Worldwide investment in energy efficiency continues to grow

Worldwide investment in energy efficiency continues to grow

In 2016, global investment in energy efficiency increased by 9% to $231bn, maintaining the upward trend of recent years.

The savings mean that in 2016, the world would have used 12% more energy had it not been for energy efficiency improvements since 2000 – equivalent to adding another European Union in the global energy market, according to a new report by the International Energy Agency. ‘Energy Efficiency 2017’.

Improved energy efficiency has reduced household expenditure on energy. Indeed, energy efficiency gains since 2000 helped households in several major economies avoid nearly $300 billion in additional spending on energy in 2016. For example, in Germany, France and the United Kingdom, household energy bills in 2016 were on average over $400 per capita lower than they would have been had energy efficiency not improved as it did since 2000.

Savings are also being made in large emerging economies, where demand for energy services is growing. For example, on average Chinese households would have spent 25% more on energy in 2016 if not for efficiency.

Energy efficiency in buildings continues to improve, thanks to policy action and technological advances. Policies have focused primarily on the building envelope, rather than heating and cooling equipment. There is considerable potential to achieve further energy savings by establishing standards.

Efficiency improvements of 10% to 20% are possible in most countries from appliances, equipment and lighting products that are already commercially available. There is strong global momentum towards more efficient lighting; by 2022, 90% of indoor lighting worldwide is expected to be provided by compact fluorescent lamps (CFLs) and light-emitting diodes (LEDs).

Industry energy efficiency has improved, with use of energy management systems increasing. Energy use per unit of economic output in the industrial sector fell by nearly 20% between 2000 and 2016. The magnitude of the declines is similar both in IEA member countries and major emerging economies.

In some energy-intensive industries, such as aluminium smelting and cement manufacturing, average efficiency has improved sharply as a result of rapid expansion in production capacity, especially in emerging economies, since new facilities tend to be much more efficient than old ones.

The application of energy management systems, which provide a structure to monitor energy consumption and identify opportunities to improve efficiency, is growing, driven by policy and financial incentives. The number of certifications for ISO 50001 – a global standard for energy management developed by the International Organization for Standardization in 2011 – grew to nearly 12 000 in 2015, 85% of which were in Europe.

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The share of world final energy use covered by policies that mandate energy efficiency improvements grew to nearly 32% in 2016 – an increase of 1.4 percentage points on 2015, but still leaving 68% of global energy use uncovered.

In stark contrast with previous years, nearly all the 2016 increase in coverage was due to the continuing impact of existing policies, as old energy-using equipment was replaced. Just 1% of the increase was due to new policies, an historic low.

Global energy intensity – measured as the amount of primary energy demand needed to produce one unit of gross domestic product (GDP) – fell by 1.8% in 2016. Since 2010, intensity has declined at an average rate of 2.1% per year, which is a significant increase from the average rate of 1.3% between 1970 and 2010.

The decline in global energy intensity means that the world is able to produce more GDP for each unit of energy consumed – an energy productivity bonus. Measured as the difference between actual GDP and the hypothetical GDP that would have been generated had energy intensity stayed at the previous year’s level, this bonus was $2.2 trillion in 2016 – equal to twice the size of the Australian economy.

However, global progress has become dependent on yesterday’s policies, with the implementation of new policies slowing. If the world is to transition to a clean energy future, a pipeline of new efficiency policies needs to be coming into force. Instead, the current low rate of implementation risks a backward step.

Further information

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