The current challenges regarding energy security, energy prices and the cost of living have intersected with the climate crisis to remind us that energy efficiency is more indispensable than ever.
The cleanest, cheapest, most reliable source of energy is what countries can avoid using, while still providing full energy services for citizens. That is why the IEA refers to energy efficiency as the “first fuel”. Without early action on efficiency the energy transition to net zero emissions will be more expensive and much more difficult to achieve.
The IEA Net Zero Emissions by 2050 Scenario (NZE) sees the average annual rate of global energy intensity (i.e., energy use per unit of GDP) improvement – a key measure of the economy’s energy efficiency – doubling from around 2% achieved between 2010-2020 to just over 4% from 2020-2030. With accelerated action, the global economy by 2030 could be around one third more energy efficient than in 2020.
Most of the efficiency measures in the Net Zero Scenario, beyond those in the current policy case, are already cost effective and pay for themselves through energy savings, even more so at today’s energy prices. Put simply, a more efficient building, car or industrial facility, requires less energy to perform the same function, with cost savings that are larger than the investment required to achieve them.
The year 2021 saw the largest ever annual increase in global energy related CO2 emissions, around 2 Gt to about 36 Gt of CO2, more than offsetting the decline in 2020. This followed an increase of about 10 Gt, or 45% between 2000 and 2019. During this period, the energy intensity of the global economy improved by around a quarter resulting in avoided emissions of about 8 Gt CO2 in 2019. This means that energy intensity improvements in the economy are offsetting almost half of the emissions growth that could have happened.
Accelerated action on energy efficiency and related avoided energy demand measures can help avoid around 95 EJ of final energy demand in 2030 compared to the Stated Policies Scenario (STEPS) which takes into account existing policies and measures and also those under development. Without this additional action, final energy demand could be 18% higher in 2030 instead of around 5% lower as in the Net Zero Scenario.
This avoided energy demand results from a wide range of measures, reflecting the diverse nature of efficiency-related technologies and actions across all sectors. Elements of avoided energy demand include technical efficiency, electrification, behaviour change and other avoided energy demand such as from digitalisation, material efficiency and other fuel switching. It is also achieved even as the economy grows by 40% and supports around 800 million more people with improved access to energy services.