It is undeniable that the world needs to take faster action to put the brakes on climate change. But the current energy crisis, impacting many parts of the world, is seen by some as a more immediate priority. The problems arising from a shortage of energy and fluctuating costs threaten to crowd out efforts to decarbonise. That is as true for the largest business as for the average homeowner, for whom the short-term priority is access to affordable energy.

However, if approached strategically, addressing short-term energy security issues also helps to tackle the climate crisis. Olivier Blum, executive vice president of Schneider Electric’s Energy Management business, argues that the climate crisis and the energy crisis are “absolutely connected” and that “tackling one will help to improve the other”.

Mr Blum suggests that the solutions to improve energy security and ultimately cut electricity prices also enable the energy transition. “Energy security is a catalyst for the energy transition in the mid-term. It's about how we reduce our dependency on fossil fuel, improve access to renewables, and how we make the world more electric.”

The demand-side energy transition

It is vital, Mr Blum argues, that the energy crisis accelerates rather than derails the move away from fossil fuels and the wider energy transition. And that it encourages a greater focus on energy efficiency. “A lot of the focus on decarbonisation has been on the supply side,” he says. “However, our research shows that to stay on the 1.5-degree trajectory, only 45% of the answer comes from decarbonising supply. The remaining 55% comes from changing demand.” [1]

So why is energy demand often overlooked? Partly, it is because energy efficiency is difficult to visualise. The impact of a new solar farm is easy to imagine. It is far harder to grasp the transformative effect of optimising air conditioning across a property portfolio.

Nevertheless, attitudes are finally changing as reducing energy use is understood as a win in terms of environmental, social and governance (ESG) commitments and hard costs. “With the energy crisis acting as a catalyst, many business leaders are already rethinking their companies’ relationships with energy. It is no longer the relatively cheap and available resource it used to be,” Mr Blum says.

“You can take it from an energy transition standpoint, you can take it from a cost standpoint. At the end of the day,” he adds, “everything we can do to reduce our energy consumption and reduce our energy bill is good for the energy transition.”

Mr Blum argues that it is the responsibility of business leaders to shift cultures, attitudes and behaviours within their organisations, to make clear that energy efficiency is central to meeting ESG commitments. CFOs are increasingly important drivers of change because energy efficiency can significantly improve profitability. But businesses also need to do the hard work of measuring and limiting energy use at a strategic and structural level.

Electricity 4.0

Schneider Electric coined the term Electricity 4.0 (the fourth electrical revolution) to describe the convergence at scale of electrification and digital technology [2]. When digitisation meets clean electricity, energy shifts from being the biggest driver of carbon emissions to the biggest opportunity for carbon reduction. To deploy Electricity 4.0, business leaders should follow an integrated approach: strategise, digitise and decarbonise.

“Strategise” is the roadmap. It is about getting a clear understanding of where you are today, where you want to be tomorrow, how you are going to get there and who you need to engage in order to achieve the results.

Mr Blum emphasises the importance of the next step, “digitise”, in which energy consumption and carbon emissions need to be visualised, so they can be monitored and optimised.

Decarbonisation relies on a holistic view of Scope 1, 2 and 3 emissions in real time, a single source for all energy and emissions data. “Digital tools can make the invisible visible through metering and monitoring, gaining insights to drive efficiency and eliminate waste,” he says.

“This is what we call the decarbonisation roadmap execution for your building, for your data centre, for your factories. It's about replacing fossil fuel supply with clean energy sources, electrifying wherever possible (such as vehicles and heating) to reduce dependency on fossil fuels, and reducing energy consumption through efficiency and automation. These three actions combine to accelerate our zero-carbon future.”

Behaviours must change

Mr Blum believes that energy efficiency tools are the fastest and least capital-intensive way to cut short-term energy costs and accelerate carbon reduction. Although the transition from fossil to clean energy and electrification will take time (but must continue), reducing energy consumption and energy waste can happen quickly and is an important lever to deliver net-zero commitments and tackle the climate crisis in the short term.


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