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Event Report: Launch of LCI report on industrial energy efficiency

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On 5 March 2015 the ECCT's Low Carbon Initiative (LCI) released a report titled "The Path to Industrial Energy Efficiency in Taiwan - Partnering with the EU" at a Premium Event lunch. The event was attended by John Deng, Minister of the Ministry of Economic Affairs and around 50 guests including ECCT members, government and business leaders. A press conference to brief the media on the report was held immediately after the lunch and attended by over 20 journalists from print, television and online media. The report, produced jointly by KPMG Sustainability Consulting and the LCI, provides an overview of global energy and climate facts and trends, a summary of policies and practices in Taiwan and the EU and offers some of the best solutions to improve energy efficiency in industry from ten ECCT LCI members.
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At the lunch, the report was introduced by ECCT Chairman Bernd Barkey while an overview was presented by Niven Huang, General Manager of KPMG Sustainability Consulting and Erdal Elver, ECCT LCI Advocacy Platform Head & ECCT Executive Director.

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The report shows how integrating energy management into a company's business strategy can reduce costs and thereby enable companies to increase margins and competiveness. Moreover, boosting energy efficiency is the least costly of all measures to reduce pollution and combat climate change since it does not require a change in living standards, way of life or industrial structure. It simply consists of applying better technologies onto existing patterns of production, transportation, housing or electricity generation.
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In his introduction to the report at the lunch, ECCT Chairman Bernd Barkey said that the LCI had decided to focus on energy efficiency in industry since industry is the largest consumer of energy and that there is great potential to realise significant energy savings in Taiwan's industrial and manufacturing sector, which would translate into less primary energy use and therefore a reduction in energy imports and CO2 emissions. He added that ECCT members have a lot to offer Taiwan in the drive towards a low carbon future and that the report highlights just a few of the solutions that European businesses have developed which can substantially increase energy efficiency in industry. "Besides the environmental benefits, these solutions can also help companies to reduce costs over the medium to long term", he said. "By adopting these technologies, we can help Taiwan to become greener, more sustainable, more competitive and more profitable," he concluded.

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In his remarks at the lunch MoEA Minister Deng said that the EU provides an excellent example to the world to follow regarding action taken to reduce greenhouse gas emissions and increase sustainability. Minister Deng highlighted some of the action Taiwan has taken to promote energy efficiency and alternative energy including a large increase in renewable energy targets and an improvement in Taiwan's energy intensity of 4% in recent years. However, he acknowledged that there is much room for improvement given the fact that Taiwan accounts for 0.3% of the world's population but produces close to 1% of global emissions.

According to the report, there are stumbling blocks to overcome before realizing greater energy efficiency in industry. Taiwan's relatively low energy prices, lack of comprehensive energy and climate policies and the lack of attractive incentives are the major reasons that industries have not taken action to enhance their energy efficiency. Low energy prices in Taiwan make the return on investment cycle rather long and thus act as a disincentive for investments in advanced energy efficiency technologies as investments are usually only decided based upon their immediate benefits and disregard life cycle costs over the medium and long term. In addition, there is a lack of awareness among small and medium-sized companies of the benefits of energy efficiency.

While Taiwan relies heavily on imported energy, there has to date been little focus on energy efficiency. For years, total energy consumption in Taiwan has had a persistently positive correlation with GDP. This is in contrast to countries such as the United Kingdom, Japan and Germany, which have achieved low growth or even declines in energy consumption while achieving positive economic growth.

