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We are all agents of change. And together we can change the world. It is now or never! An EDP podcast that discusses the present and seeks solutions for a more sustainable future.

Catarina Barreiros: Welcome to another episode of the "É Agora ou Nunca" podcast. My name is Catarina Barreiros and today we will talk about energy efficiency. What is energy efficiency, what is the role of renewables in contributing to energy efficiency? Let's talk a little bit about the domestic sector and the industrial sector. And I have two guests with me who will help to us in clarifying these questions. We have João Pedro Gouveia, graduated in Environmental Engineering from Nova, where he also got a PhD in climate change and sustainable development policies. He currently works as a researcher and project manager for the Cense and Drawdown projects. He has also participated in numerous scientific publications and contributed to the book, the New York Times international bestseller, the Drawdown. And he was also recognized as a research worker in the field of energy since 2008, on buildings and climate change. He is also a founding member of DERA and APEEN. We also have with us Jorge Leal, graduated in Mechanical Engineering from the University of Porto. He was associated with energy projects and audits for about eight years. In 2012, he joined EDP in the area of ​​energy efficiency and five years ago he also assumed the position of deputy director of B2B energy services at EDP Comercial. It is there that he works in the area of ​​energy efficiency, specialized technical services and solar photo voltaic systems for self-consumption. Thank you both so much for being here with me. And maybe we start with the first question – a key question – which is: what is energy efficiency? Who wants to start?

Jorge Leal: João, go ahead. 

João Pedro Gouveia: I can start. So, energy efficiency is for us to manage to have an output, the same energy service output with the least possible energy. And, therefore, it is not just the perspective of reducing consumption, reducing comfort, reducing needs, but rather accommodating the same needs with a lesser input and a lower final energy consumption.

Catarina Barreiros: Um-hum. Hum-hum. OK. So, we're talking about... When we talk of energy efficiency, we also talk of reducing the necessary energy and also of the improvement in energy access, which is also a super interesting theme. And I know that you also have done work in the area of ​​energy poverty, and how is this issue of energy efficiency, energy poverty, related to it? How are the two of them, can they...

João Pedro Gouveia: Yes, energy efficiency is seen as one of the important pillars for reducing energy consumption in the future, and also for reducing emissions, isn't it? And, therefore, it comes out as an important portion that needs to be invested in, not only in the buildings, in the industrial sector, in transport, in the design of cities, as a relevant pillar. However, when thinking about reducing consumption and reducing emissions, it is clear that renewables always play an important role. And, therefore, in this logic, it is necessary to have a balance between the two here.

Catarina Barreiros: Um-hum. Hum-hum. OK. And since you talked about the industry sector, it was also a point that I wanted to tackle. What is the current status? What… how are we doing in terms of energy efficiency? We are much better than we were a few years ago, there are more technologies, bigger adoption...

Jorge Leal: Yes. In the industry sector, Portugal was a pioneer from the outset. In 1982, we launched a regulation when nothing was done in Europe yet, in which we imposed on industries with higher energy consumption, more intensive in terms of consumption, that they had to carry out energy audits, that they had to establish energy rationalization plans, where they identified measures that they then had to implement and comply with. And so, in 82 we were already doing this. Europe was not yet very aware of this, of these issues. However, within the industry sector, in 2008 we had a review of the regulation that imposes these measures, we widened the portfolio of companies that have to comply with these regulations. So, I would say that, in industry, there is a huge track record of made history, already accomplished, but there is still enormous potential to capitalize on. So, there is still a lot of work to be done here in order to become much more efficient.

João Pedro Gouveia: Yes and it seems to me that in regard to what was done in industry, I agree with it. In buildings, and in the residential and service sectors, this did not happen. The first thermal regulation for buildings appeared in 1990. In Europe, central Europe and northern Europe, regulations have existed since the 1960s, for example. And then, what happened was, in my perspective, energy efficiency was being neglected by governments, by companies, in terms of buildings, in the residential and services sectors. And I think there is an explanation, also very straightforward. To start it off, there were not very specific goals for different types of users and consumers, which existed in the industry sector. Then, in industry, there is also that perspective of cost/effectiveness, therefore, of profitability in terms of business. Therefore, they were replaced by a more efficient engine, a boiler or by another type of fuel, there was an immediate prospect of financial return. Which in terms of buildings, in households and in smaller service companies is not obvious. Therefore, that is why in Portugal we have a great lack of thermal comfort, the energy poverty issues. I would even say an underconsumption [00:05:00] of final energy when compared to other European countries, with the same climate and the same conditions. And, therefore, all this created a very big delay in the country. And actually, if we look at the last 10, maybe 20 years, little has been done to improve energy efficiency in buildings.

Jorge Leal: Yes. Yes, I would say that there were attempts with the regulation after the evolution of the 1990's, right? With the appearance in 2006 of the new regulation that imposes the energy certificate...

Catarina Barreiros: Right. 

João Pedro Gouveia: Yes.

Jorge Leal: ... and all that work. But still, it is clearly not enough. And what we see today in buildings' heritage, 70-80% with a very, very low level of certification, right? Therefore, few buildings with A+ class, as a life cycle perspective. This is another key point when we look at energy efficiency, is that the returns on this type of investment are rarely made with very quick paybacks (one year, two years).

Catarina Barreiros: In the short term.

Jorge Leal: And companies often use these metrics in their decision process. In energy efficiency, you do work in the medium/long term and maintain competitiveness because, by the way, I would like to emphasize this part, which is that energy efficiency is another mechanism for companies to be competitive. To reduce your exploration and operating costs…

Catarina Barreiros: Um-hum. And for people, too, isn't it? For the domestic sector as well.

