The energy efficiency conversation

NARRATOR Welcome to the DNV Talks Energy podcast series. Electrification, rise of renewables and new technologies supported by more data and IT systems are transforming the power system. Join us each week as we discuss these changes with guests from around the industry.

MATHIAS STECK Welcome to a new episode of DNV Talks Energy. My guest today is Dr Phyllis Yoshida, Senior Fellow for Energy and Technology, Sasakawa Peace Foundation USA. Welcome Phyllis.

DR PHYLLIS YOSHIDA Thank you.

MATHIAS STECK Phyllis, we want to talk about energy efficiency today. But before we do this, it would be great if you could give us some background of Sasakawa USA and yourself.

DR PHYLLIS YOSHIDA Sasakawa USA is affiliated with the Sasakawa Peace Foundation, which is based in Tokyo, which is actually one of the largest Japanese NGOs. Our mission really is to help US-Japan relations, US-Japan-Asia relations looking at the challenges that we all face together. One that we face, obviously, is energy and climate. When I retired from being Deputy Assistant Secretary of Energy at US Department of Energy, the then head of Sasakawa sort of enticed me to come and work on energy and climate for them because they had not done much of that in the past. About the same time, the new Chairman of Sasakawa Peace Foundation in Japan, Nobuo Tanaka came onboard and he had been the Executive Director of the International Energy Agency in Paris. So, the thought was that we could do more and we have done quite a bit more now in terms of writing and putting together people-to-people activities.

MATHIAS STECK Right. So, let’s dive into this topic. Everybody is aware now of global warming, the climate emergency. We talk a lot about the rise of renewables, new installation of renewables. Are you satisfied with the levels of discussion around energy efficiency and is there a chance that we have maybe overlooked that a little bit in the whole discussion?

DR PHYLLIS YOSHIDA Energy efficiency, I think, has always been overlooked. It’s sexier, really, to talk about supply. I personally have worked in energy efficiency for most of my career, in particular looking at energy efficient and clean vehicles, automotive vehicles. At one point I ran the US Department of Energy Clean Vehicle programme. I also was one of the major negotiators setting up the International Partnership for Energy Efficiency Cooperation, again, when I was at the US Department of Energy. And the reason we set up that new international organization was really because we felt there wasn’t enough awareness of energy efficiency. That said, I think there is more awareness now than there used to be. I think consumers can easily conceptualize an energy-efficient refrigerator. Companies can really think about energy productivity. But as we move past those simple, easily-understood types of things to efficiency that is more based on system, like, digitalization with the grid, etc., I think we need to relook at how we talk about energy efficiency, so that we don’t lose people as we go into a new era.

MATHIAS STECK Yes. So, energy efficiency, as you also alluded to already, there is a lot of different things to consider. You can consider consumer-level, certainly on the manufacturing side there’s a lot of buildings, there is a lot. I would be interested in your personal view on the biggest importance of energy efficiency and where that would make the biggest impact.

DR PHYLLIS YOSHIDA I think as I mentioned earlier, I think we’re changing in terms of energy efficiency. We’re moving beyond looking at things like lighting standards, sort of individual pieces of the puzzle. Where we’re moving now and where the next biggest low-hanging fruit are going to be, though they won't be so low-hanging anymore, is really, the systems efficiencies that one has to pull together using artificial intelligence, again, the term usually used is digitalization. How do you integrate all of these renewables into the grid efficiently? How does the grid itself accept things efficiently? How do smart cities do things in a systematic way that’s efficient as opposed to just pieces? Same with transportation systems.

MATHIAS STECK Energy efficiency, to a great extent, is also driven by behaviour. And you can influence behaviour, for example, by benchmarking, by energy audits. What is your take on this? What has to improve on that level, being maybe mandatory and having more of a comparison of how well you do against others, either in your industry or towards your neighbour?

DR PHYLLIS YOSHIDA I think where we’re going, obviously energy audits are very important. The US government, for a long time, has subsidized energy audits, as you probably know, for small and medium-sized businesses. We’ve done lots of energy audits for personal residences, for public housing, etc. But again, where we’re going to go, it’s going to get much harder to do energy audits, because, again, we’re not looking at an individual building or an individual manufacturing plant. Because as things get more and more interconnected in a systems level, you're going to really need to pull data together from several different companies to see what's going on and how you benchmark against others. And that, I think, we still haven't figured in terms of data privacy. Is somebody, is there going to be a company that buys and sells data, especially for the grid, or for individual components of the system? We've done that for quite a long time in terms of research where the US government or other governments around the world have served a sort of black box in which companies can put in their most sensitive R&D data, so that we can benchmark and figure out, like, for a hydrogen vehicle what part is doing worse or better and where research money needs to go. So, it’s almost the same. It’s going to be for, I think, energy audits and things going in the future is the firms that do that are going to have to be able to have access to data that goes beyond just a notebook because it’s going to be so dynamic.

MATHIAS STECK It is interesting that you just mentioned energy audits are quite common in the US. At the same time, of course, the consumption levels are relatively high still in the US. But what I really want to ask is, utilities may respond if they have to undergo energy audits and if they have to undergo programmes to lower consumption. That is kind of cutting in their own business. So, what would you tell a utility in other parts of the world, where that is maybe not so common, why that might still be a good thing to do?

