 Really, thank you all for coming very much in kind of a chilly, chilly morning, but Phil Benoit's going to warm it up for us with a very positive presentation about the IEA and what some of its latest work on energy efficiency and the related policy issues. So we're very pleased to have Phil Benoit back with us again. Is this the third time? Second time. And he's the head of the Energy Efficiency and Environment Division at the IEA, and as those of you who follow the IEA's work closely realize, you know, the work that IEA has done over the years on energy efficiency and technology has probably, you know, been less recognized than maybe some of the other things, but probably, in my view, some of the most important work in the last IEA's existence, which is getting close to, I guess it's 40 years this year, is if we need a reminder, yeah. So in recent years in the U.S. legislation that relates to energy, probably the one thing that does have bipartisan support is energy efficiency matters. And if you look at some of the positive developments that have occurred in recent years of the U.S., it's been those energy efficiency standards, energy efficiency rules and regulation that really have made a difference. And if you think about the goals that the President has set for this country and our other member countries in the IEA have set, a big share of that. And we'll be reminded of that again by Phil's presentation today on the 18 countries that are covered in this report, but then in about 10 days, 24th, Fatih Birol will be here to present the global view, which also highlights energy efficiency as probably the most important element in reaching not only environment goals, but economic efficiency goals. So Bill's going to make about a 30-minute presentation or so. Then we'll open it up to Q&A, and we look forward to having interaction. And once again, thank you, Phil, for coming, and thank you all for being here, Bill. Thanks, Guy. Thanks for those kind words of introduction. It's a real pleasure to be back here. This is the second time, because this is the second market report that we've issued. And we always start with a visit to Washington and to CIS to present our findings. I think you've touched on some of the important points that I was actually going to raise at the end, but maybe I'll raise at the beginning in terms of energy efficiency. I mean, what we see when it comes to energy efficiency is a economic energy fuel, basically, that can substitute for supply-side interventions. That generates a lot of benefits, generates climate benefits, but it also generates other important benefits in terms of supporting economic development, improving access. Fundamentally, we think of labor productivity, we think of capital productivity, we need to think about energy productivity, not always simply energy intensity. It's not a question necessarily of using less energy for each dollar of GDP. It's often a question of generating as many dollars of GDP for every unit of energy that is used, and this is particularly a critical issue when we look at emerging economies and developing countries. So one of the challenges I think that we do face is, on the one hand, under IA analysis, energy efficiency is the most important contributor to achieving the type of decarbonization that is required to achieve our climate goal aspirations, but at the same time, for many countries it's important for them to recognize that energy efficiency can meet a variety of objectives. So something that we have tried to do over the recent past, the very recent past, at the IA is to complement some of the analytic work that we do with work that is fundamentally in many ways designed to reposition energy efficiency. So for example, at the IA we have a lot of fuel market reports. We've had fuel market reports, we started with oil, we moved into coal and gas, and a couple of years ago we started a fuel market report with the renewable fuel. And we sort of felt that we needed to look at energy efficiency in a similar way. Why? At the end of the day, you can put solar panels on your roof or you can put insulation in your home. Both of them serve to satisfy an energy demand for energy services. They just do it in different ways. So a couple of years ago we thought, well, we should look at energy efficiency maybe in a similar way. We should look at what the market looks like, and that actually presented a variety of challenges. One of the questions was really defining and sizing the market. To be frank, when we raised the notion of having a fuel market report, there were many who were skeptical. They said, what is the market for energy efficiency? And I think many of you were coming and thinking about the market for oil, a nice integrated global market. But the fact of the matter is when you look at renewables it's not as integrated, and clearly when we're getting into energy efficiency it becomes even more diffused. But fundamentally the way we chose to define the market is to recognize that many people are spending money for goods and services that will generate an energy efficient result. Sometimes they do it on purpose and buying insulation. Sometimes they're required to do it because there's a mandate out there, but at the end of the day there's a lot of money that's being spent to generate a more efficient outcome. So inputs and outputs, and then one of the real chances we had is okay, how do you actually try to evaluate what that market looks like at a global level, and I'll come back to that. Second thing was a recognition that we're looking at a very diffuse market operating in a variety of sectors. You could say for each way that we use energy there's a corresponding energy efficiency investment or typology that's taking place. So diffuse and varied, but having said that what we saw while it's very local and sectoral there were certain common elements that we were able to pick upon. Third thing in IEA market reports it's important to talk about prospects. So that's one thing that we touched upon, where do we see the energy efficiency market going. And lastly one of the major problems that we faced in doing this market report was true the first year, it's been true this year, and will continue to be true but we hope to do a better job of this is we face a lot of data and methodological challenges. We often don't have the type of quality of data that one has. For example when you look at the oil market or even if you look at renewables and then there are a lot of methodological challenges. What should we count as the energy efficiency component when you buy a more efficient refrigerator that provides a lot of other services. But now withstanding these challenges we felt that was important to move ahead and to really reflect the fact that there is a market out there for energy efficiency. And last year we had our inaugural report and out with the old and in with the new and this year we have our new or second annual energy efficiency market report which I will describe to you today. So what are some of the challenges from last year's? The first is we reinforced and came up with what we feel are more robust methodologies for trying to size the market. Each year we decided to focus on a particular subject area. Last year we focused in on ICT and this year we focused in on transport and finance. As Guy has remarked we were able to expand our analysis in a variety of areas from 11 IEA countries to 18 countries. Again this is a reflection of the data challenges that we face. We have to be looking at consistent data to be able to aggregate things. We've done a new decomposition methodology which is more precise and that's how we can try to isolate out the energy efficiency impact from structural impacts and like I'll come back to that and we have more energy efficiency indicators that we're tracking. So here's just the table of context which helps to sort of describe what's in the report. First part really deals with some global issues trying to estimate the market and the like with the focus on transport and finance. And then what we do is we go in in the second part and look at how the market is playing out in a variety of individual countries. So in terms of the market estimations what we did is