Understanding the Energy Efficiency Challenge

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Reflections from the Concordia Annual Summit

Energy efficiency is key to delivering more than 40 percent of the Paris Agreement goals. Enabling efficient technologies and energy transfer reduces energy waste, makes the power grid more resilient, decreases carbon emissions and reduces cost to consumers.

At the Concordia Annual Summit, the International Copper Association (ICA) held a closed roundtable with U.S. leaders from across business, academia, NGOs and IGOs to address this gap. Participants included Presidents and CEOs from Siemens USA, Holsman International, Veracity Worldwide and the Business Council for Sustainable Energy. ICA was also joined by representatives from the University of Virginia Darden School of Business, Signify, the Chiricahua Health Foundation and Lewis-Burke Associates LLC. Together, these experts identified challenges facing the shift to energy-efficient infrastructure and appliances and discussed potential solutions and ongoing initiatives to help fill the energy-efficiency gap.

Raising Awareness to Ensure a Just Transition

Unlike most other types of waste, energy waste is intangible—its effect often only felt through rising energy costs. Energy waste increases greenhouse gas (GHG) emissions and decreases the resiliency of the power grid. The increased energy demand resulting from inefficient energy use places a greater load on energy-related infrastructure—straining resources, increasing the likelihood of outages and decreasing the grid’s ability to meet demand. Increased energy requirements from energy waste also make governments, businesses and consumers more reliant on global energy supply chains and geopolitical instabilities.

Despite these multitudes of effects resulting from inefficient power usage, the lack of awareness and tangibility of these issues presents a major barrier to solution implementation. While renewable energy generation and the clean energy transition are widely discussed in policy and wider society, the discussion on how to maximize the clean energy power supply has not reached the mainstream.

Energy efficiency’s impact goes beyond emissions; it ensures a just transition. Areas with higher levels of socio-economic development and education, have typically increased levels of implementation of energy-efficient technologies and infrastructure. Populations where energy efficiency could create a greater impact financially and environmentally usually have inefficient infrastructure. Energy efficiency requires scale of implementation to ensure an inclusive transition and meet the goals of the Paris Agreement.

Shifting Risk and Reward

Multiple actors play a role in scaling energy-efficiency solutions. Although they face unique stakeholder challenges, energy service companies (ESCO), commercial entities and governments can be part of the solution.

Energy Service Companies (ESCO)

  • Opportunity: ESCOs can retrofit existing technologies with energy-efficient motors, HVAC systems, refrigeration units or LED lighting systems, for example. This benefits both the ESCO and the end user, as energy-efficient technologies are often safer, more reliable and resilient. This is due to the use of reliable and conductive materials, such as copper, that can handle high levels of heat and electricity.
  • Challenge: For ESCO companies to provide energy-efficient services and technologies at affordable prices, market demand must exist at scale.

Commercial Entities

  • Opportunity: Energy-efficient applications and infrastructure investments, such as commercial building upgrades or industrial motors, can have a lifespan of 40 years, making the investment more cost efficient over the lifecycle of the application. The benefits of implementing energy-efficient technologies will have an equally long-lasting effect.
  • Challenge: Commercial companies operate on shorter investment time horizons, which often make justifying longer-term financial investments, such as replacing equipment or infrastructure with more energy-efficient alternatives, more difficult than financing immediate needs. For commercial enterprises, there is a continuous pull between economic competitiveness and energy usage.

Governments

  • Opportunity: Governments are often one of the largest land and property owners, which means action on energy efficiency in governmental infrastructure can produce a significant impact.
  • Challenge: Governments must justify expenditures to constituents and must follow budget appropriations. Governmental oversight mechanisms require data collection and multi-level approvals, which can make implementation slower than private sector actors.

Increasing Accountability for Energy-Efficiency Targets

Part of addressing the challenges facing government and industry is increasing transparency and accountability mechanisms to enable action on energy efficiency.

Performance Metrics

  • Ensure energy-efficiency performance metrics are included in public and private energy performance and sustainability reports.
  • Include energy efficiency metrics in green funding initiatives.

Stakeholder Accountability

  • Identify individuals or teams with the technical knowledge and accountability for overseeing progress toward energy-efficiency metrics.
  • Increase awareness of the benefits of energy-efficient solutions at the governance or board level to raise the importance of the targets within a company or government program’s operations.

Nationally Determined Contributions (NDC)

  • Include formalized energy-efficiency targets and minimum energy performance standards (MEPS) in Nationally Determined Contributions (NDC). These are government commitments toward reducing national emissions that are required by the Paris Agreement to ensure global accountability of countries in their climate mitigation efforts.

Developing Solutions

To enable energy efficiency at scale, stakeholders must develop a framework that incentivizes and facilitates this transition. The possibilities include:

  • Create profit sharing models between government landowners and private contractors to lessen upfront costs for both parties.
  • Capitalize on the resources and brain power of universities to bring public and private actors together to raise awareness of energy-efficiency solutions among the financial community and practitioners.
  • Develop “energy-efficiency hubs” that function similarly to energy-oriented hubs, such as those for green hydrogen.
  • Connect infrastructure and energy policies to education and skill development to ensure the next generation is equipped to maintain, develop and implement energy-efficient solutions. With half of the world’s population younger than 30 years old, educating and preparing youth to meet these challenges will aid their ability to act.
  • Establish educational guidance and best practices for cities, companies and consumers on implementing and funding energy-efficient solutions will also help small and medium enterprises take action. Progress must occur from the local to the international level.

