As world demand for energy increases due to rapid economic growth and urbanization, energy efficiency measures have shifted to the center of energy policy agenda globally. With an annual growth in electricity demand of 7 to 8 percent, and with its vibrant economy and young population, Turkey has taken bold steps toward achieving policy objectives for its untapped potential in energy efficiency.
Conventionally energy efficiency, perceived as the reduction of overall energy demand, goes beyond a reduction in energy demand. The term was elevated with the phenomenon “the rebound effect”, meaning that the aim of improved energy efficiency is not merely the reduction of consumption but rather the ability to access more energy services. The term ‘Energy Efficiency’ has evolved to such a degree that it is considered a major energy resource and is identified as “ the hidden fuel” by the International Energy Agency, in its report on the benefits of energy efficiency.
Supporting energy efficiency would generate a number of benefits for developing economies by expanding energy accessibility, improving the overall industrial output as well as increasing the affordability of energy services and strengthening the resilience of the energy sector for climate mitigation policies.
In comparison with OECD countries, the average energy intensity of the Turkish economy is considered ‘energy intensive’. However, Turkey’s energy efficiency improved significantly thanks to the recently initiated regulations and legislation which have been put in place. In 2004, in order to comply with the EU acquis, an energy efficiency strategy was introduced, outlining the formation of an institutional and financial framework focusing on energy saving investments. In 2007, the Energy Efficiency Law (5627) was ratified, providing a legal basis for the promotion of energy efficiency. This law enabled Turkey to be more competitive and achieve sustainable economic growth in the long term. Additionally, with this law, the administrative structure overseeing the implementation of related policies has also been formed. An increase in overall public awareness on energy efficiency policies, the implementation of penalties for non-compliance as well as incentives for further improvement in the field of energy efficiency have been clearly set out. All these legalities and regulatory framework requirements have been harmonized with those in the European Union.
Turkey has great energy saving potential and to benefit from this, a variety of international funding is available for use. Energy efficiency projects which are funded by international organizations as well as by Turkish Banks serve the current state of energy efficiency well by providing a mechanism for the promotion of energy savings. Recently, the European Bank for Reconstruction and Development (EBRD) pledged a total of €550 million in funds for energy financing focusing on energy efficiency in Turkey. Another project supported by the United Nations Development Program (UNDP) was run between 2010 and 2014 to promote the adoption of energy efficient technologies, with a budget of $5.6 million.
A World Bank report on Turkey’s energy efficiency policy notes that Turkey can save up to $3 billion in its energy intensive industrial sector. This accounts for thirty-nine percent of the total final energy consumption as the largest energy consumer. In particular, sectors such as iron and steel along with the subsectors of cement, glass and bricks could help Turkey save approximately 8 million tons of oil equivalent (toe) in energy annually.
Another notable evaluation is with the energy saving potential in the building sector, equal to 7 million toe, or equivalent to thirty percent. Among the subsector of buildings, the greatest portion goes to heating, which makes up eighty percent of overall energy consumption in this sector. Thanks to the major overhaul in this sector, new builds are required to meet EU thermal insulation standards. However, the implementation of these regulations and their monitoring needs to be well managed, which otherwise would become a major challenge for law enforcement. Lastly, losses in electricity generation, transmission and distribution, which reached fifteen percent from 2011 to 2015, needs to be addressed through upgrading equipment in the grid system and by increasing the frequency of maintenance work.
Turkey has taken a step forward towards a more energy efficient future by initiating a policy framework to meet the country’s energy demands. To tackle the complex challenges of energy efficiency, Turkey needs to use its limited resources more efficiently, which requires a timely, well-established and balanced policy design, reflective of Turkey’s distinct economic character.