this year we looked at five different methodologies just to go through them briefly. The first is we basically looked at okay what is the capital formation over the last year. We took a certain percentage of that assuming that that reflected the energy efficiency component and came out with a figure. The second thing we did was we looked at changes in global energy intensity. We basically tried to remove the activity impact in terms of impact on total final consumption as well as changes in economy structural changes and came up with a figure. We went through five and interestingly enough all of the different methodologies produced similar types of results and basically result that the overall global market for energy efficiency using these top down methodologies came in at about 310 to 360 billion dollars which was consistent with the 300 billion dollar estimate that we had last year. So increase in comfort around that number but having said that really still in need to do more work and to improve both the data and the methodological issues. And what you have here is a reflection of the results from Monte Carlo analysis which was the fourth one and what's notable here these are the results that you have when you do basically vary some of the inputs according to certain distribution curves and what's striking in this result is that if anything we probably tend to see the possibility that the market may be larger than what we were thinking. But fundamentally we're getting increasingly comfortable with the notion that the global market for energy efficiency probably sits somewhere in the 300 billion dollar range. And I think equally important and coming back to this issue of prospects is that we see signals that point to further growth. Guy mentioned, unless you mentioned it right now or right before you mentioned the agreement between China and the United States on the climate issue, clearly energy efficiency is going to be an important way in which both countries can try to achieve that. The European Union just came out with a target nonbinding of 27% reduction in primary energy consumption. What we see is increasingly countries looking to energy efficiency to meet a variety of goals and what we see with increased policy attention is the prospect for increased growth in the market. Obviously one of the other major drivers is just where we sit in terms of energy prices and those tend to be, I guess some people view them maybe as a little lower than they were three years ago but clearly they're much higher than where they were 10 or 12 years ago. So fundamentally our sense is that signals point to further growth in the energy efficiency market. The other thing is this is really more repeat from some of the conclusions from last year's if we look at the size of that market it's larger than the amount of investments that were made in renewable power generation and the like. So it's really it is a sizable market, not obviously smaller than where we are in terms of upstream oil and gas but really a big market and a big market when we think about efforts to decarbonize the energy sector. This is the actual market. So when we look at the basically the IEA's market report on renewables estimates that the market for renewables is about investments in power generation is about $220, $30, $40, $50 billion. And we estimate that the amount of money that's being spent on energy efficiency investments is larger about $300 billion. So this is consistent with our estimation. Again with the major caveat that we still face major data and methodological challenges that these other sectors don't face. And then the other big conclusion is that based on the 11 countries, the 11 IEA countries that we're able to analyze that includes some of the largest OECD economies, if we look at the contribution of different fuels to total final consumption in 2011, what you see is obviously a large amount of the contribution to total final consumption coming from oil, a lesser amount from gas, a lesser amount from coal, a larger amount from electricity and obviously that includes some coal as well. And if we compare that to the amount of energy savings that were generated in 2011 from investments in energy efficiency over the preceding several decades, our conclusion is that there were more, there was more in terms of energy savings from energy efficiency investments in 2011 than any other fuel contributed to actual consumption. So that's also how we termed, came up with this term of energy efficiency as the first fuel and let me go to this next graph which helps to sort of just illustrate this point. So what you have here is basically you start from 1970s for, and that's the point where we had data and you look at what the world looked like and you look at what the energy intensity looked like, sorry, for these 11 IA countries for which we had data. And then over time, you look at actual contribution to total final consumption which is Basie, the red, the blue and the like and you compare that to what would total final consumption have been if we hadn't had energy efficiency investments. And if you just then focus on 2011, what you see is what I presented in the previous graph, that basically the green bar which is how much energy efficiency improvements over the preceding decades generated in terms of savings in 2011 as compared to the amount of oil or electricity or natural gas that contributed to total final consumption of these 11 IA countries. And that's our calculation of how we end up with energy efficiency being the first fuel. And then it's also interesting to compare that figure to actual total final consumption in a variety of regions. So for example, we have that 1,300 million tons of oil equivalent saved in 2011 and if you look at Asia, excluding China, it actually consumed less in terms of total final consumption. China, the amount of savings from the IA 11 countries was about 80% of what China used in terms of total final consumption. The IA, the savings was larger than the entire total final consumption of the European Union and represented about 80, 87% of what the United States said. So basically what we see is energy efficiency investments are generating over time savings that basically displace the entire total final consumption of some continents and some regions. And let me just also point out when I mentioned before that we looked at 30, 40 years because that's where we had data. It's important to recognize that that long time frame is relevant and appropriate we feel when you're looking at the amount of savings because after all, when you build a home and you put insulation in there, I used to live in Potomac. I lived in a home that was built after the oil embargo. It was a very tight home from an energy perspective. A lot of insulation, a lot of windows that were efficient, very little air movement in there. And obviously over the 20, 30, 40 years that home continues to generate that type of benefits. Now obviously cars come and go and the like so they're the capital stock, it's different type of movement, but you do have this benefit over time. And then the other thing is if you think about, for example, coal-powered plants or renewables, hydro power plants, many plants have been operating for 20, 30 years and we count their contribution in the total final consumption figures that we have. So in some ways we feel it's very appropriate to look at this extended time frame to figure out where we are. Bottom line is energy efficiency is truly an invisible powerhouse when it comes to meeting energy demand for energy services. So what was also interesting to do is to try to figure out and to try to identify using improved methodologies. What is the impact of energy efficiency as opposed to the impact of changes in the structure of the economy or the impact of increasing population economic growth on total final consumption. One of the improvements I had mentioned that we had made is we've proved the methodology in terms of what we call our decomposition analysis. We're able to go from 11 to 18 countries and we're able to use a methodology also that we felt was more precise. And this sort of reflects the result of that. So what you have here with the blue line starting in 