energy efficiency means improving how energy is used across sectors—residential, industrial, and transportation—so that the same or better services are provided with significantly less energy. According to the International Energy Agency (IEA), scaling up energy efficiency efforts could substantially help meet global climate goals and reduce energy costs. For the ASEAN region, especially Indonesia, this approach is not only essential for environmental sustainability but also crucial for economic resilience and energy security.
In 2023, the IEA emphasized the importance of doubling energy efficiency to stay on track with the Paris Agreement’s goal of limiting global temperature rise to below 2°C. The latest IEA data highlights that energy efficiency improvements contributed to 40% of the reduction in energy-related CO2 emissions between 2010 and 2020. However, these efforts must be significantly increased by 2030. According to the IEA’s Energy Efficiency 2023 report, doubling energy efficiency by 2030 could reduce energy bills and make up 50% of CO2 reductions.
In ASEAN, energy demand is expected to grow by more than 60% by 2040 due to rapid economic growth and urbanization, making energy efficiency a critical component of the region’s energy strategy. The ASEAN Centre for Energy (ACE) supports the ASEAN Plan of Action for Energy Cooperation (APAEC), which includes targets for reducing energy intensity by 32% by 2025 compared to 2005 levels. Indonesia, as the largest energy consumer in the region, plays a pivotal role in achieving these targets. However, more ambitious measures, such as those promoted by the IEA, could propel the region to even greater energy savings and sustainability.
The Power of Digitalization in Industrial Energy Efficiency
Technological advancements are critical to achieving energy efficiency goals across various sectors, including building materials, transportation, and industrial processes. Innovations such as electric vehicles, energy-efficient appliances, and smart grid technologies are driving significant reductions in energy demand and improving energy management. These advancements allow us to reduce energy consumption while maintaining quality of life, minimizing energy losses, and supporting sustainability efforts.
Digitalization is reshaping industrial energy efficiency by leveraging data analytics, energy management systems, and predictive maintenance to optimize operations and reduce inefficiencies. At the Indonesia International Sustainability Forum 2024, Kelvin Fu, Managing Director of Gunung Capital, highlighted the importance of digital transformation in enhancing efficiency, particularly in the steel industry. The government’s role in supporting these efforts through gradual carbon tax implementation and incentives for companies is crucial. Carbon pricing and digital solutions are enabling businesses to track energy use and carbon footprints, aligning with sustainability goals and contributing to a more energy-efficient and environmentally sustainable future.
Governments play a crucial role in driving energy efficiency initiatives. By implementing policies that incentivize energy-efficient behaviors and investments, governments can create a favorable environment for adopting energy-efficient technologies. These policies may include tax incentives, building codes, and regulations that promote energy efficiency in transportation, industry, and residential sectors. Moreover, increased investment in energy efficiency research and development is essential for unlocking innovations and reducing the cost of energy-efficient solutions.
Global Collaboration and Partnerships is Crucial
Global collaboration is essential to achieve the goal of doubling energy efficiency. Governments, international organizations, and businesses must work together to share knowledge and best practices while promoting the development of energy-efficient technologies. Increased investment in research and development can help reduce costs and drive innovation. Collaborative efforts are crucial to address the specific challenges faced by different countries and accelerate energy efficiency progress across the globe.
The International Finance Corporation (IFC) has partnered with Indonesian steelmaker PT Gunung Raja Paksi Tbk (GRP) to help it transition to lower-carbon steel production and enter the green steel market. In its first investment in Asia’s steel sector in over a decade, IFC provided $60 million to upgrade GRP’s electric arc furnace (EAF) and improve energy efficiency. Additionally, IFC is considering financing options for decommissioning GRP’s blast furnace.
This initiative could pave the way for similar projects to reduce CO2 emissions in the steel industry, which contributes roughly 8% of global greenhouse gasses. IFC aims to promote decarbonization by encouraging the use of EAF technology, which uses electricity instead of coal.
GRP revealed plans to invest $600 million to upgrade the company’s entire facility and become a regional leader in green steel production. The company will decommission a newly-built blast furnace and seek carbon credits as part of its transition. The largest private steel manufacturer acknowledged the challenge but emphasized the need for the steel industry to adapt.
This successful collaboration highlights the crucial role of global partnerships in accelerating energy efficiency and reducing carbon emissions. By working together, governments, businesses, and international organizations can share knowledge, best practices, and resources to foster the development and deployment of energy-efficient technologies. This initiative demonstrates the potential for similar collaborations to drive decarbonization in the industry to contribute to a more sustainable future.
In conclusion, doubling energy efficiency by 2030 is a critical step towards a more sustainable and resilient future. By reducing energy consumption, we can mitigate climate change, enhance energy security, and alleviate economic burdens. Technological advancements, government policies, and global collaboration are essential for achieving this ambitious goal. The integration of digital technologies into industrial processes offers significant opportunities for improving energy efficiency and driving sustainable economic growth.