Jorge Leal: Absolutely, absolutely. In other words, as soon as we talk about energy efficiency, we are talking about competitiveness, saving, with the same level of comfort, with the same level of activity. So, without touching the output as I said, but in a much more efficient way, at a lower cost. And, therefore, in the built heritage, we continue to see buildings with many more thermal characteristics, whether in terms of insulation, in glazed openings, in mechanical systems that we then have to renew, and remove all those thermal loads that are present. Therefore, little comfort, the investment is made, but there is no long-term perspective of the life cycle of that system that is there, therefore as a key point.

João Pedro Gouveia: Yes, and what happens, in my perception, is that the construction boom in Portugal took place in the 70s/80s, even in the 90s, when there was no such thermal regulation and what happened was that people wanted to build fast and cheap. And, therefore, we're here today with this stock of buildings, in which 70 to 80% is inefficient, class C or lower. So, below the current thermal regulation it has much worse perspectives, right? And so, the problem now is how to do this transformation. Because in Portugal we have very, very low building renovation rates: 0.05% per year of building renovation. So, in this perspective, when we look at European targets, at the European Commission's strategies – the Renovation Wave, for example, right? – with the European average of buildings' renovation being about 1% per year, with the ambition to triple that rate of renovation. It is necessary to understand the business model for this renewal. How do we integrate the different market players? Because we are talking about a distribution of agents that is very different from, for example, installing a large photo voltaic plant. 

Jorge Leal: Um-hum. Of course.

Catarina Barreiros: Of course.

João Pedro Gouveia: Which there… there are few economic agents, for the transformation of three and a half million homes in Portugal, right?

Catarina Barreiros: Right.

Jorge Leal: Of course.

João Pedro Gouveia: And, therefore, it is very distributed, people also have to recognize the value of energy efficiency and not just think… as maybe it makes sense in industry, which is the financial return, isn't it? Because here there are many, many ... energy efficiency in homes has many broader advantages. In terms of health, in terms of thermal comfort, in terms of productivity… we now, from this Covid perspective, spend more time at home, right? All of this has alerted people – I think – to the problem of the conditions in the house, how they heat up the house, what is the best equipment to heat up the house. All of this is important in this balance. 

Jorge Leal: And from this household perspective, I mean, it applies as a whole, but in the household, it is essential the question of when to purchase the equipment or of when you think about making the “what are you going to do?” intervention. If I'm going to buy a new boiler, for example, to think, once more, that we don't just focus on the moment of purchase, on the cost, but on what the exploration will be: which energy bill will be coming next. Because for 10 years, we'll have that equipment stuck there. After, we will hardly have a direct replacement after that is…

Catarina Barreiros: We are linked to that equipment there.

Jorge Leal: That's going to be a rationalization. And, therefore, that moment of decision, I believe it is critical that there is a vision and a broader life cycle perspective, once more, so that we can make our decisions more rational. Otherwise it becomes... 

João Pedro Gouveia: And that happens when we are talking about an industry, it happens almost naturally, doesn't it? Because there are investment plans, there are business models, there is alternative financing...

Catarina Barreiros: Focus on profitability, right? As I was talking about.

João Pedro Gouveia: But because it is really to make the system more efficient in global terms, of an industry where people at home do not have the same knowledge, right? 

Jorge Leal: Yes. 

João Pedro Gouveia: They don't have the same technical knowledge, they don't have the same investment capacity, they don't have the same perception, because it's very different for me to be investing in air conditioning – it's an active consumption of energy – than for me to be investing in windows. And, therefore, it is sometimes easier – that is perceptible, in the financing that the State has been given – for people to bet more on everything that is equipment, that is easier to acquire and easier to install, than to install insulation on a wall, changing a window, putting insulation on the roof. And all of this is much more structural for this problem that we have in Portugal, also of thermal comfort. [00:10:00] And so, if we bet on it, if we manage to bring the advantages to people and what is the role of this type of transformation, it is much more relevant, in my perspective, than just focusing on the integration of renewable energies, even in terms of equipment efficiency, an air conditioning, a heat pump, whatever, but the passive component, right? 

Jorge Leal: Of course.

João Pedro Gouveia: That I'm transforming my house in order to make it more resilient, and have thermal comfort without having to consume energy because, ultimately, what we're talking about here about energy consumption has to do with emissions.

Jorge Leal: Of course.

João Pedro Gouveia: Energy by itself might not become a problem. 

Catarina Barreiros: Yes, of course.

João Pedro Gouveia: But with the perspective of climate change and the need to reduce emissions, the whole passive perspective of consumption of materials, additional materials, extraction of resources, it's very relevant when looking at the value chain. 

Jorge Leal: Yes João. And I add this: when we look at energy efficiency, when we look at energy intensity and we compare it with Europe, for example, we see that Portugal has an higher energy intensity than most other countries in the European Union, at around 10%. Despite having made a good reduction path, we have been decreasing this energy intensity, even so, we are above our peers. And when we see that we have, for example, a much more moderate climate than our peers, our counterparts - right? - here in the European Union. Therefore, we should, or we would, have conditions to be able to have a lower level, clearly comparing what this standard is. What do I see? We see transport as the main consumer of primary energy in Portugal, at around 36%. Then we look at the buildings and that's why this issue of buildings is so critical. And we also see the industry sector at about 30%. We can almost say it is a third, a third, a third. 

Catarina Barreiros: It is shared responsibility. 

Jorge Leal: Exactly. There are transport, industry, buildings which are clearly what we have to work on. Transport still very insipid, right? Now we start to electrify and, in this way, to somehow decarbonize. The industry component, as I say, I think that's where we've been doing the most. 

João Pedro Gouveia: Yes.

Jorge Leal: I keep saying that there is a lot to do. Therefore, there is a lot and, above all, it is important as we have plenty of SMEs, it is very important...

João Pedro Gouveia: It's very different from big industry. 