2001 which represents the base of 100 is you have what should total final consumption have looked like in these 18 IEA countries if you're simply factored in the impact of population growth and increase in the economy, changes in the economy. And what you see for example is from 2007 to 2009 you have a reduction in total final consumption which obviously is tied to the recession. So that is what total final consumption should have looked like if we had simply had the world remaining unchanged in terms of energy efficiency and the like. What's significant there is a increase in total final consumption through 2011. We do the same analysis just looking at changes in structure and basically that's as for example you move from intensive industries to less energy intensive services. The amount of energy unit that's required for each GDP is less so as the economy, the structure of the economy changes that will have an impact on total final consumption. We strip that out as well. And this is actually what total final consumption actually was in these IEA 18 countries and what you see is that basically something has happened because if you look at the impact of activity, increasing economic activity and population growth as well as structural adjustments, you have a total final consumption that really should have been higher than what it actually was and the reason it was lower is because of the impact of energy efficiency. And so the green line which is the key line shows what total final consumption would have been like as a result of energy efficiency investments. And so bottom line is that energy efficiency is effectively serving to reduce total final consumption in the face of increasing population and economic growth. That's the fundamental important message that we see here and that's also reflected when we look at a breakdown by countries and what you see here is that in 12 of the 18 countries that we studied, energy efficiency improvements which are the green bars were able to more than compensate for increases in population and economic growth resulting in the little circles which is actually what was the change in total final consumption. So energy efficiency improvements were greater than growth having a dampening impact on total final consumption of energy. Now one of the areas that I mentioned that we looked at was transport and what we see in transport is a lot of the energy efficiency market is driven by vehicle fuel economy standards. What you see in the graph reflected there are the solid lines are the actual fuel economy results and the dotted lines are prospective fuel economy standards and what we see is that this is really a global phenomenon. The European Union, the United States, obviously there's a lot of discussion about the fuel economy standards here but even India, China, other countries are really looking at fuel economy standards as an important way to manage a variety of issues including fuel imports which obviously in a country like Japan and Korea are critical to energy security issues and the like and I think what's interesting as reflecting the first bullet is that 15 million vehicles sold in 2011 were sold in countries that have fuel economy standards and that represents over 70% of the new vehicle fleet. The other point is that improving standards can achieve a major fuel savings by 2020 depending in some ways on how aggressive countries are in terms of pursuing those things. So when we look at the transport sector what we see is that energy efficiency is a big part of that transport market and put it another way that if we think about the energy efficiency market a lot of the activity is going to take place in the transport sector in terms of increased spending for more efficient vehicles. But when we think about transport and we think about efficiencies not simply a question of making the particular engine or vehicle more efficient. What you have reflected in the bottom chart is the fact that road transport towards the right whether it's for freight or passengers is a less efficient way of moving goods and people than freight rail and the like. And so when we think about efficiency as a general proposition being more efficient in terms of our energy use to move people and freight it's not simply a question of improving the efficiency of the car or of the locomotive there's also an issue in terms of shifting between modes of transport. Now that is probably not what one would classically think of in terms of maybe the energy efficiency market but the fact of the matter is and something that became evident to us as we were looking more deeply at this issue of the energy efficiency market for transport ultimately our objective is to achieve more energy efficient transport of people and freight so shifts in mode are going to be an important part of that and this is obviously something that is going to be it's increasingly important in Europe and even the United States where there's a lot of discussion about rail or urban transport and the like. Countries like Brazil are building metro systems and if anybody has visited any major city in any major emerging economy I'm sure you're all very sensitive to the massive traffic jams that they face so the whole issue of shifting or maybe in some ways in those countries preventing a shift to a light duty vehicles will be an important part of the energy efficiency story in the transport sector and obviously those type of investments in mass rail and the like involve a significant amount of investment in infrastructure. The other shift that's important to think about is a geographic shift so what you see in these two diagrams the green line is projected world transport the dark blue line is what's expected to happen in OECD countries and basically it's expected to remain flat and all of the increase in terms of transport demand is going to come from non OECD countries so when we think about the energy efficiency market what we see is a likely increase for potential investments in energy efficiency in transport really being centered around emerging economies. So as mentioned the other area of focus that we dealt with in this market board was looking at the issue of finance and what you have here is a breakdown that the IE did in terms of where we see the sources of financing. Now what's interesting and maybe in some ways not so surprising is that the dark blue lines which represent nearly 55, 60% of sources of financing is internally generated cash. At the end of the day the fact of the matter is when I go out and I buy a CFL for my home I'm not borrowing money to buy that CFL I'm using savings and earnings to do that that's what a lot of companies do but having said that a significant portion of the investment will come from third party sources of financing that's principally debt as well as some equity so that represents about 40%. So when we superimpose that on our market what we see is really an estimated large financing market for energy efficiency. We see a market that is expanding and continuously innovating. We estimate that the amount of financing that went into that 300 or plus billion market if you apply a 40% rule is in the range of $120 billion and much of that actually came from that we were able to identify came from bilateral and multilateral development aid. There's a great activity of the public sector in trying to promote energy efficiency. Some of that is public sector money that's going into domestic programs. So for example KFW has a program to encourage retrofit investments in Germany the United States also tries to put in place programs like similar to that guarantee programs and the like but there's also a significant amount of money that we were able to identify that is coming from places like the World Bank, KFW's development aid and we're basically it's countries that are providing financing to developing countries to support investment in energy efficiency and we were able to identify over $22 billion worth of that in 2012. I think the critical issue or the most important issues that we see financiers becoming increasingly comfortable with tools to finance energy efficiency. So in that regard we see it moving from a niche product to more of an established financial