Energy efficiency gains in decline, IEA warns

22nd November 2019 By: Schalk Burger - Creamer Media Senior Deputy Editor

The global rate of progress of energy efficiency is slowing and has declined for three consecutive years, leaving it well below the 3% minimum that intergovernmental organisation International Energy Agency (IEA) analysis shows is central to achieving global climate and energy goals, says IEA executive director Dr Fatih Birol.

“If the rate had reached 3% over that period, the world could have generated a further $2.6-trillion in economic output – close to that of the entire French economy – for the same amount of energy,” he highlights.

Global primary energy intensity – an important indicator of how heavily the world’s economic activity uses energy – improved by 1.2% in 2018, the slowest rate since the start of this decade, according to the IEA’s annual ‘Energy Efficiency 2019’ report.

The report finds that the deceleration in efficiency progress results from a mixture of social and economic trends, combined with some specific factors, such as extreme weather.

Energy efficiency has tremendous potential to boost economic growth and avoid greenhouse-gas emissions. The slowing global rate of progress has significant implications for consumers, businesses and the environment, the report states.

“The historic slowdown in energy efficiency in 2018 necessitates bold action by policy- makers and investors. We can improve energy efficiency by 3% a year simply by using existing technologies and cost-effective investments. “There is no excuse for inaction, and ambitious policies need to be put in place to spur investment and put the necessary technologies to work on a global scale,” emphasises Birol.

This means that new ways of policy thinking that move beyond traditional approaches are required, particularly to maximise the potential efficiency gains from the rapid spread of digital technologies throughout economies and energy systems, the report states.

The report includes a special focus on the ways in which digitalisation is transforming energy efficiency and increasing its value.

By multiplying the interconnections among buildings, appliances, equipment and transport systems, digitalisation is providing energy efficiency gains beyond what was possible when these areas remained largely disconnected. While efficiency in these areas has always had benefits for energy systems, digitalisation allows for these benefits to be measured and valued more quickly and more accurately.

“As digitalisation transforms the global energy system, the IEA is committed to helping countries ensure they are able to maximise the benefits while navigating the challenges,” Birol says.

The report points out that, while digital technologies could benefit all sectors and end-users of energy, uncertainty remains about the scale of those benefits.

The need for stronger action underpins the work of the Global Commission for Urgent Action on Energy Efficiency, which the IEA announced in July. Headed by Irish Prime Minister Leo Varadkar, the commission’s members include national leaders, government Ministers and top business executives.

It will produce recommendations in mid-2020 on how to achieve major breakthroughs in energy efficiency policy.

The slowdown in energy efficiency is also the key reason why the IEA has been the driving force behind the Three Percent Club, an initiative under which 15 countries have already signalled their commitment to help the world get onto a path of 3% annual improvements in energy intensity.

Much will depend on how policies are designed to respond to the huge opportunities and emerging challenges, most notably the risk of increased energy demand from the mushrooming use of digital devices.

The IEA’s commitment to advancing energy efficiency worldwide includes sustained efforts to build greater capacity for smart policy-making in emerging economies. In the past year, the IEA has trained nearly 500 policy-makers from 100 countries, an example of which is the first IEA energy efficiency training week in sub-Saharan Africa, which took place in October in Pretoria, South Africa.