Jorge Leal: Of course. It is very important to get down to this mandatory level and, unfortunately, it is due to the fact that it is mandatory and it is not yet the entrepreneur's mindset to look at energy efficiency as a strategic vector of its management. 

Catarina Barreiros: Right, right.

Jorge Leal: But it is extremely important to lower this level of obligation, so that we can expand the range of companies that would be covered by these programs and, later, the buildings' component that we have already been talking here, about the critical condition they are in, for us to change it.

Catarina Barreiros: And, deep down, it's funny because SMEs will have, give or take, the same problem as the domestic sector, it's very dispersed…

Jorge Leal: Yes. 

Catarina Barreiros: …there is often very little literacy from who is making the decisions. This is something that, perhaps throughout the episodes, we have come to realize, which is: the issue is always focused on literacy. Literacy is the component… we don't know of as consumers, as small business managers, the technicalities. 

Jorge Leal: Yes, I would say this, to make a parallel here, it was as if in a company we wanted to start changing. I mean, I'm sick and I start taking the medication right away without taking an X-ray first...

Catarina Barreiros: Without going to the doctor. Right.

Jorge Leal: ... without going to the doctor, exactly. Therefore, in companies it is relatively similar. We don't know and we think we've started to change some things and, therefore, there is little study, decisions are often made on impulse, it's because, well… I know someone, I already have my service provider who will guide me. But there is little study. There are few audits, few installations of energy monitoring systems that help us to effectively understand what consumption is like and then, on a factual basis, being able to be much more assertive about what the interventions we carry out.

Catarina Barreiros: Of course.

Jorge Leal: Therefore, I think it is still lacking here. Well, there are good examples as well. Fortunately, in SMEs we have been following a path and there are some good examples, but, there is no doubt, there is much to be done.

Catarina Barreiros: Of course.

João Pedro Gouveia: That, to me, reminds me, let's say, that idea of the three Ds of energy, doesn't it? On the part decarbonisation end, digitization and even from the perspective of energy distribution and democratization. Because for example when we are talking, OK, the decarbonization part is easy. Easy... not easy, but...

Catarina Barreiros: But we know how, yes.

João Pedro Gouveia: It's very active, you can see the integration of renewables, how to achieve solar, wind and so on. On the part of distribution and the distributed network, the importance of systems resilience. And here, that perspective of how a company, how a house, how a State services building, can integrate renewable energy, but in a distributed way. Now, a good example - this week in Texas, right? - we have heard the problems of three million people without access to energy, with, -10°C at home.

Catarina Barreiros: Without light.

João Pedro Gouveia: And this shows the role, not only of actively building more plants, more renewable energies, but the role of energy efficiency itself. Because if those houses – of course up to a certain limit, it's very cold – were more efficient, if there were…

Catarina Barreiros: American construction is...

João Pedro Gouveia: Yeah. But if they were more efficient on their own, if they had a more distributed energy network, so, the role of decentralized photo voltaic, for example, [00:15:00] let's imagine a future where this...

Catarina Barreiros: Um-hum. A community that could be...

João Pedro Gouveia: Energy communities with batteries, maybe this problem was not so widespread. We are talking about an entire city, an entire state with almost no energy.

Jorge Leal: Of course.

João Pedro Gouveia: And, therefore, the role of efficiency in this perspective, of whether I have an energy unit and whether I can be more efficient using it, is very, very relevant, isn't it?

Catarina Barreiros: Of course.

João Pedro Gouveia: And then I was also talking about the importance of digitization in this process. And here enters the knowledge that was being referenced: if I have smarter meters, if I have control systems and if I know how I'm consuming energy, it's very relevant for the solutions. Because, OK, I've already realized my consumption profile, that equipment in my... consumes more... and when talking about a house, we're talking about a small industry and a big industry. It is exactly the same process.

Jorge Leal: Yes. Yes, yes. 

João Pedro Gouveia: The scale is different, but the process is the same.

Jorge Leal: Yes. The big advantage... and nowadays with the price of these equipment falling dramatically, it's affordable.

Catarina Barreiros: That's what I was going to say.

Jorge Leal: Nowadays, it is no longer an utopian thing that only big companies can deal with a super complicated system. No. It is possible. It is available.

Catarina Barreiros: Even for people and small businesses.

Jorge Leal: Yes. Clearly.

Catarina Barreiros: I remember reading in the Drawdown about intelligent thermostats, and I thought: This is likely a very expensive thing. Then I went to check it, and there were adapters for existing equipment that cost 20 or 30 euros, and I went to check and found out that even EDP has such solutions.

Jorge Leal: Yes. Correct.

Catarina Barreiros: I mean, it's something that is relatively accessible to the majority of the population and a person thinks “€20.00. €20.00. In two months of electricity, this is paid if I manage to lower my consumption by 40%” And I manage to do it, because I know what I'm consuming.

Jorge Leal: Indeed. Above all, I think, it's this question of knowing, isn't it? First thing is to measure. We have to understand what is happening.

João Pedro Gouveia: Of course.

Jorge Leal: Where am I consuming, what are the problems I have, what are the equipments in which it really makes a difference to intervene, to control. Then, we move on to a logic of what measures I will implement, how will I finance it, how will I guarantee that technically this is all very consistent and well harmonized. And then the other part is how do I keep saving. This is another concern… and in the industry this is very palpable, a very growing concern is: we made the investment, how do I now guarantee that savings are retained and prolonged over time.

Catarina Barreiros: Yes, a profitability. 

Jorge Leal: A profitability. Because sometimes – and we have, unfortunately, many cases in the country – we make the investment, we even make a state of the art investment, often with excellent equipment, and then the exploration because we don't have the proper training, because we don't have the technical knowledge, because of several reasons.