Future Sustainability Trends in Copper Demand

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The copper industry is working to ensure environmentally responsible practices and clean-energy technologies are at the heart of the copper value chain. This idea drew industry experts, market analysts and ICA members to the Copper Demand and Sustainability Workshop on the eve of London Metal Exchange (LME) Week.

In the words of Eduardo Mencarini, Partner at McKinsey, during the event, “From renewable energy infrastructure to electric vehicles, the transition to net zero cannot happen without copper.” However, the metal alone cannot be the solution.

In front of a room full of analysts, journalists and members of the copper industry at the Hyatt Regency Hotel—The Churchill in London, Colin Hamilton, Managing Director of Commodities Research at BMO Capital Markets, moderated two panel sessions that explored the decarbonization challenge, demand projection, responsible production frameworks and supply chain collaboration.

Former ICA Chairman, Stephen Higgins of Freeport-McMoRan, gave the opening remarks.

Copper Industry 2030

The first panel featured Eduardo Mencarini, Partner at McKinsey, and Louise Assem, Global Director of Material Stewardship at ICA, who discussed the outlook of the copper industry for 2030 and the decarbonization challenge.

The session started with Louise announcing the release of a greenhouse gas (GHG) measurement guide to help unify carbon footprint measurements for copper production. As a first step for more unified reporting, this vital work provides the first sector-specific methodology for determining the carbon footprint of sites producing copper and copper-containing products.

Louise noted, the “guide is just one step in discussing the decarbonization challenge and the ways the copper industry can work together to harmonize greenhouse gas measurement and reporting.” This new guide is indicative of the importance of transparent reporting in responsible production and the growing mandate of consumers, businesses and governments for sustainable products.

Looking downstream, Eduardo, a specialist in mining and metals, shared McKinsey’s expectation that copper demand will “grow at 3 percent per year for the next 10 years, driven by electrification, infrastructure, industrial output and a growing middle class.”

In the workshop, Eduardo spoke about the demands of the green transition driving copper demand, including renewable energy technologies, green building infrastructure, and e-mobility. He also noted the role of copper in industrial electro-processing and motor systems, as well as its contributions to the electricity grid in underground cables, transformers, batteries and offshore grids.

With a growing population and the sustainable development of emerging economies, copper demand will continue to be an enabler of green technologies.

Colin Hamilton moderated the discussion between Dr. Louise Assem and Eduardo Mencarini.

Together, Louise and Eduardo’s comments highlight where copper needs to focus over the remainder of the decade—environmentally conscious production of a metal in high demand. Copper will play a critical role not only in the development of emerging economies, but in the energy transitions of developed economies as well. This places an even greater emphasis to the importance of being able to source copper responsibly and sustainably.

Responsible Production Frameworks

The workshop’s second session featured three experts discussing the need to develop sector-specific production frameworks across supply chains. The LME’s Chief Sustainability Officer, Georgina Hallett, outlined why “responsible production frameworks are essential to industry and will play a critical role in helping the copper industry deliver its decarbonization ambitions.” Georgina shared that 75 percent of LME’s copper brands are using a Track A standard to meet the LME’s responsible sourcing requirements—clear evidence of the industry’s ambition. The remaining challenge is to create uniformity in reporting that is not only accessible to the industry’s biggest players but to any business that is producing copper and copper-containing products.

Georgina Hallett discusses responsible production frameworks.

Following Georgina, Michèle Brülhart, Executive Director of the Copper Mark, spoke about the balance between meeting ESG goals and advancing industry practices. As individual actors lead efforts to meet ESG goals, the overall performance of the industry continues to grow as the baseline for progress rises. Using the example of The Copper Mark—an independent third-party assurance framework for responsible production practices—Michèle explained why standards “enable sites throughout the copper and wider transition minerals sector to contribute positively to the communities and environments within and around which they operate.”

Andrea Mungai, a sustainability specialist at Enel Green Power, noted that it will take greater collaboration in the supply chain to decrease complexity and increase transparency. A lack of data sharing is one barrier to net zero that faces complex supply chains with numerous verticals. In his view, mitigating the environmental and social impacts of raw material use in manufacturing equipment is a strategic need that can only be addressed by “increasing the sustainability of operations.” Through partnership and transparency in the supply chain, the copper industry can continue to mitigate climate change through its impacts on UN SDGS 7, 9, 11 and 13.

Colin Hamilton moderated the second session discussion with speakers Michèle Brülhart and Andrea Mungai.   

Asia World Copper Conference in Singapore

Thanks to those who attended ICA’s Copper Demand and Sustainability Workshop and to the panelists for sharing their insights and outlooks for the future.

Up next, ICA will be a silver sponsor at the Asia World Copper Conference in Singapore on 23 November, where industry experts will continue the discussion on decarbonization and responsible production in the copper industry.

Thank you to all who joined!