3FOOD

Third Industrial Revolution Consulting Group
Also embedded in Table 6 are data that show two key highlights. The first is a small net cost in
the initial year of the TIR innovation scenario. Assuming the initiatives begin in the year 2017,
initial policy costs and capital outlays create activity for which there are no immediate net
savings. Hence, the TIR Innovation Net Energy Savings are a negative €14 million in that year.
But the second key highlight reveals a significant reduction in Luxembourg’s overall cost of
energy services in subsequent years. Rather than a suggested annual cost of €2,190 million in
the Reference Case, for example, the TIR Innovation Scenario shows a much smaller energy bill
of €1,369 million—an annual savings of €821 million by 2050. There is one minor caution that
was previously-discussed and that needs to be raised once again. The €821 million cost
reduction represents what might be termed gross energy savings. A more useful metric is the
net energy bill savings in that same year. This mirrors the costs of related programs and
policies, as well as the amortized payments made for the energy efficiency upgrades which
equals €336 million. Therefore, the net savings in 2050 is €485 million. This point is very similar
to the discussion surrounding Figure 3 which tracks the range of average annual expenditures
over the period 2016 through 2050. In that period, the average annual energy savings of €420
million is actually closer to €250 million when the added program costs together with the
amortized energy efficiency upgrades are also included.
At the same time, however, there are large reductions in the cost of externalities highlighted by
the Stanford University report, which if included in the assessment here, would further extend
the benefits of the TIR Innovation Scenario. In addition, there are the larger productivity returns
that come with the evolving interoperability of the Internet of Things TIR infrastructure, as
noted by the ACEEE, Cisco, General Electric, McKinsey, and AT Kearney studies. The productivity
benefits would also increase the robustness and vigor of the Luxembourg economy. Although
these gains are generally referenced among the last four economic drivers identified in Table 1,
they are not included in this particular assessment because of the paucity of impact-specific
data that are collected and maintained to evaluate these outcomes. This point further
underscores the importance of generating new metrics and building new analytical techniques
that can enable policy makers and businesses to more effectively evaluate future decisionmaking
as suggested in the discussion that follows.
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