Catarina Barreiros: Or because the equipment was not adequate to our need.

João Pedro Gouveia: That is why knowledge is very important. It is knowledge of the real situation, of what is happening, right? Hence the logic of big data and more data, data access, humidity sensors, temperature sensors, energy consumption... all this is very relevant for these combinations and analysis. Because I can have consumer profiles, I can have a way to balance the reduction of energy needs, - for example, with active air conditioning or with the integration of renewables - in a more cost-effective way for the system, right?

Catarina Barreiros: Right.

João Pedro Gouveia: We are talking from the perspective of the house, but if we are going to expand, for example, what is the role of energy efficiency on a global scale? Right? When we're talking, and it's a big leap, but it's in a perspective of: "OK, I at home have this cost-effective combination that I can design and understand," but when we're thinking on a global scale with developed countries, growing economies, it's very different. And this is also valid for what are the solutions in each place. Is it not? 

Catarina Barreiros: Of course. 

João Pedro Gouveia: The same rule does not apply in terms of a window. The window that I will install in Portugal is not the same window that is installed in Russia.

Jorge Leal: Of course.

João Pedro Gouveia: And if there is no knowledge of the market, if there is no knowledge of all agents to know which is the best solution for each context, it becomes a problem of lack of discredit in the market and in knowledge.

Jorge Leal: Absolutely. And having in mind what João said: technologies exist. Knowledge exists. There has obviously been a lot of innovation and there has been a lot of reduction in what is the cost and, therefore, this democratization of access and technicians. Knowledge exists. What I think we are still missing is this perspective as consumers, as decision makers of an informed choice to seek this sedimentation of knowledge, to effectively look for where are the technicians who have this knowledge, who can help, and this perspective for medium/long term. We tend to make decisions based on the acquisition cost, because it is cheaper and without this medium/long term vision. And energy efficiency is decisive. We can't solve it.

João Pedro Gouveia: But there is an important point, which is: there must really be confidence in the entire energy efficiency market. If we think about houses, people... not everyone is an expert in the field of energy, nor do they have this objective. And, therefore, they have to trust that there is an entity, if there isn't I will go to my City Council, or I will go to a company or a consultant or other entity, that can give me a reliable, credible package that is a suitable solution for my situation. And so people... there is a great energetic illiteracy, right? But that is why it is necessary. Not everyone has to master all aspects.

Catarina Barreiros: Of course.

João Pedro Gouveia: And here is where the chain is important.

Catarina Barreiros: And that is why presentation is important when dealing with the consumer. For example, we are talking about energy certifications for homes, as there are for appliances, right?

João Pedro Gouveia: Yes. This is very... for me this is a very important point, which is: to value energy certification. And it was said that when buying an equipment I have to understand that if I'm really investing in an A++ equipment that might cost me – a washing machine or a fridge – another €100 or €200…

Catarina Barreiros: But that will…

João Pedro Gouveia:... with their use - and we need to do the math - cost may be recovered by the end of a year. Or at the end of two. Therefore, it pays off immediately. The fridge is the equipment that consumes the most at home. Not due to power, but due to...

Jorge Leal: Continuity.

João Pedro Gouveia:... continuity.

Catarina Barreiros: It is always connected. To conserve food.

João Pedro Gouveia: Exactly. And from this perspective it is necessary to have this... 

Catarina Barreiros: Yes, yes.

João Pedro Gouveia: At the time of purchase of, not only equipment, but for example of a house. I think there needs to be a lot of policies that also value energy certification and the quality of a house when purchasing. Where consumers are able to understand: "OK, I have an A house. What's the difference for me to rent or buy a C house?" And I think it's still not clear to consumers how it can be done or how it is valued. Because there is that dimension, okay…

Catarina Barreiros: You don't even notice the difference between an A and a C. We were talking before we started recording, about that: for a consumer, when they are going to buy a fridge, for example, between buying an A or an A+++, the consumer thinks it's more or less the same thing, because is there in the… when in reality, the difference between an A++ and an A+++ is like the difference from an A to a B.

João Pedro Gouveia: But there are effective indicators of consumption. 

Catarina Barreiros: They are visible. Yes, Yes. 

João Pedro Gouveia: I'm comparing 200 Kw/hour with 300, for example.

Catarina Barreiros: Right, right.

João Pedro Gouveia: In a house, it is related to thermal comfort and people don't realize that they're going to spend, maybe... 

Catarina Barreiros: What makes an impact.

João Pedro Gouveia: Exactly, they don't have that direct connection. And so I'm buying an A-certified house, but I don't see how it affects me in real consumption.

Jorge Leal: Yes, how much more do I pay, isn't it?

João Pedro Gouveia: Only with the use, and we have several weeks of cold weather, do people realized "well, now I have to turn on the oil heater or the electric heater. Look, maybe I should have better windows." 

Catarina Barreiros: Um-hum. The subject of passive houses that you talked about a while ago is a subject related to that, isn't it?

Jorge Leal: Yes, absolutely. And this part of building renovation is finally being looked at, there is a prospect of investing around 143 billion euros to renovate, by 2050, all built heritage.

Catarina Barreiros: It looks like a lot of money.

Jorge Leal: That's what's inside this European bazooka that's being prepared.

Catarina Barreiros: Better than zero.

Jorge Leal: Finally, there is this perspective. Bringing the buildings closer to the concept of the...

Catarina Barreiros: Of the passive house.

Jorge Leal: Passive house and zero consumption, isn't it? A lot to do, because energy efficiency is just that, it's looking at the passive part first, building well, ensuring that we have the correct insulation, that we have well-sized windows, that we have this whole logic of controlled ventilation, which is also another super important point.

Catarina Barreiros: Um-hum. The very building materials that are chosen, the way a brick is oriented in the construction of a house can allow or prevent ventilation, isn't it? I mean things are...