market segment. Having said that I think what we recognize is at the end of the day many, many banks too many banks still remain unfamiliar with what's required in terms of an energy efficiency investment. So there's needs to be continued emphasis in increasing familiarity with that. And I think at the end of the day when you'll see a lot of banks that are familiar with doing that then you'll probably see an increase in the amount of funding. If I could just parenthetically make an observation in some ways it's really not that surprising that it becomes more difficult to do an energy efficiency financing than another one because at the end of the day you're dealing with the counterfactual energy savings. So if I could give an illustration and I'd spent many years as an investment banker doing energy projects. So if you're gonna finance a power plant and you're a bank you basically have to, you have to get comfortable with the technology that the power plant is gonna work. And then what you need to do is you need to get comfortable that the utility that's gonna buy the money from the power plant has the money to pay for it. And then you know pretty much what the cost, the price at which it's gonna be sold and you do your revenues calculation. So you're basically sitting there looking at an electricity power generation technology and electricity power generation purchase and the like. But if you compare that to, for example, promoting energy efficiency retrofits for commercial buildings. On the one hand you have to get comfortable with the fact that the technology that people are proposing will actually produce the results. So more efficient boilers, more efficient lighting. I notice you have windows here, the whole placement of the windows and the like are designed often to produce a result. You need less artificial lighting in here if you were upstairs and the like. So you have to get comfortable that the technology will produce the type of savings that you want. But at the same time, basically where is the owner of the commercial space gonna get their money? They're not gonna get it from generating energy. They're gonna get it from renting out the commercial space. So you have to also get comfortable with what is the commercial real estate market gonna look like in this part of Washington. So you have to really look at two completely different types of phenomenons, the technical operation of a variety of energy efficiency investments as well as the commercial real estate market. And that's, I think in some ways, somewhat more daunting prospect for financiers. So I think there are some structural reasons why it's been more difficult, but having said that, banks do much more complicated things. It's really just a question of getting them comfortable with that. So this whole movement away from a niche product to more of an established financial market is something that we see is ongoing and which we feel will have an important impact. And then the other thing is greater transparency and standards for financial products will also help in this regard. What you have here is a reflection of an ESCO market that is extremely large. What we did in the finance chapters we focused in on certain aspects. And I think what's most notable here is a $12 billion market in China, $6 billion market in the United States. So very large in very large countries with a possibility in China to grow significantly. Then we also looked at country case studies that helped in some ways enrich the more theoretical analysis and gives specific examples. A large focus here on Asia but just to take you through a couple. We looked at China where one of the major drivers for energy efficiency investments is the five year plans. We compared the 11th to the 12th and what's interesting is you see relatively consistent level of investments slightly higher under the 12th year plan as compared to the 11th year plan but the amount of energy savings that's expected to be produced is less. And I think in some ways that's a reflection of two important dynamics. The first is that in China they've been dealing with energy efficiency for a number of five year plans now and you could argue that some of the lower hanging fruits have been taking up so you're getting to the point you're the cost effectiveness of any particular investment diminishes. And then the second thing is more of a focus now on capacity building and training as well since that there's a need to improve the expertise. And I think that's again consistent with the fact that kind of as you move up the supply curve things become more challenging and having greater capacity becomes important. Continued leadership from the European Union as reflected one could argue in the recent decision to have 27% non-binding target in terms of consumption, primary consumption. I think some people were disappointed. Some people were hoping for 30%. They may revisit that. But over time clearly a real emphasis from the European Union on this and increasingly also motivated by some energy security issues. Clearly the concerns that Ukraine faces in terms of gas imports then also bleeds over into issues for the European Union is facing. And interestingly after so this report was issued the day after the Nobel Prize for physics was given to the Japanese inventors of LEDs. And here you see a real illustration of how technology can generate a market in Japan. LED sales grew through from 100 million in 2007 to four billion in 2013. So the real development and real explosion of an energy efficiency market generated by technology. So in some of the key findings energy efficiency market is a significant component of the global energy system. One that has been too often overlooked and one that is becoming increasingly important given among other things climate change mitigation aspirations. Secondly as I mentioned it's a market that we project will grow with drivers strengthening. And thirdly that strong policies and standardization and the like will support it. Now what I would like to do now is to actually touch briefly on another related working that we have because as I had mentioned at the beginning one of the issues that we see is energy efficiency that is under invested and under investment in energy efficiency. And when we think about one of some of the reasons for that we feel that in some ways it's because energy efficiency remained too long an overly technical energy fuel energy instrument that was only considered by energy efficiency experts and maybe a few other ones. Rather than something like renewables where there was a real ability to capture the imagination of the public. My kids often come home and they have an assignment and their assignment has to do with renewable energy. They don't really often come home and have an assignment that has to do with energy invest, energy efficiency. So what we want to do is figure out a way to build bridges to other stakeholders in government in the private sector to sort of draw them into seeing what are the advantages of energy efficiency. And what you have here is advantages that manifest themselves at an individual level and national level fuel imports and the like international climate change. So we want to build bridges to more stakeholders and also figure out a way to do a better job of capturing the imagination of the public. Because at the end of the day, what we recognize is that we are all operating with scarce resources, whether they're financial resources or even in terms of time and attention. And what we need to do is to figure out a way to get people to better prioritize energy efficiency in a manner that reflects the benefits that energy efficiency can provide. So in order to do that, we engaged in a stream of work that we call the multiple benefits of energy efficiency improvements. I can't remember where the last year I'd mentioned it, but we've continued on this line. And what we have here is something we sometimes refer to as the flower, the energy, the flower of multiple benefits. And what we try to do in this through this work stream is to raise awareness around the benefits of energy efficiency, fuel imports, energy security and the like, increase the analysis of benefits that go beyond