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The tremendous climate mitigation potential of energy efficiency has been well established. IEA analysis, as presented in the Efficient World Strategy (EWS) for example, shows how available and cost effective efficiency measures alone could achieve an immediate peak in global energy-related carbon dioxide (CO2) emissions, and then see levels fall significantly lower than today by 2040, representing a major share of the emissions abatement required under the goals of the Paris Agreement.

Unfortunately, the world is far from capturing efficiency’s full potential. Indeed, the IEA’s most recent analysis of the global state of efficiency, detailed in our latest market report Energy Efficiency 2019, confirms a worrying trend:

global efficiency improvements are slowing down rather than speeding up.

This means the world is missing a major opportunity, not only in terms of cost effective emissions reductions. After all, energy efficiency allows countries to create more value from energy resources that drive economic growth. In 2018, for example, primary energy intensity – an important indicator of how much energy is used by the global economy – improved by 1.2% compared to 2017. This improvement represents the extraction of an additional USD 1.6 trillion in economic value from global energy use, compared with2017.

However, 1.2% also represents the slowest rate of improvement documented since 2010, the third year in a row the rate has declined, and well below the average 3% improvement consistent with the EWS, meaning with what is possible today using readily available energy efficiency measures(see Figure 1).

Had energy intensity improved at 3% every year since 2015, the world would have generated a further USD 2.6 trillion in value in 2018 – close to the size of the French economy – for the same amount of energy.

In climate mitigation terms, a 3% annual improvement in energy intensity since 2015 would make a key contribution to an earlier peak in global emissions. Instead, emissions rose 1.7% last year, the highest rate of growth since 2013, and 70% higher than the average increase since 2010.

The global slowdown on efficiency is due to several factors. In the short term, economic factors are driving up energy demand faster than efficiency improvements are able

to offset those demand increases. Energy-intensive industries in China, for example, increased their share of industrial production and pushed up demand for all primary energy fuels. Weather played a part as well, particularly in 2018, when for example a colder than usual winter in North America drove up heating related energy demand.

Longer-term structural and societal factors are also contributing to the slowdown. Consumers are buying larger cars, and typical vehicle occupancy rates have fallen. And despite improvements in vehicle efficiency, energy use is growing, in part because sales of larger less- efficient cars are growing. People are also living in larger homes and using more devices in those homes. We have seen a significant growth in the average size of homes in all economies, the energy impacts of which have consistently matched or outpaced efficiency gains since 2014. In industry, the impact of structural change away from energy- intensive industries has gradually weakened since 2013.

Meanwhile, policy efforts and investment levels have been insufficient. Growth in the coverag of efficiency policies was marginal in 2018. The strength of those policies, such as increases in energy performance standards for appliances, also increased only slightly, and below the five-year historical average. In parallel, levels of investment targeting efficiency have remained largely unchanged since 2014, and well below the levels required to capture the cost-effective opportunities available (see Figure 2).

Many global leaders are becoming more aware about the importance of getting efficiency back on track. A new Global Commission for Urgent Action on Energy Efficiency was launched in June of this year during the IEA’s biggest ever Global Conference on Energy Efficiency.

The Commission has 23 members, including its honorary chair the Irish Prime Minister, and is composed of national leaders, current and former ministers, top business executives and global thought leaders. With analytical support from the IEA, Commission members will examine how progress on energy efficiency can be rapidly accelerated, and develop a series of actionable recommendations that will be announced in the summer of 2020. In parallel, a new coalition of countries, businesses and institutions known as the Three Percent Club, was announced at the UN Climate Action Summit in September, in an effort to drive more ambition towards a 3% annual global increase in energy efficiency.

The IEA is convinced of the critical importance of policy action on efficiency, and of working with policy makers across the globe to design and implement effective efficiency measures. Indeed, global outreach on efficiency is a core part of our activities, alongside all of our research and analytical efforts. In our view, governments have all the tools they need at their disposal to open a new chapter in the story of a more sustainable energy future. With the right ambition, policy action and investments, efficiency can take a leading role in this story, delivering its full potential for economies, climate mitigation and beyond.

Brian Motherway, Head of Energy Efficiency, International Energy Agency (IEA)

Dr. Brian Motherway is Head of the Energy Efficiency Division at the International Energy Agency, overseeing a range of analytical and outreach programmes supporting energy efficiency globally.

Prior to joining the IEA Brian was Chief Executive of the Sustainable Energy Authority of Ireland.

Brian holds Bachelors and Masters degrees in engineering and a PhD in sociology.

 

 

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