Jorge Leal: Of course. But beware, we have concepts like thermal inertia. All these are concepts that, in short, will bring comfort later, so let's think "what active systems am I going to put in place? How am I going to effectively control the temperature, [for example] of a house?" This is because if we look – and I insist on this point – in a passive way, in the vast majority of our dwellings we would not, in principle, have great cooling needs. Because we have a mild climate. Therefore, we surely have heating.

Catarina Barreiros: Less so in the Alentejo interior. Maybe there. 

Jorge Leal: Yes. Correct, correct. There are always some...

Catarina Barreiros: Still, there is a shade that can be put up to shade the window.

Jorge Leal: And we decrease. Because this consumption… the point is that if we do not have these concerns in the construction phase, in the design phase, later we will have to invest in mechanical systems that try to provide this comfort. And I say try, because many times, even with mechanical systems, it will be impossible to achieve that comfort and we will have this energy bill, and, above all, with this passive part, we should reduce consumption, minimize consumption. And we have the entire exploration cycle of the building, to be able to monetize the investment that we made in the beginning. And that's another false question: but isn't it much more expensive to build a passive building with some bioclimatic concerns? Wrong. It's more than documented, it's not.

João Pedro Gouveia: But then the problem we have is that – and it's not a Portuguese problem, it's a European problem – we have many buildings already built, we have cities.

Jorge Leal: Of course.

João Pedro Gouveia: And, therefore, here the question is not so much – and it seems to me that it is not so much – taking this into account during construction, but since we build little and remodel little, the question is how do I transform …

Catarina Barreiros: The existing ones.

João Pedro Gouveia: …three and a half million, four million buildings in Europe alone. Hence the renovation wave and it even links a lot with the strategies of the European Commission, which we have also been working on, linked to energy poverty, which is: how are we able to mitigate energy poverty with energy efficiency? And what are the strategies, what are the business models, what are the agents, what types of innovative financing to effectively transform [00:25:00] the existing building stock. In historic neighbourhoods. We also have to work on that perspective. How can I, in a historic neighbourhood, have more innovative solutions? Even the concept… an idea that is: positive energy neighbourhoods, much talked about now in the European goals. The projects that exist on a European scale are in new neighbourhoods. This is easy. Solutions exist.

Catarina Barreiros: From scratch, isn't it?

João Pedro Gouveia: It is easy to build from scratch. Now, how do I do this in a neighborhood of Lisbon, or in Porto? That is what is difficult.

Jorge Leal: Right, no doubt. João says it is easy and I think it's not that easy. Because, unfortunately, we still continue to build in a very bad way.

Catarina Barreiros: Because the builders don't have this literacy either, right? 

Jorge Leal: Yes, of course.

Catarina Barreiros: Building a passive house, we all know what we are talking about.

Jorge Leal: Right.

Catarina Barreiros: I studied architecture, I don't know about it because of what I studied, it wasn't taught there.

Jorge Leal: Right. But this is another point that I think is also a pillar in this transformation that we want to make, which is the issue of training. We say: the technicians are there, the techniques – above all it is: the techniques are already there, very well known, mature.

Catarina Barreiros: Yes.

Jorge Leal: The training of technicians who are… agents who work in this sector…

Catarina Barreiros: It's slow.

Jorge Leal:... it's slow. And I think there is a lot to do here.

Catarina Barreiros: Even in renovation.

João Pedro Gouveia: And the role of regulations is also a little bit like that. 

Jorge Leal: Of course.

João Pedro Gouveia: There may be a lag, but I think that in the regulations we have carbon neutrality goals in Portugal for 2050. We have the National Climate Energy Plan for 2030 with goals… these goals must all be ambitious. And that ambition must lead to ambitious regulations.

Jorge Leal: That's it.

João Pedro Gouveia: Because a building I build today will be here in 2050. And so, if I'm not applying the best techniques that exist, the best materials that exist, we are up for a bad start.

Catarina Barreiros: I won't be able to be neutral in 2050.

Jorge Leal: We're already making the mistake of creating a problem that we'll have to solve later, right?

João Pedro Gouveia: Yes.

Jorge Leal: And, therefore, the moment of construction, the purchase of equipment, the part where we are creating, conceiving, is decisive for what will be the next 20, 30, 50 years. A building has a useful life, doesn't it?

João Pedro Gouveia: And, with this in mind, I wanted to give a global idea of the role of energy efficiency compared to renewables. In prospective studies for 2050 on a global scale, it is identified that renewables and fuel substitution will play a very important role in reducing emissions in line with scenarios, for example, of 1.5ºC. This reduction represents 80%, therefore the replacement of fuels and this prospect of integrating renewables will represent 80% of that reduction. Energy efficiency represents only 20%. What is the important role of energy efficiency? It is going to attenuate the economic growth foreseen with the increase of the world population, with the increase of needs in several countries (in Southeast Asia, even in Africa, in Latin America) with the need for more things.

Catarina Barreiros: Right, right. We are consuming more and more. 

João Pedro Gouveia: More and more. And the role of energy efficiency, in the scenarios seen at global level, is to mitigate.

Jorge Leal: The minimization of this increase.

Catarina Barreiros: Exactly.

Jorge Leal: It's minimizing, which unfortunately also shows that it is necessary... not unfortunately, but we need to think in an integrated way. It's not just looking at like "good, energy efficiency will solve it". No, it won't.

Jorge Leal: Of course.

João Pedro Gouveia: It will mitigate growth, which is very relevant, but in that perspective, unfortunately, it will not make us reduce emissions associated with reducing energy consumptions. And so, this role of integrating renewables, the electrification of systems, the part of energy efficiency of equipment and the passive component, they're all very critical to this evolution.