simply energy savings or even greenhouse gas mitigation, improve methodological tools and build capacity. So for example, something that we see is that cities and other subnational entities often don't have the capacity to fully evaluate the potential benefits of energy efficiency. So it becomes much easier to think about building another pumping station for water rather than thinking about improving the efficiency of the existing water pumping facilities. And so we just last month, actually two months ago, our executive director launched this book called Capturing the Multiple Benefits of Energy Efficiency. We focused in on five substantive areas that were identified by our membership, macroeconomic benefits, impacts on public budgets, health benefits, industrial productivity and energy providers, I'll take you through them really relatively quickly. In terms of macroeconomic impacts, this is probably the area that's been studied the most, it's been studied a lot in the United States and other countries, but fundamentally in summer you see two major type of macroeconomic impacts. One is the investment effects from investing in energy efficiency, job creation and like, this is something that people like to focus in on. But obviously you also have the benefits from energy demand reduction effects and that's obviously very important in countries that are very dependent on fuel imports. Whether it's a large country like Japan or whether it's a country that's a virtual island in many ways like Korea or a country like Jamaica. We looked at the issue of public budgets, the impacts on cities, but also the impacts on municipal utilities such as water and sewerage companies or in public buildings. So for example, there's a large program in Canada to improve lighting efficiency in buildings where they were able to mobilize about $300 million in investment that produces about 40 millions in savings. One of the ones I actually like to talk the most about is the potential benefit of energy efficiency in terms of health and well-being. Now a lot of the time people are starting to think about the issue of energy efficiency and its benefits in terms of health and well-being when they think about air pollution and obviously that's something that's important in China. But there was an interesting program in New Zealand that had to do with indoor exposure factors, the second box in there. And basically it has to do with indoor quality or particularly in poorer homes where you have bad insulation. So you'll go from place near the wall as compared to the place near the window and you have a major differential in temperature. The net result is people tend to get sick more in the light. And so they put in place a program in New Zealand to support insulation improvements in homes and they found that the reduced health cost of those families provided a $4 return for each dollar of investment. So major impacts from energy and efficiency in some areas that you wouldn't necessarily think about health in terms of indoor health. Industry, it's always interesting. People love to say that the private sector will always focus in on go where there's money. I think what we have tended to find is the following is that corporations tend to be good at what they're good at doing. And what they tend to be good at doing is value creation, increasing sales, increasing market shares. They tend to think less about savings in some ways because savings has to do more with reducing things. So what we fundamentally wanna do as well is to sort of support industries to relook at the issue of energy efficiency as really a value creation proposition, not simply a question of reducing energy. So as you try to become more energy efficient that can promote innovation and improve your competitive position and the like. And then obviously energy providers, there's a lot of work on this in the United States and California and other places and what you see here on the gray side is the cost of energy efficiency investments that's compared to on the right hand side the type of benefits you can get in terms of reduced technical transmission and distribution losses and the like. And then the other thing is when you improve energy efficiency, one of the major potential impacts is to improve affordability for consumers and that allows you to sometimes improve bill collection by reducing defaults. So potential impacts for energy providers as well. And then obviously when we talk about energy efficiency we have to talk about the rebound effect. So we recognize that it can in fact be a negative. If you think about energy savings if that's your goal or reducing climate change greenhouse gas emissions, clearly you have to think about the rebound effect and that'll be a negative. But it can also be a positive. The fact of the matter is if you're trying to promote economic development in a poor country and you improve affordability so that families have more money to spend on other things, if they choose to spend it on a personal computer for their child when that increases energy consumption that is not a negative impact. The objective there was to improve standards of living and you've achieved that. And then the other thing is sometimes it's not even relevant. This issue about insulation really doesn't have a major impact in terms of energy consumption. It might indirectly but fundamentally not all benefits that are generated from energy efficiency will generate an energy rebound effect. Some do and some don't. And again you have here this illustration of health. So one thing that's interesting about the multiple benefits approach to energy efficiency is it gives us insights into maybe a more refined and subtle assessment of what is the rebound effect and when and how we should be concerned about it. When we think about energy efficiency we have to think about national priorities. So again Jamaica and Japan will be very concerned about fuel imports while Russia will be less concerned about that Russia and Saudi Arabia. Saudi Arabia interesting enough is looking at energy efficiency as well of preserving its resources for export. It's a big issue for developing countries. There's clear link to access. One way to provide electricity to more people is by reducing the losses. You don't always have to build another cold power plant. Combating local air pollution is a big issue in many countries. So for many developing countries in particular energy efficiency provides some important benefits. And then I think one point to make is just the strategy that we see around multiple benefits. It isn't a question of saying that energy efficiency produces 15 benefits. As somebody said that's the kiss of death when it comes to any policy initiatives to say it produces 15 benefits. But rather to focus in on some of them in terms of dealing with key stakeholders. So for example this issue of development whether it's energy access or poverty alleviation to focus in on those players and say energy efficiency can deliver that benefit for you or the illustration I gave about health. So it's really identifying who's the key stakeholder, what's the key priority interest and seeing whether energy efficiency can serve that goal and then building allegiances that way. So we wanna continue to do work in this regard. Because at the end, coming back to the point I made at the beginning, when we look to the future what we see is that of the economically profitable energy efficiency investments out there under current policies and practices we're only going to invest in about one third. That means for every dollar that we invest in an energy efficiency investment under current policies and practices we project that there are another $2 of investments that we're not making and that means we're leaving a lot of money on the table and we're leaving a lot of benefits on the table. And that was one reason why we wanted to move forward with these two publications. And as a final note, guys, let me give you a copy both. Thank you very much. Well, that actually answers one of the comments I was, you know, I think that multiple benefits work that you've done since we last saw you and in addition to the 2014 report is outstanding and one of the points I would, is IA