You don’t need to squint to see that the clean energy transition is approaching quickly. The silhouette of wind turbines and solar panels installed on the neighbors’ roof are no longer novel – they’re increasingly normal. Investment in renewable energy now makes up 70 percent of all power sector investment. Coal-fired electricity generation in China was down in 2015 while generation from low carbon technologies was up. Low prices pushed investment in upstream fossil fuels down by a quarter. So while decarbonizing our energy supply has been critical, it’s what you don’t see that’s had the greatest benefit to the global climate to-date. Energy demand peaked in 2007 in OECD countries and demand has since stabilized at levels not seen in over a decade. The annual growth in energy demand in China was the lowest it has been since 1999. Global energy intensity improved at a rate three times greater than the average over the past decade. These developments are conflicting with the idea that lower energy prices beget higher consumption. So what is going on?
Another no-carbon “source” of energy has been working in the background to speed up the transition to a sustainable energy system. Analysis from the International Energy Agency (IEA) shows that improving energy efficiency has had the largest role in lowering energy demand and reducing greenhouse gas emissions. Efficiency saved the equivalent of 13 percent of final energy consumption in 2015 in OECD countries. Huge efficiency gains in China over the last decade lowered coal consumption by 350 million tons in 2015. Energy efficiency improvements across these countries lowered emissions by 2.7 billion tons of CO2 in 2015.
How is this possible? While the year-over-year changes in efficiency may appear small, over time its impact can be truly significant. If the efficiency of our lights, appliances, buildings, vehicles and motors had not improved in OECD countries since 2000 we would have added the energy demand of another Japan to the global energy system. Efficiency improvements in China alone avoided adding the energy demand of another Germany.
That efficiency is improving is no accident. Investment in energy efficiency grew 6 percent in 2015 to USD 220 billion. This was driven by policy. Since 2000, the number of policies mandating minimum efficiency levels has grown substantially. The share of global energy consumption from the industries, buildings, products, and vehicles subject to mandatory standards has tripled since 2000. Meanwhile, the average efficiency level mandated by these policies has risen by a quarter. Vehicle efficiency standards covered 74 percent of new vehicle sales and saved 2.5 percent of global oil consumption in 2015 – approximately the annual production of Brazil.
Unlike conventional oil and gas resources, energy efficiency is the one resource that all countries possess in abundance. This resource is at the fingertips of policy makers who can and should continue to broaden and strengthen policies. While efficiency gains to-date have been impressive, they are still far off from where we need to be. To achieve our goal to limit warming to well beyond 2 degrees, efficiency is a central action. IEA analysis shows that over one-third of all emissions reductions needed are achieved through energy efficiency by 2040. The upshot is that efficiency doesn’t just help us decarbonize, it works to satisfy all of our energy policy goals such as improving energy security, access, affordability. It is the first fuel.
Dr. Brian Motherway, Energy Efficiency Division Head, IEA