EU authorities and companies remain global leaders in tackling climate change. EU authorities and member states have introduced policies to spur low carbon development while EU corporations are at the forefront of developing cutting-edge technologies. In 2014, the EU adopted new targets for 2030, including a cut of 40% in greenhouse gases emissions compared to 1990, increasing renewable energy to 27% of the total energy mix, and improving energy efficiency by 27% compared to 1990. Based on experience to date, these targets are credible, economically and technically realistic. Between 1990 and 2014, the EU reduced its greenhouse gas (GHG) emissions by 20% while its GDP grew by more than 40%. EU industry is 19% less energy intensive now than in 2001 while new buildings in Europe use half the energy they needed in the 1980s.
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In terms of policy, the EU implemented the Energy Efficiency Directive (2012/27/EU) in December 2012, which provided a framework for the goal of cutting primary energy use by 20% in EU countries by 2020. Under this policy, every EU member must set an energy efficiency goal at the national level, and achieve the energy-saving goal projected in the directive between 2014 and 2020. In Germany for example, large companies will be required to do an energy audit from 2015 onwards and this has to be repeated every four years. In an evaluation undertaken by European Commission Services in 2012 (Non-Paper Energy Efficiency Directive Informal Energy Council in April 2012), it was estimated that the Energy Efficiency Directive will add €24 billion to the EU GDP and create a net employment of 400,000 jobs, while the cost of implementing all measures would be €24 billion each year. For the years 2011-2020, the reduction in the cost of energy generation and distribution would be an average of €6 billion per year, and the reduction in fuel expenditure would be an average of about €38 billion per annum.

The first chapter of the report provides an overview of global energy and climate facts and trends. According to the Fifth Assessment Report (AR5) released by the United Nation's (UN) Intergovernmental Panel on Climate Change (IPCC), human activities are the main cause of the dramatic changes in the global climate system and as high as 83% of GHG emissions can be attributed to the use of energy. From 1971 to 2011, the supply of fossil fuel-based primary energies doubled, causing global CO2 emissions to increase over the years.

The International Energy Agency (IEA) noted in its 2013 Energy Efficiency Market Report that energy efficiency is the world's "first fuel", and since 1974, investments in energy efficiency have had a cumulative impact on annual energy use, resulting in 1.52 billion tonnes of oil equivalent (TOE) of energy saved in 11 IEA member countries in 2010. This amount was larger than the consumption of oil, electricity or natural gas in these countries in 2010 alone. The IEA has shifted its emphasis to energy efficiency in recent years. The reason cited for this is that increasing energy efficiency is a strategy that can achieve multiple energy policy goals, generate diverse effects, including supplying and obtaining energy services in a cost effective way, cutting GHG emissions and lowering the reliance on imported energy. For example, the IEA's 2012 World Energy Outlook pointed out that, by 2020, over 75% of global CO2 emission reduction will come from increase of energy efficiency, including reduced use of electricity, higher efficiency by end users and higher efficiency of power plants. If the US, China, EU and Japan implemented their policies as planned, the energy intensity in these countries would increase by only 1.8% from 2010 to 2035. This shows that increasing energy efficiency is a crucial factor for countries in terms of the future global supply and demand for energy, reduction in GHG emissions and their competitiveness.

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The second chapter of the report provides an overview of energy use and policies in Taiwan. It notes that in Taiwan energy consumption in the electrical and electronics industry continues to rise, while the growth in the chemical and basic metals industries has slowed down. From the percentages of energy consumption, these three industries consumed 70.5% of all energy used in Taiwan, yet the industrial sector contributes only 31% to GDP. This highlights the relatively poor performance of Taiwan's industrial sector in terms of energy efficiency compared to developed countries, such as Japan, the United States and Germany.

The third chapter of the report notes the emergence of energy management systems in recent years, which highlights the growing importance of energy efficiency for industry. ISO 50001, published in 2011, is the most globally-recognized energy management system standard. As of May 2014, 7,346 manufacturers in 68 countries worldwide have implemented the ISO 50001 system in their plants. Taiwan ranked No. 11 with 118 companies certified for ISO50001. Among them, the manufacturing sector accounted for the highest portion at 65%.

Another significant trend in recent years is the increase in the use of Combined Heat and Power (CHP) systems. CHP systems recycle the heat lost in the conventional power generation process, making them far more energy efficient than traditional power generation facilities. European countries, including Denmark, Finland, Norway, Germany and Italy, have actively developed large-scale Combined Cooling, Heating and Power (CCHP) Systems and promoted regional energy integration through legislation, tax discounts and subsidies for CCHP energy and natural gas.

Chapter 4 of the report sets out to show that Taiwanese businesses can actually save money by reducing energy and the use of resources while the final section of the report (chapter 5) provides a range of solutions offered by ten ECCT LCI members to improve energy efficiency in manufacturing: ABB, Atlas Copco, BASF, Bosch, Evonik, Grundfos, Schneider, Siemens, STMicroelectronics and TÜV Rheinland.

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