Jorge Leal: Deepdowm. all of these are part of the same ecosystem, so to speak, to make an energy transition.

Catarina Barreiros: From a package. Yes.

João Pedro Gouveia: No doubt! We cannot rely solely on renewables, or only the passive component, renewables, various types of renewables.

Jorge Leal: Exactly.

João Pedro Gouveia: Because then, for example, there is that potential discussion: "I can't only have solar, I can't only have wind." And there's a balance here... 

Catarina Barreiros: It is the efficiency of the energies themselves.

João Pedro Gouveia: Not only the intrinsic ones.

Jorge Leal: It's a mix, it's a mix we create.

João Pedro Gouveia: It is a mix, it is the optimization of the whole energy system. And when we're talking on a global scale, that's it: We can't have the whole world on solar. Perhaps there are countries where it has to be waves, in other countries there's the use of biomass and the use of waste.

Jorge Leal: Right.

João Pedro Gouveia: Therefore, the combination and panoply of solutions is very relevant: We do not bet on a single horse only.

Catarina Barreiros: Yes, yes. 

Jorge Leal: Yes. And this perspective of the energy mix that we have been constructing, and on our basis today, more and more renewable, it has begun with good intensity, has allowed us to lower, for example, our energy dependence as a country, hasn't it? If ten years ago we had 80% of this dependency, today we are at 75 and the goal we have is to reach 65% in 2030. Therefore, the growth of renewable energy, especially solar - clearly here the solar will have a role, as our PNEC, our National Climate Energy Plan, also states - to grow it eight times. Be it the decentralized solar, so with the possibility of democratization of access, with the ordinary citizen being able to produce his own energy, or at least part of it. 

Catarina Barreiros: Right.

Jorge Leal: And, therefore, in a logic of self-consumption, the consumer produces the product and consumes it at a local level. But also via centralized power stations [00:30:00] and by the installed power. Therefore, in the solar growth, the wind will surely also continue to be a vector, especially with hybridization.

João Pedro Gouveia: Yes, and efficiency. Technologies are more and more intrinsically efficient. 

Jorge Leal: Of course. 

João Pedro Gouveia: So we have wind with much larger blades... 

Jorge Leal: Correct. 

João Pedro Gouveia: ... much higher capacity factors, every year the costs of these technologies, especially the solar and now more recently of the batteries, there is a lowering of 80% of the costs a year. All this will democratize access, make it easier to integrate these technologies into the market.

Jorge Leal: And yes, I believe that this digitization capacity to create such control mechanisms will also be critical because, for example, when the batteries are massively adopted and get coupled with self-consumption solar photo voltaic systems, on a basis, again, let's talk domestic, it will then be necessary to have control systems that allow for this management of when I do a battery charge and discharge. And it radically changes what will be the way we relate with energy. 

João Pedro Gouveia: Portugal is already a good example of this, isn't it? We have the management that REN makes of transmission, of electricity transport, also EDP at various scales. Portugal is a good example. Portugal is one of the world's countries that has managed to integrate variable renewables the most, isn't it? Wind... Right, and this is very important also to show that there are various perspectives: Decarbonize, digitize, democratize. All this is very relevant in the various dynamics. 

Catarina Barreiros: And they are not incompatible. And that's what's funny to see. Many times, we think we have to make a choice. And that we have to choose: Either it is democratic or it is... but the truth is that when we bet on energy efficiency, on renewables, we bet on better long-term solutions that are also better for local economies, don't we? The question of decentralizing and being autonomous is that if a snow storm, we will not be left without energy.

João Pedro Gouveia: Or a drought in Portugal. 

Catarina Barreiros: Or a drought, yes. It is more likely in Portugal.

Jorge Leal: And a component that I was talking about, on this issue of local communities, has to do with the capacity of energy efficiency to generate local employment. That this is another super important aspect of energy efficiency, that it is ultimately an excellent promoter. Because for every million I invest I create about 15 new jobs.

Catarina Barreiros: OK.

Jorge Leal: And therefore this is another very important local drive.

João Pedro Gouveia: In the construction of dwellings I will not... 

Jorge Leal: Yes. I don't import, do I?

João Pedro Gouveia: I don't import a contractor or a business.

Catarina Barreiros: Right.

João Pedro Gouveia: Therefore, this is also very relevant: The employment that this perspective of buildings' renovation, technologies spread throughout residential buildings and services in the various municipalities are very important for economic transformation as well.

Jorge Leal: Yes. And I also think that it's not a question... for example, looking at funding, because we always think: "How do we do this? Where is there money for this?" And my perspective is that it is not because of lack of funding.

Catarina Barreiros: Incentive, yes.

Jorge Leal: It is not. There are several mechanisms, since... whether they are state support... and now we have seen the plan...

João Pedro Gouveia: The most sustainable houses. 

Jorge Leal: The most sustainable houses.

Catarina Barreiros: That was immediately over requested. 

Jorge Leal: [Overlapping voices] there were already seven thousand applications and, in fact, two thousand were financed.

Catarina Barreiros: Yes.

Jorge Leal: So five thousand remained in stock, waiting to see what is going to happen. A new application has already been announced.

João Pedro Gouveia: Yes. But funding at the European level, as I said in the ELPRE, which is the Long-Term Strategy for Building Renewal, the 143 billion that are planned for, will see if they come to fruition. But, even through banking entities, energy service companies, there are several mechanisms to finance energy efficiency.

Catarina Barreiros: So what is missing? Because we have the solutions, we have...

Jorge Leal: My personal perspective, and from my experience, the lack of that actor, the decision maker - be it through companies, be it through the final consumer, domestic - have a greater awareness that this business is a business that exists, and that they can take advantage of it, not in the short term. It is not in a year or in two years, except for some or other measure, the LEDs, for example, because there are others. But, except for the odd measure, these are not measures that generate returns at the end of one or two years. These are returns of four, five, six years. But they are so in a structuring way. So it's a saving that remains, isn't it?

