[MUSIC] Welcome back, in addition to discussing renewable energy sources we also need to discuss energy efficiency. Because in many ways the cleanest and cheapest kilowatt is the kilowatt that we don't use. So improved efficiency allows us to use less energy and that is a great contribution to decarbonization of the energy system. So it this expected in all scenarios that improved energy efficiency will play a major role. Efficiency has been improving steadily in energy consumption. We need to expect that in the future it will continue at a fast pace. Here you see the expectations of the International Energy Agency for improving efficiency in the coming decades and the role that it plays, energy consumption globally declines a little bit. It is the gray dots in the middle of the green bars, the net increase in energy consumption, and that is the result of two contrasting developments. On the one hand, increased consumption due to increased activity, basically increased income. And improved efficiency which is represented by the yellow bars due to improved technology and uptake, and also some restructuring of the economy represented by the blue bars. The next slide tells us how improved energy efficiency has a crucial role to play in shifting from the new policy scenario, which is what we may expect to happen on the basis of existing policies. Not existing only, also policies that governments have announced for the future and not yet implemented. And the agency's sustainable development goals scenario, which is, if you wish the desirable outcome in view of the Paris Agreement, and the UN Sustainable Development Goals. And as you can see, the role of efficiency is represented by the two yellow sections in this graph, and it is a fundamental contribution to the total. So efficiency is very important, we need to accept and understand that improving energy efficiency requires, on the one hand, improved technology, which means producing more efficient products, more efficient machines. But it also requires acceptance and appropriate behavior from the users who must buy their more efficient products because the simple availability of more efficient machines is not sufficient. They also must be adopted and consumers must also behave in such a way that efficiency is used for saving energy rather than for obtaining better outcomes in keeping the energy consumption unchanged. Price signals can achieve this outcome, because they will not only encourage consumers to opt for more efficient machines but also to use them in such a way that their energy consumption will be reduced. Lighting offers an easy example of improved energy energy efficiency because we now have the technology of light emitting diodes, which is really very significantly more efficient than the traditional technology of incandescent light bulbs. The same amount of light which used to be obtained from a 100-watt incandescent light bulb is today available from a 4-watt light emitting diode unit. So the difference is really huge and yet consumers still need to be convinced to change their old bulbs with LEDs and not everybody does. Of course LEDs are more expensive than the incandescent light bulbs, so that is one important thing, convincing the consumers, and the second is also that even when they are convinced they still need to pay attention to switching off the light when they leave the room. In general, buildings are a major point of energy consumption, energy is consumed for lighting, for heating or cooling, for cooking, for operating a large number, in fact a growing number of household appliances that are available on the market. Efficiency has improved for all of this but very unevenly. In some cases the improvement has been quite dramatic, not just for lighting, but also for example for refrigerators, but for other appliances, the improvement has been minimal. The numbers that we have for example for the United States are represented in this graph tell us that the majority of a American households still use at least one incandescent light bulb. They also use compact fluorescent units and about 40% have at least one light emitting diode in their homes. So there is still a 60% of households that have not bought even one LED. So the uptake from the consumers has been less than universal, much less than universal. The next graph shows the difference between owner-occupied units and renter-occupied units. This is important not just for lighting, for all investment in efficiency because when a unit is occupied by the owner, the owner is more likely to undertake the investment which is needed to improve efficiency and reduce energy consumption. When a unit is occupied by a renter, the owner may not have much interest in investing because the energy, the electricity bill is paid by the renter. And the renter may not also have much interest in investing, because he may not stay in the unit long enough for the investment to be recovered. So we have plenty of these difficulties and aligning interests and making sure that efficient solutions are effectively preferred by the consumer. So issues related to availability of finance, issues related to how long it takes to cover the initial investment in many cases apply answers maybe more efficient. But it takes many years, even a decade in some cases, to recover the added cost of shifting to a more efficient solution. So all of this in the absence of a clear price signal, it is unlikely that consumers will opt for the most efficient solution quickly enough as would be needed for the purpose of reducing energy consumption. In addition, there may be a so-called the rebound effect. And that means that greater efficiency may stimulate in fact higher consumption because I have a more efficient unit so I can opt for a relatively larger home because it's better insulated, I may opt for a larger refrigerator because it is more efficient. And so not all efficiency gains is translated into reductioniIn energy consumption.