is a great place but it has limited, there's only so much you can do, obviously most effectively within your own member countries but as you pointed out, increasingly important to deploy these benefits in the places where most of the growth is going to be. So how are, I mean, I know you personally and IA has been involved in things like G20 and other multilateral organizations. I suppose that's one way of getting the word out. Is there any, are there other ways? It's nice to do great reports in the show because the benefits, I think to all of us sitting around here saying, well, this is obvious, this is a no-brainer, all those benefits, whether they're 15 or 100, especially the point you made about health, which one would not necessarily think about. Other ways you at the IA and other multilateral organizations are getting this to where, at the deployment stage? Okay, I think you raise a variety of important points in that series of questions. The first is, and I think it's something that we recognize in the multiple benefits book is that we really drew largely on the expertise outside the IA. There are obviously many institutions that do a much deeper analysis of the macroeconomic benefits, the health benefits, obviously, and the like. So what we have tried to do through this effort is really to provide a platform for changing the nature of the discourse. But ultimately, the analysis will depend on a variety of the key policymakers outside of the IA. What we've been struck and pleased by is the amount of interest people have had in having us present this information. So we've gotten a large demand for the multiple benefits presentation, more than for the market report, probably from about 15, 20 countries. And normally from the energy specialists who say it's very useful for them that an organization, an energy agency like the IA has put out this type of approach. And then what we hope is two things will happen. First of all, it will facilitate national stakeholders' discussions within the national context to try to get others interested in. So for example, Denmark has said they wanna figure out a way how to use this analysis. Canada is already doing a lot of this, explicitly in the context of multiple benefits. They wanna figure out how to use it. And then the other thing we wanna do is to see how we can maybe through our multilateral dimension provide a platform for specialists to come together. We are having discussions in the context of the G20, but I think that G20 is gonna focus in on different aspects. But the other thing is we have a program now to work more closely with a variety of key emerging economies. And what we have found is a strong interest in many of these emerging economies to try to get a better handle on the key benefits from energy efficiency investments. And so we have a program with India and with Mexico to help them improve their analysis of some of the macroeconomic benefits, for example. And you pointed out the middle oil producing countries are very interested and we've had done some work with the King Abdullah Research Center and they're working on some issues on efficiency standards. And for them it's in addition to just being reaping the benefits of having more energy to export, which is their main business, it's the fact that they subsidize energy consumption in Saudi Arabia and many oil producing countries. And to the extent they're more efficient, they can reduce their subsidies. It's kind of a roundabout way of getting, but I think the goal is the same. One question before I open to the floor on the specifics, it was one chart. I think it was the one that showed the breakdown between structural change and efficiency. It looked like it was slowing down. And now whether that's sort of an aftermath of the recession or what, but the period 09 to 2011 in that research, it looked like that improvements in efficiency. I just wanted your comment on that. Yes. So I mean, yeah, that's exactly right. It was more, I think it was from 2007 to 2009. And then, and even after that, still. So what happened was I can go back, but basically it improved, then it got worse, and then it started to improve again. And basically, like for example in countries, I think one of the examples we have is Greece or the like, as your capacity factor diminishes because you're facing a recession a lot of time, your energy efficiency diminishes. So you're absolutely right. But we've seen now a more recent uptick in terms of improvement, and that's also reflected in the WIO report, which Fatih will describe next week. So it's not, we're reaching point, diminishing opportunities. As your last chart showed, we have lots of opportunities. We're spending maybe $1 instead of, you know, three for every, in each of those sectors. So let's open it up. And the usual ground rules here, please identify yourself and your affiliation and try to keep the questions concise. Who we've... Thank you. Michelle Melton, I'm with the CSIS Energy Program. Thank you. It was a really interesting presentation. I have two questions. I may have just missed it, but I didn't actually see anything on costs of energy efficiency, like LCOE relative to some of these other fuels. And I was wondering if you were doing any work on that. And the second is related to EMV protocols. Are you doing any work to standardize or encourage standardization of EMV protocols? Thanks. Defined, some people may not know what... Sorry, EMV evaluation measurement and verification. I think that's what it stands for. It's essentially being able to have, when we think about it in the U.S., we think about it state to state. They have different requirements for what counts as energy efficiency and how you measure it against a baseline. Can we take a few and... Yeah, maybe we should... If we were to be more efficient, are there... Bob? I'm Bob Hershey. I'm a consultant. Could you give us some idea how this breaks down between residential and industrial and utilities? One more. Yes, sir? My name is Frank Barron. I'm a private investor. I appreciate very much your presentation and your information. It's very enthusiastically being embraced by myself. A question I have in the United States right now, we have a very strong momentum in the LEEDS certification activity going on, architectural financing and so on and so forth. Can you comment on that LEEDS? Is that a passing phenomenon? Do you see that as a real structural change within America or within the world from an architectural standpoint? Okay, great. I'd like to take many of them and that way I can ignore one and... So in terms of... Interesting, on the issue of costs, so the costs are the 300 billion. The 310 billion. In terms of rates of return, which is kind of more, I think part of your question was getting at, I think the interesting problem that we sometimes face on the energy efficiency side is you end up for some investments with rates of return that are too high and sort of incredible to people. So the purpose of this objective is less to sort of look at the issue to sort of say, at least on the market report, to say, oh, look, here are these wonderful rates of return, but rather to sort of say, you need to be thinking about energy efficiency and comparing what is your potential rate of return on the energy efficiency investment as opposed to going out and spending money and putting solar panels on your roof. So if I could give an illustration, I was doing a presentation to the Energy Minister's Meeting of the European Union and one of them said, they have an issue because they know, they find it's much easier to encourage people to put solar panels on their roof, even though it's gonna be much more cost effective for them to put insulation in their homes. So I think one of the, what we sort of feel in the energy efficiency side, I'm sure you feel this as well, is that in fact, there are a lot of extremely cost effective investments that aren't taking place and how can we encourage people to do that? And that's what these reports are designed to do. In the multiple benefits publication, you'll see a variety of illustrations of investments that have very high returns. The other thing is in that regard, it's sort of embedded in another form of analysis. If