Catarina Barreiros: OK.

João Pedro Gouveia: But there is also a very important point there, which is often talked about, which has to do with fair transition, isn't there? And when we are talking about this perspective of financing and financing models, and the plans that are launched to support people, here we are, I would say, focusing on the middle class, which has the ability to invest something and then have that return. This was clearly seen in these fundings. And, therefore, it is necessary that all... in my perspective: The whole decarbonization strategy, aligned with the goals of carbon neutrality, of investment - whether private or public - must always have in mind the logic of "how do I support the most vulnerable citizens in this transition?"

Jorge Leal: Of course.

João Pedro Gouveia: There were tax benefits for windows, for solar-thermal, there was support for investment to photo voltaic, support to the electric cars, to the electric vehicles, for the renovation of buildings. But, people who do not have financial availability...

Catarina Barreiros: Those who do not even have a car and who take the bus.

João Pedro Gouveia: Exactly. Exactly.

Jorge Leal: Yes. 

João Pedro Gouveia: How can we integrate them in this transition? [00:35:00] Because we can't get to 2040/2050 in which we have half the population on electric cars, solar photo voltaic, heat pumps...

Catarina Barreiros: And the other half on gas and fossil fuels.

Jorge Leal: Of course. This creates asymmetries.

João Pedro Gouveia: And the other half on fossil fuels, paying for access to the network.

Catarina Barreiros: But once again the question of local power, of decentralization, can help us, perhaps, to a fairer transition, I don't know.

Jorge Leal: Yes. I would say yes, but I would say we have been failing. We have been failing. ECO.AP, I think it's the ECO.AP program that was highly focused on renewal. To give an example from the point of view of central and local administration...

João Pedro Gouveia: And it was never achieved.

Jorge Leal: ...and it was never achieve, except for one or other case, to never truly gain traction and be a massive example.

João Pedro Gouveia: Yes. 

Catarina Barreiros: OK.

Jorge Leal: In the framework of the PO SEUR and the P2020, some projects, fortunately, are seeing the light of day and are succeeding in making these transformations. But there is still a big flaw here, from the State's end, of being able to set this example and, in terms of its building heritage, which is immense, once again, to be able to signal this and make this balance between the middle class, which has some other purchasing power, with those who are most disadvantaged and being able to bring forward, in a certain way, this energy transition also to these populations, which is essential for cohesion, right from the start, isn't it?

João Pedro Gouveia: Of course. Of course.

Catarina Barreiros: Yes, so an entity is missing here - isn't it? - the State, which is already predisposed to set an example, well, and that... even in fleets, even... so, I mean, it is a reality, public transport is a reality. So, decarbonization... we were talking about it a bit ago, then transportation, we can talk about electric cars, but most people don't drive their own car. That is to say, they go by public transportation. So, all this then has problems related to a fair transition, doesn't it? Therefore, we need to arrange solutions that are...

Jorge Leal: Able to be adopted in mass and that can reach the entire population, right? Also saying, I feel, then, at last, that issue of the ECO.AP program not going so well, that many municipalities have been able to recently do work in this area. For example, in the management of their fleets, we often see this electrification starting there. And, for example, it is even ahead than many of the private, the private sector. So, there are also some aspects here where the central power is actually setting this example.

João Pedro Gouveia: Yes, for example, in the LEDs in public lighting, this was a measure where it was immediately understood that there was a profitability in economic terms right there, and we clearly have many municipalities in Portugal in this transition. Therefore, it is the first measure, the LEDs for public lighting. Then the rest has to be evaluated, doesn't it? And I also think that here, just like families, such knowledge is lacking. Because a municipality - Portugal has more than 300 municipalities, doesn't it? - this lack of knowledge, not all municipalities have an energy specialist, an electric technician or an engineer.

Jorge Leal: Yes. Yes. João, there I think that intercity communities, for example, and energy agencies, were an excellent mechanism to get these technicians, this technical knowledge into the municipalities, to bring these matters forwards and ensure coherence and consistency on what is done.

João Pedro Gouveia: Those entities can be very important even - I have been speaking a little bit about this - as that aggregator of energy knowledge as well. If I want to renovate my house, I live in Bragança, I want to renovate my house, I don't know anything, where do I go?

Jorge Leal: That's right.

João Pedro Gouveia: And, therefore, I can go to my parish council, which is possibly harder because it is even more decentralized, but perhaps to the municipality, either a CIM or a separate energy agency in the region, can be very helpful in helping people through this transition. It is the axis. Nobody can go and talk to the government, can they? "I want to invest". But there is an important intermediary there.

Catarina Barreiros: Right.

João Pedro Gouveia: Yes, especially because there are many measures that are behavioral, that do not require investment, there are many measures that are, in short, with some investment but that the return is still - when we look at the life cycle of that equipment, of that system that is there – 20%. If a solar thermal system, for example, has an expected service life with some maintenance of 20-25 years. If I have to wait 5 years to get that investment back, well, I will have 20 years yet, 15 to 20 years of fruitful use, won't I? 

Catarina Barreiros: Fruitful use…

Jorge Leal: It's positive, isn't it?

Catarina Barreiros: Right, right.

João Pedro Gouveia: This is transformative. Therefore, there are many measures that can be acted upon and that people can really take. That is another thing that I think is interesting and that is not yet widespread, it is that we... every citizen really has the power to trigger a number of measures that will impact his energy bill. I always like to say this: the invoice is the multiplication of a price for consumption.

Jorge Leal: Of course.

João Pedro Gouveia: And I can work with kilowatts/hour. 

Catarina Barreiros: It is that control, is it not, that I was speaking about.

