Efficiency Gains Globally, Two-Thirds of Savings Untapped

Global energy savings in 2015 reached a new high, equaling 13 percent of total consumption, despite lower energy prices and higher economic growth. A new analysis by the International Energy Agency (IEA) found that emerging countries like China led the way, and that government policies have been fundamental to this success.

That’s all very good news.

Unfortunately, these smart efficiency investments that reduce customer bills and pollution, and grow jobs are not happening fast enough for the world to meet its carbon pollution reduction goals. Two-thirds of energy efficiency’s economic potential remains untapped, with the greatest untapped potential in the areas where supportive policy is absent or inadequate, the EIA report shows.

Tremendous gains

The amount of energy used per unit of gross domestic product or GDP (the value of all goods and services produced) decreased by 1.8 percent in 2015. That is triple the annual rate of improvement in energy productivity than was seen over the last decade. This is particularly noteworthy given that oil prices in 2015 were 30 percent lower on average than the previous year, and natural gas prices also fell last year. Since 2000, energy efficiency improvements have saved enough energy to power Japan for one year, the report notes.

Confirming findings in previous reports, the IEA said these energy savings occurred despite a growing economy. In other words, the global economy became less energy intense. While the economy grew by 2 percent, efficiency gains led to the flattening of growth in primary energy demand – showing that economic growth and environmental gains need not go hand in hand.

But savings not large enough or fast enough

These efficiency improvements, while good news, are not enough. IEA warns that worldwide progress is "still too slow," and is putting global climate goals at risk. IEA's analysis showed annual energy productivity improvements must rise to at least 2.6 percent (vs the 1.8 percent we experienced in 2015) immediately to put us on a path to meet our climate goals.

China is driving the efficiency bus

This improvement in efficiency did not happen uniformly across the globe. Gains in efficiency were higher in emerging and developing countries than industrialized countries. China’s energy productivity (or energy used per unit of GDP) increased by 5.6 percent in 2015, meaning that it took that much less energy to make the same goods and provide the same services, while its economy grew by 6.9 percent. Industrialized countries only improved their productivity by an average of 2 percent. In the power sector alone, energy efficiency gains avoided the need for over $230 billion in investment for new (mostly coal-fired) electricity generation. The avoided emissions from efficiency improvements were 1.2 billion tonnes of carbon dioxide (CO2) in 2014, equivalent to the total CO2 emissions of Japan.

Policy support is the key

The IEA report linked the expansion of government policies establishing efficiency standards directly to energy savings and emission reductions. But despite the clearly demonstrated importance of that kind of policy, only one-third of the world’s energy use is covered by any type of efficiency performance standards, up from 11 percent in 2000.

Progress has been fastest in residential buildings, where expansion of building energy codes and tightening of minimum energy performance standards (MEPS) on heating and cooling equipment are driving improvements. The IEA recently introduced its Efficiency Policy Progress Index (EPPI) that tracks efficiency standards by combining their coverage and the strengthening of their performance levels to establish a baseline from which to track future progress.

With two-thirds of our energy use uncovered by efficiency policies and that same amount of economic savings potential still untapped in every country, future action seems clear. Let’s keep an eye on the EPPI and work to make it go through the roof.

About the Authors

Sheryl Carter

Codirector, Energy program

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