Energy efficiency is the first step for global progress and sustainability

Erich Labuda, Global Division President, Motion Services, ABB Ltd., shares that the focus on energy efficiency offers a fast track to address climate goals while improving economic competitiveness and quality of life. He also outlines the reasons energy efficiency matters, the opportunities available, and the path forward.

The Paris Agreement set an ambitious 1.5°C climate target. With the visible effects of climate change, where are we lacking in our commitments?

The Paris Agreement’s 1.5°C goal is a critical target, but we’re not on track to meet it. For a long time, the focus was solely on renewables like solar and wind. While they are essential for a clean planet, they take years, sometimes decades, to plan and build, which is too slow to meet immediate climate targets. Renewables also pose challenges for grid stability, requiring additional technologies like battery storage. As a result, we’re not deploying renewable electricity sources fast enough to make the necessary impact.

The International Energy Agency (IEA) has referred to energy efficiency as the “second fuel.” What does this mean, and why is the conversation shifting from renewables to energy efficiency?

The IEA’s designation of energy efficiency as the “second fuel” translates to its importance. It’s an acknowledgement that while we must continue to develop new power sources, we also have a massive, readily available “fuel” in the energy we currently waste. The conversation is shifting because people are realising that projects still in planning stages will not be ready in time to meet the 2030 targets. Energy efficiency provides a fast track as it is the quickest and most effective way to reduce our overall energy consumption, which is critical for still reaching our climate goals.

Beyond the climate targets, why should individuals, businesses, and governments prioritise energy efficiency?

There are three key reasons why energy efficiency matters for everyone. First is power quality and grid stability. In a growing economy like India’s, increasing electricity consumption puts a huge strain on the power grid. By producing more with less, or simply reducing consumption, we alleviate this stress. This leads to better power quality, fewer outages, and a more reliable grid, which is good for both industry and everyday life.

Second is competitiveness. Investing in energy efficiency makes businesses more competitive. It lowers operating costs and reduces the cost of producing goods. This is especially important for growing export markets, where global competition is fierce.

Finally, and most importantly, is responsibility. Energy efficiency is fundamentally the right thing to do. We have a duty to the next generation to ensure they inherit a healthy planet. Our actions today will determine whether they suffer the consequences of climate change or benefit from the sustainable decisions we make now. We must be the ones to “plant the tree” even if we don’t get to enjoy the shade.

Where are the biggest opportunities for energy efficiency, and what are the main barriers to implementation?

The biggest opportunities are in the three major areas of energy consumption. Industry is the number one contributor, consuming about 45% of the world’s electricity. It is followed by infrastructure development and transportation.

Within the industrial sector, electrical motors are the single largest consumer of electricity, accounting for about 45% of the world’s total. With over 300 million motors in use, many of them are old and inefficient. Upgrading these old pumps, compressors, and HVAC systems represents a vast opportunity.

The biggest barrier, however, isn’t technology, as the technology for highly efficient motors (IE5, IE6) already exists. The real barrier is a lack of knowledge. We did a survey with 3,000 executives and decision makers through which we understood that while nine out of ten want to invest in energy efficiency, seven out of ten don’t know how. This highlights the need for education and knowledge transfer. We need to clearly explain the business case for these investments, focusing on total cost of ownership rather than just the initial purchase price, and help companies prioritise their investments for maximum impact.

What steps can enterprises take to absorb energy efficiency initiatives in their premises or facilities?

When discussing initial actions for enterprises to adopt energy efficiency initiatives in their facilities, the most important step is to achieve clarity. This involves mapping out the key consumption drivers, as it gives users a starting point.

The next step is to identify the levers for energy efficiency. In the industrial context, a significant share of the world’s electricity is used for electrical motion. Consider conveyor belts, for example, when you wash your hands, the water pressure is generated by a pump driven by a motor.

Motors power the HVAC system that we use in any setting. In terms of buildings, there has been a significant shift towards LED lighting, especially in new constructions. However, many older buildings still need attention in this regard. The regulatory aspect plays a greater role here. For example, in the Netherlands, an energy efficiency regulation is applied to commercial buildings. If you do not meet the specific requirements or thresholds, you will not even be allowed to rent out that space.

Different ways are applied to tackle different problems. Countries are tackling it. Unfortunately, there is no one-size-fits-all solution. Every country needs to find its own path forward. But policymakers working in collaboration with industry is the key.

Many traditional businesses in India, including those in construction, manufacturing, and mobility, have embraced electrification in the past decade. However, this shift presents challenges related to power quality and grid stability. How do you see electrification driving energy efficiency?

Transforming to electric solutions is advantageous, and the world is increasingly moving in that direction. From a physics standpoint, combustion-based applications can rarely achieve more than 30-40% efficiency, whereas electric-driven systems can reach efficiencies of 95-97% and, in optimal conditions, even up to 99%. This clearly demonstrates a compelling business case for electrification. Power demand is rapidly increasing, so energy efficiency is key to reducing grid stress and ensuring a sensible total cost of ownership.

I am noticing a generational shift in India, with young leaders becoming more aware of carbon emissions and the growing market competitiveness. This upcoming generation is acutely aware of carbon emissions and recognises that the competitive landscape has evolved over the past 20 years. As a result, decision-makers are increasingly looking beyond just the initial price of an asset. They are now considering the total cost of ownership over the next 10 to 20 years and factoring in various indicators before making their choices. This trend is becoming more apparent in the business landscape.

How will the growing adoption of automation and digitalisation in India, along with advancements like AI, address historical fears about new technology to bring industrial competitiveness and improve energy efficiency?

Throughout history, technology has consistently changed the way things are done, typically providing new opportunities. When I think about automation and digitalisation, I see that India still has a lot of potential. There’s no downside to further automation because it will only enhance competitiveness, bring quality, and free up people to pursue other tasks.

If we look back at history from the steam engine to industrialisation, there has always been fear surrounding the adoption of new technology. However, once that fear is overcome, the transition happens rapidly. I see India now at a pivotal moment, beginning to adopt robots and various digital solutions on a large scale. To achieve energy efficiency, implementing digital solutions and automation is essential; there’s no alternative. Digitalisation provides transparency by creating a continuous flow of data that analyses operations and offers clarity. With the introduction of AI, data can lead to actionable recommendations.