you actually look at the IEA's projections or scenario analysis in terms of how you can decarbonize the energy sector, what you'll tend to see is that energy efficiency investments tend to be front loaded as compared to even renewables. And the reason for that is because energy efficiency investments tend to be cost effective relative to some of the renewables investments. And then I think generally what we're trying to do, not just in terms of monitoring and evaluation, is we want to get, we want to encourage an improvement in the state of the art as a general proposition across different countries. And the fact of the matter is, for example, if you look at the macroeconomic impacts of energy efficiency, a lot of countries or even states in the United States are doing extremely sophisticated analysis and other countries are doing a less sophisticated analysis. So some ways, maybe for us, we're not quite at the point of doing sort of an ISO sort of standardization effort that we think that would be useful, but even just getting people to do a better job about sharing. I was just in India 10 days ago to talk to the Bureau of Energy Efficiency there that's very interested in improving the way that they do an assessment of the economic impacts and we brought in some specialists from other countries. In terms of the breakdown of the 300 billion, I don't have a breakdown by sector. In fact, because of the way the methodologies are done, we wouldn't actually be able to generate a breakdown by sector at this point. And then finally on the issues of buildings and the gold standards and the like that you see in different countries, what we're seeing is that is becoming increasingly popular. It's also very popular, for example, in Europe where they do use a slight variation. And so we think that's something that's going to continue. Obviously what will be very exciting is to see that type of practice being spread into emerging economies. People love to say the date on buildings, if you think out to 2050, 80% of the buildings that all exist in 2050 and OECD countries are already built. So the big challenge there is on the renovation side and 80% of the buildings that will exist in 2050 have yet to be built when you look at some of the emerging economies. So clearly that overall effort, directionally, we think is a positive. There are sometimes it gets a little complicated and there are sometimes problems that people sort of realize and things strange incentives that play out and even the way you measure it. But as a general proposition, I think it's a positive evolution. Phil, bring me up to date. We used to do the IEA, these policy peer reviews for our member countries. Is that still going on? And the data that you now have for these 18 countries ought to be yielding some lessons learned and some countries look like they were doing. Relative, getting to Michelle's question, better let's say return on investment on some of those. Are you at the point now where you'll be able to use the data you're collecting in your report to as an input to these policy reviews that the IEA does for each member country at a regular basis? Okay, so the policy reviews you're talking about are probably in-depth reviews. So I think it's more, it's a symbiotic relationship. Normally the person that does the energy efficiency and now part of the in-depth review for a particular country comes out of the same unit that does the market report. And so, for example, when we did the in-depth review, we only do two or three or four countries a year, but we just were in the process of doing for one for the European Union. And obviously some of the information that we got from the in-depth review goes into the market report. And the market report helps inform us in terms of the in-depth review. At a certain point the IEA, we issued our 25 policy recommendations on energy efficiency. And there was a major pushback from countries in terms of having us evaluate how they were doing in terms of progress on that because their view was, well, we haven't said that we wanna do the 25 policy recommendations, so we don't think it's fair for you to evaluate how we're progressing in that regard. As a general proposition, what we find is we issued something that's now absorbed in this report. We issued one something called a scoreboard, which sort of gave a sense of how some countries were doing in terms of energy efficiency. Note the word scoreboard as opposed to scorecard. And that was not a very popular effort. So the fact of the matter is countries often resist comparisons to other countries. And to be frank, there's a lot of validity in that because to compare across different countries, you have to start factoring in, if you're looking at energy use issues, climate issues and the like, where are they coming from and starts becoming very messy. So what we have tried to do is less look at how countries compare to each other, but rather focus in on how countries can continue to improve themselves. The last thing I would say is I threw up that slide that showed the 18 countries and I can tell you that where we tend to get the biggest comments from countries is the look you don't look at them, I can tell you there are two or three countries in there that called us and said, wait a second, why does that data look like that? It's not consistent with our data. We had to go back and forth and we realized sometimes we were using a different timeframe and the like. So we're trying to remain in the positive and constructive vein of sort of supporting countries and improving what they're doing rather than getting the notion of grading them. Yeah, even after 40 years, there's still a lot of sensitivity that you're being graded among your peers. So yes, sir. Hi, my name is Tanimoto. I'm a visiting fellow here from Japan Bank for International Cooperation and thank you very much for your great presentation. And my intuition is that the great driver for the energy efficiency is the energy price, the high energy prices. And I'm curious about the recent stagnation in the energy price will lead to the slow down of the energy efficiency market or current price is still high enough for the promotion. Thank you. We have another question or two for Phil before we make it. Yes, sir. Always energy storage consultant and then faculty of Towson University. Actually, the question I have here is not a question. I'd like to get to your feeling about not energy efficiency but energy waste, especially I'm looking into developing countries. Would they be possible to benefit from the work you guys are doing or they are still at the lower level and they are still there in the area of how to improve the waste of energy before they get into energy efficiency. Thank you. Yes, yeah. I want to ask you about your opinion about and which one is better or more important that raising more energy efficiency or developing more renewable energies in the long-term perspective? Okay, so on the issue of prices. So what we find not surprisingly is there are two major drivers of investment in energy efficiency. One is going to be policies and the other is going to be prices. So what we find on the prices side, I agree with you totally. I think there are two issues there. On the one hand, some of the discussions we have internally is people want transparent, flexible prices that adjust with the market. And sometimes we have the debate internally that say, yeah, that's useful to support energy efficiency but at the end of the day what's probably going to drive energy efficiency investments is what is the absolute level of prices rather than how pure is the price from a market perspective. So clearly I think when you're looking at a situation where prices are high, energy efficiency becomes relatively speaking more profitable and similarly psychologically more appealing. You tend to see an increase in energy efficiency investments when you have that type of increase in prices and also an expectation that prices are going to stay high. Having said that, there are two issues that we see in terms of the price environment that operate to the disfavor of energy efficiency. The first is obviously fossil fuel subsidies, price subsidies, that lower the price of