Jorge Leal: That's what people can understand.

João Pedro Gouveia: Therefore, if it enters what is our range of action. What can I impact? What can I decide? Where do I really have decision-making power?

Catarina Barreiros: Yes.

Jorge Leal: But then it also brings us to - what I see a lot in the discussions of ordinary citizens, as such - in which they look at the invoice and... it's not about understanding the invoice, it's just: "How did I go 20€ up this month? Why?" Because they do not have this knowledge, we do not have that knowledge in our house, how much is the oil heater consuming, the air-conditioning working for ten minutes consuming. "Is it better to use air conditioning or an oil heater?"

Catarina Barreiros: Just the heating of the sanitary waters. Most people are unaware of the impact that the warming of sanitary waters has on the bill. I mean... [00:40:00] the truth is that there are behavioral things that we can apply at home. We are, in our home - not wanting to make it too personal - but we managed to have half the energy consumption of people who have the same lifestyle as us. From behaviors that derive from knowing that half of our consumption is in the fridge and in the heating of sanitary waters and, so, what can we do about that? Ok, make the most out of it when waters are heated up, we have an intelligent thermo-accumulator, for example, that we manage to, so... of course these are more specific things, but the LEDs, the so-called LEDs that we were talking about, such an important measure, one LED costs 1,00€ nowadays. It's not like ten years ago.

João Pedro Gouveia: Like five years ago.

Catarina Barreiros: Like five years ago.

Jorge Leal: Right. But this issue, for example, of hot sanitary waters is essential, because lighting accounts for about 4 to 5% of the electric consumption of a dwelling.

João Pedro Gouveia: People think it's much higher too.

Catarina Barreiros: Yes, it is only "turns off the lights!" But it is not: "Do not take a fifteen minutes bath with boiling water!"

Jorge Leal: Exactly.

João Pedro Gouveia: That's it.

Jorge Leal: And, therefore, we make LED investments, excellent, great, but the concern with sanitary hot water is fundamental, isn't it? Because if we do not solve it... and we have hours of sunshine in our country as they do not exist in central Europe. And, for example, Austria about a decade ago launched a program where it installed four million square meters of solar thermal panel.

João Pedro Gouveia: We missed that process.

Jorge Leal: And we don't reach that figure, we have... what? 400, 500 thousand square meters of installed panels, and we have hours of sunshine that central Europe does not have.

João Pedro Gouveia: Yes. Yes. No doubt.

Jorge Leal: So, there are a number of measures here that we can trigger, which are available. We need to train technicians and then give this proper assistance, because we have also had bad experiences in the past. To start it off, in solar thermal which costs us a lot, because when we break consumer trust it becomes very difficult and it takes a lot of time - I would say at least one generation - to recover it.

João Pedro Gouveia: That is why the dissemination of good practices, of a good functioning: "I changed this window, that worked and I am seeing the impact...". These stories are also important to people. From the perspective that people don't know what they should choose, right? They can say: "Well, I have 5000€ here. Where will I spend it on? Will I buy a heat pump, will I change my window or will I install insulation?" This lack of knowledge is really relevant. And so we need to find support for consumers, for this logic.

Jorge Leal: Of course.

Catarina Barreiros: This is a good question, perhaps, to move towards a last question, that is: Effectively, where can we act that has... that is more efficient? What if I have... I have limited resources, where should I act first? Which is it - of course there are answers here to the industrial sector, governments - but if we had to do a life cycle analysis, almost, to the energy efficiency solutions that already exist, which are going to be - maybe if each of us says one we can reach two - the most important?

João Pedro Gouveia: We have already spoken about this here. The passive component of the dwellings, focusing on buildings, is essential. That is, I can't invest first in photo voltaic if I haven't solved my problem yet...

Catarina Barreiros: Of construction, therefore.

João Pedro Gouveia: ... of construction. What do we in many people see as well? Invest in air conditioning, have a good air conditioning, have a heat pump, but then ends up heating up the street.

Catarina Barreiros: Right. 

João Pedro Gouveia: Because... and you see that a lot. People have this perception, which is: "I bought an oil heater, it was actually cheap, I'm using it. But I have to constantly warm it up. It has to be on for eight hours overnight, because otherwise I'll be cold". And then I am spending money, I am spending energy, with all the consequences, emissions and so on. But, well, the structural component, the windows, the walls, the roofs of the dwellings, for me it is the first measure.

Jorge Leal: Yes, the passive component. Clearly. I agree, I could only.

Catarina Barreiros: Right.

Jorge Leal: And you touched these two points... if we talk about residential we have to deal with the kitchen equipment part, especially refrigerators and everything that is connected to confection, and the part about the hot sanitary waters. So, these are the two issues where, I would say, it is worth putting the whole focus right away, where people should start, because they represent 60 to 70% of their energy consumption and, therefore, it is not worth really looking at others before we truly solve these two. 

João Pedro Gouveia: And we covered the three main ones, didn't we? The kitchen component, the heating and cooling component and the hot waters component. And so we already have a combination here. 

Jorge Leal: Of course. If we move on to industry, or to companies. To companies. It does not need to be industry, for companies, what I can recommend is: energy audit.

João Pedro Gouveia: Um-hum. 

Catarina Barreiros: OK.

Jorge Leal: Let's measure, let's understand, let's do an X-ray, if you allow me the expression, how is the company, what am I consuming, so then, right there, we take much better informed decisions, much better supported.

Catarina Barreiros: To act today, right? In order not to happen what we were talking about in fifty years' time, not having carbon neutrality due to a decision of today. So, it remains for us to say that it is now or never!

We are all agents of change. And together we can change the world. It is now or never! An EDP podcast that discusses the present and seeks solutions for a more sustainable future. Follow the It's Now or Never podcast on Spotify or at edp.com.