Despite momentum on energy efficiency policy, it is crucial to double the pace of efficiency improvements as record heat and growth in energy-intensive industries boost energy demand, says the International Energy Agency.
This is the key message of the IEA’s Energy Efficiency 2023 report, released today.
The flagship report states that investments in efficiency have grown by 45% since 2020, and in the past year, countries representing three-quarters of global energy demand have strengthened energy efficiency policies or introduced new ones.
Key measures are also becoming more widespread. For example, almost all countries now have efficiency standards for air conditioners, and the number of countries with standards for industrial motors has tripled within the past decade.
However, global improvements in energy intensity – the main metric used for the energy efficiency of the global economy – slowed in 2023. It is set to fall back to below longer-term trends, to 1.3% from a stronger 2% last year. The lower energy intensity improvement rate largely reflects an increase in energy demand of 1.7% in 2023, compared with 1.3% a year ago.
According to the report, this was the result of factors such as an economic rebound in energy-intensive sectors such as petrochemicals and aviation in some regions, as well as booming demand for air conditioning during what is on track to be the hottest year on record.
During a press briefing at Enlit Europe, Dr Brian Motherway, IEA Head of the Office of Energy Efficiency and Inclusive Transitions and author of the report, said:
“Last year in 2022, the world became 2% more energy efficient. In 2023, it’s a mixed story. Some regions got better, some not so much.
“One of our key asks for COP28 is a doubling in the rate of energy efficiency improvement for the rest of this decade. If we achieve that, it’ll be one of the biggest contributions to emissions reductions.
Motherway added: “We’ll see energy bills going down, we’ll see emissions going down, and we’ll see 4.5 million more jobs in energy efficiency right across the world. It can be done: the technologies and policies exist.”
Energy efficiency policy and economic growth trends
Motherway said that “…the ten biggest electricity markets saw their biggest peaks due to air conditioning, accounting for nearly three quarters for (electricity) demand.
“Policymakers are responding. Many technologies have standards being applied. But we see contradictory (figures) – standards going up but also economic growth and lifestyle changes.”
This then increases demand.
Commenting on the competitiveness between energy efficiency policy with economic growth trends, Motherway added how “the way to address this is more efficiency policy, because in some places they work hand in hand and in some cases, they do work against each other.
“For example, in some markets, we see how energy efficiency policy is making cars a lot more efficient and of course we’re seeing a lot more growth in EVs but on the other hand, we’re seeing cars becoming a lot more heavier and SUV sales growing very rapidly.
“SUVs tend to be heavier and less efficient and so in terms of energy use those issues are competing with each other. So the solution to that is more efficiency policy, more push for electric vehicles. In other cases though we’re seeing alignment between those issues.”
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Strong national gains
However, according to the report, although this slower global rate of efficiency improvements should be noted, strong gains have also been observed at the national level.
After improving energy intensity by 8% in 2022, the European Union is set to post a 5% improvement this year. The United States is also on track for a 4% improvement in 2023. Since the start of the energy crisis, more than 40 countries in total have improved energy efficiency at a rate of 4% or more for at least one year.
The report notes that consistent and widespread efficiency gains are crucial to drive down emissions, especially given expectations for global growth in electricity demand.
For example, they state how universally switching to LED technology for lighting in the United States could save enough energy to power 3 million electric vehicles per year or heat 2.6 million homes with heat pumps.
The report also finds that achieving the doubling target set out earlier in 2023 would deliver substantial benefits for governments, citizens and industry.
Under this scenario, employing workers in activities like retrofitting homes, installing heat pumps and manufacturing more efficient cars would lead to the creation of 4.5 million more jobs. It would also cut today’s home energy bills – reducing them in advanced economies by around one-third, for example. The climate impact would also be enormous.
COP28
Doubling energy efficiency improvements by 2030 would lower global carbon dioxide emissions by over 7 billion tonnes, equivalent to the emissions from the entire transport sector worldwide today, according to the report.
“The world’s climate ambitions hinge on our ability to make the global energy system much more efficient. If governments want to keep the 1.5 °C goal within reach while supporting energy security, doubling energy efficiency progress this decade is critical,” said IEA Executive Director Fatih Birol in the IEA’s official press statement.
“The findings of this report are a stark warning to the leaders gathering shortly at the COP28 climate conference in Dubai that they all need to commit to stronger action on efficiency and to deliver on it.”