DR PHYLLIS YOSHIDA That’s a very hard question, because you need... A lot of utilities still think their business is simply selling more power, as opposed to selling a product that increases maybe the productivity of their customer or has some bigger global impact in terms of sustainable development. So, that whole mindset has to start changing. There need to be incentives in place from regulators, from government, even from customers, in terms of really enabling those companies still to make a profit, but to see their whole existence in a different way.

MATHIAS STECK Coming to the personal level of what can we do with regards to energy efficiency, I found it very interesting when we had the unfortunate event in Fukushima which caused quite a substantial power shortage for some time, how suddenly private people could react to this in saving electricity by, for example, not putting the air cons so low. And there was certainly also some governmental intervention. But if we look now at this point that everybody is aware of the risk of climate emergency and what that will result in, do you have any hope that we can actually do much more as an individual to prevent climate change or at least get the gap smaller to the 1.5 degree target?

DR PHYLLIS YOSHIDA Perhaps I've been doing this for too long. I think for short-term crises, what happened in Fukushima where people voluntarily, because their neighbours were doing it, there was a lot of peer pressure to reduce energy to a certain degree, will happen for short periods. For longer periods, I think there has to be some cost incentive that you're saving money. Maybe the price of energy goes up but you have more control over it through information from your smart metre, etc. But at some point there has to be some benefit, I think, in terms of economics and cost for consumers really to change their behaviour. Starting with younger people I know way back when we had the very first Earth Day, I had to convince my parents to let me walk to high school. So, we were seeing things in idealistic big picture. I think, to a great extent, people think that way now about environment, they’ve internalized it. They don’t remember when there was time when that wasn’t internalized within schools, etc. And eventually we will get there, but I still think there's going to have to be some type of benefit people feel to themselves, not just an altruistic feeling.

MATHIAS STECK In DNV’s Energy Transition Outlook we call for five times more wind, ten times more solar and 50 times more battery production for EVs in order to close the emission gap by 2030, but at the same time we see that the price or the cost for energy is going down substantially, especially for the renewables, and we expect even more cost reductions going on with every doubling of the installed capacity. Would that maybe have an adverse effect on people being incentivized to save energy because it has become so cheap?

DR PHYLLIS YOSHIDA It’s great that prices are coming down. I don’t think that will discourage people from switching to cleaner sources of energy. In fact, I think it’s an incentive, almost, for people to switch because you can see progress being made. I think what happens now is people think progress won't be made, that we’ll never meet that target, so, why try? That said, I don’t think taking just solar, wind and batteries is important, as they are sufficient. I believe we’re going to need a little bit of everything, which means in addition to those pieces and electrification, obviously, I do think we’re going to need advanced nuclear at some point to come in. That’s a clean resource. We need to look at some of the other renewables, especially, for example, in Southeast Asia, really, how do you push and get geothermal, a major source of energy? So, it has to go beyond wind and it has to go beyond solar. It’s going to take pieces of everything as we move forward. And I still think there needs to be additional technology development, perhaps not so much for wind and solar, but perhaps high wind, solar for places that perhaps aren't quite as sunny. So, how do you make it different types of products for different places? But I think you are going to need advanced nuclear, you're going to need all types of other energy efficiencies. You're going to need another probably step increase in batteries beyond current lithium-ion batteries. And all that research is going on. I think progress is being made. Progress is being accelerated. So, hopefully we can get there, but maybe not by 2030.

MATHIAS STECK Phyllis, I have one last question for you. What is Sasakawa USA doing to harness the new collective focus on climate emergency to progress the energy transition?

DR PHYLLIS YOSHIDA We’re fairly small, but we try to do our part. I’ve been doing a lot of writing on energy. A lot of my career I spent developing international cooperative arrangements in research and in science and in technology. So, we’ve been trying to get, in particular, the Japanese government and the US government to do more on clean energy, to have more international collaboration that existed in the past. We’ve sent teams of experts or perhaps people who aren't experts, like journalists, to Japan to see what happened after Fukushima? How energy efficiency was used? How distributed grids and microgrids became much more pervasive in the aftermath? Sasakawa Peace Foundation in Tokyo, which is sort of our parent organization, because Mr Sasakawa who endowed the foundation was originally a shipping magnet, has done a huge amount in terms of looking at oceans and the effect of climate on oceans, on shorelines, etc. So, I think there are lots of pieces, but it’s what an NGO does in terms of funding studies and trying to bring people together.

MATHIAS STECK Thank you for these great insights, Phyllis, and that you for listening. That was Dr Phyllis Yoshida, Senior Fellow for Energy and Technology, Sasakawa Peace Foundation USA.

DR PHYLLIS YOSHIDA Thank you for having me and congratulations on your new Energy Outlook and congratulations on trying to get the word out to everyone.

NARRATOR Thank you for listening to this DNV Talks Energy podcast. To hear more podcasts in the series, please visit dnv.com/talksenergy.