fossil fuels, consumption and so make, lead to over consumption of fossil fuels but also means that relatively speaking in energy efficiency investment is less appealing. And then the second thing is the fact of the matter is that looking again at fossil fuels or even to a certain extent renewables we don't adequately internalize into the price of those fuels some of the externalities. One of which is obviously air quality impact but even things like, come back to your point about renewables. I mean, it's interesting. The fact of the matter is one can argue often energy efficiency it's not only the cleanest fuel so it's really probably cleaner in some ways you could argue then well it's cleaner than fossil fuels but there are other important benefits from energy efficiency. For example, many utilities are concerned about the water energy stress but they're also very concerned about the land issue. And when you build a renewables generation, generating facilities, you need a fair amount of land. You need the land for the wind turbines, you need land for the hydro, you need land for the transmission lines. These are things that you don't need when you look at energy efficiency. So maybe I'm a little biased. I have two hats. One is energy efficiency but my other hat is on the climate change perspective. And I think often energy efficiency investments are preferable to renewables. Obviously they don't generate the kilowatt hours and so at the end of the day you need to get the kilowatt hours somewhere. But as a general proposition, if your objective for example is reducing greenhouse gas emissions, as I mentioned earlier what you'll tend to see is that energy efficiency provides a larger contribution under our scenarios than renewables. That energy efficiency will only take you so far. So coming back to the pricing issue, again I think we all see this higher prices tend to result in a greater interest in energy efficiency and there are two important things that are happening that are arguably distorting prices, fossil fuel subsidies and the fact that we're not internalizing into the prices of the variety of costs that those forms of fossil fuel consumption in particular will generate. And then on the issue of energy waste, so I'll flip it around. It's a point we often make. I think it's in the slide on the access point. Energy waste, one thing that is critical in developing countries is they often face, they have inefficient supply systems. There's a lot of, they have distribution systems that are ineffective in part because as the demand for electricity grows in an urban area you have more people connecting to the same transformers. Those transformers are overheating. You have reduced efficiency of the transformers. You have significant loss of electrons. You need more power plants to provide electricity to the same number of people. It would be much more efficient to basically put in more transformers, improve the efficiency of the whole delivery system and not have to build another cold power plant. I mean it's interesting, a lot of the time some of the people who are pushing the access point tend to be people who invest in cold power generation and that's not a coincidence. And so clearly we spend less time focusing on developing countries but we did note it here. A critical benefit of energy efficiency is really supply side interventions and they're reducing waste, using energy efficiency to reduce waste is a critical part of the story. And it's also very important. The OECD countries we tend to focus very much on end-use energy efficiency. We need to be thinking at a global level more supply side issues. And we think there may actually be, we'll have to look at it a little more. It's even some more supply side opportunities even within efficient OECD countries as well. Thank you. Yes. Hello, I am an intern here at the energy program. My name is Xiaoqing. I have a question about electric vehicles. I noticed that they're not included in the transportation analysis. However, electric vehicles I think they are more efficient than intercombustion vehicles and I wanna know about IA's view about the future role that these type of vehicles can be in energy efficiency. Thank you. Any other questions? This might be, yes. If you could come to the microphone because we're doing a webcast of this. Yes, Paul Dowler, consultant. Just a question about the utilities revenue models. You know, energy efficiency is often seen as reducing utility revenues. And how is that being dealt with, sir? We have one last question for Phil. Well, otherwise that'll be it. Phil, last two questions. Yeah, great, thanks. So, agreed totally, electric vehicles are part of the energy efficiency story in transport. I mean, we have a document we focused in on certain areas and we focused in on what we felt were important points. One was to get people to think about the fact that when you have fuel economy standards for vehicles, there's actually an energy efficiency investment that's taking place there. So that was one of the major focuses. But to come to the point about electric vehicles, it's in a lot of the IA's analysis. I'm actually doing a presentation tomorrow on the transport sector and I could have thrown up the slide. And you're right, electric vehicles present two types of advantages from efficiency and a climate change perspective. One is, as you note, it's a more efficient use of energy and so you get a plus there. As well as if you sort of go to a grid system that is largely decarbonized, you also get a benefit from using electricity. It comes from renewables, or largely renewables as opposed to one that comes from oil. And in fact, interestingly enough, I think one of my colleague, my transport colleagues showed me is that two thirds of the reduction in greenhouse gas emissions comes from the improved efficiency of the electric vehicle as compared to the internal combustion engine. And only one third of the benefit, at least under our scenario analysis, comes from the fact that you're drawing electricity from a decarbonized energy grid. So agreed electric vehicles are very much and part of the energy efficiency story as is as was mentioning earlier, shifting to rail systems and the like. Those also provide more energy efficient benefits and with corresponding investments. One of our objectives, again, in the market reports to say to people, there is a market out there. There is money to be made. There is money that people are gonna spend. There's a lot of money that people are gonna spend. And in fact, coming back to an overall issue, when we look at where we think we would need to be in order to decarbonize the energy sector to achieve the two degree goal, under our scenarios, we estimate that investments, annual investments in energy efficiency will need to equal about $600 billion a year over a 22 year period. That compares to $300 billion. So what that basically means is we need to see a massive increase in the amount of investments in energy efficiency. Policies will be key, price will be key, but price is always a little funny because at the end of the day, I think we all prefer to live in a world in which energy prices are not very high. So we need to probably find other levers to encourage investment in energy efficiency. And then the other issue about utilities, yes. I mean, that is one of the classic challenges. Getting utilities to change their time frame, their mindset from thinking that more assets is better for the economy. The fact of the matter is more assets, and you see this in emerging economies as well as in other places, more assets translates into more economic power. So there's clearly an incentive for many industries to increase their asset base, to basically increase their weight and importance in the economy. And it's up to the regulators and others to really change that incentive framework. And obviously we see that taking place in states like California where you have to sort of reward the negawatt in the same, the watt that you save in the same way that you reward or the watt that you produce. Thank you. Well, thank you very much, Phil. Thank you all for coming in. Please join me in giving Phil a warm thank you for this morning's performance. Thank you.