energy efficiency

The International Energy Agency’s Energy Efficiency 2020 report says the global rate measuring how efficiently the world’s economic activity is using energy will improve by less than 1% this year, the weakest since 2010.

This weak progress deepens the challenges of meeting international energy and climate goals and makes the next three years a critical period for reversing the worrying trends, says the new report.

The already sluggish pace of global process on energy efficiency is set to slow even further this year as a result of the economic impact of the COVID-19 crises.

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The report says overall investment in energy efficiency worldwide is on course to fall by 9% in 2020. This less than 1% improvement is well below the level of progress needed to achieve the world’s shared goals for addressing climate change, reducing air pollution and increasing access to energy.

The report says disappointing trends are being exacerbated by a decrease in investments into energy-efficient buildings, equipment and vehicles amid the economic crises triggered by the global crises.

Purchases of new cars, which are more efficient than old cars, has slowed. Construction of new, more energy-efficient homes and commercial buildings is also expected to decelerate. In industrial and commercial buildings, lower energy prices have extended payback periods for key efficiency measures by as much as 40%. This reduces its attractiveness compared to other investments.

Energy efficiency measures could drive economic growth and job creation

IEA executive director Dr Fatih Birol: “Together with renewables, energy efficiency is one of the mainstays of global efforts to reach energy and climate goals. While our recent analysis shows encouraging momentum for renewables, I’m very concerned that improvements in global energy efficiency are now at their slowest rate in a decade.

“For governments that are serious about boosting energy efficiency, the litmus test will be the amount of resources they devote to it in their economic recovery packages, where efficiency measures can help drive economic growth and job creation.”

The IEA believes improvements in energy efficiency could contribute around half of the reduction in energy-related greenhouse gas emissions needed over the next 20 years to put the world on the path to meeting international energy climate goals.

However, short-term trends resulting from the COVID-19 crises are slowing improvements in the energy intensity of the world’s economy. This means every unit of economic output uses more energy than it would do otherwise. This mainly seems to be because energy-intensive industries such as metals manufacturing and chemicals, appear to have been less severely affected by the crises than other, less energy-intensive parts of the economy.

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The stimulus packages governments are introducing as part of their economic recovery plans will heavily influence future efficiency trends. These packages have the potential to drive investments and structural changes that can reduce energy intensity across all sectors of the world’s economy.

More than 60% of the funding for energy efficiency-related measures in stimulus packages announced by governments to date has focused on either the buildings sector or on accelerating the shift to electric vehicles. This includes creating new vehicle charging infrastructure.

Global government spend on energy efficiency measures is uneven and not enough

Still, many opportunities remain untapped. IEA’s tracking shows a spending imbalance across sectors. No announcements have been made to increase the penetration of super-efficient appliances, while spending on vehicle efficiency other than electric vehicles is minimal.

The planned spending is marked by a vast imbalance. Announcements by European countries dwarf those from other parts of the world. Announced spending in Europe accounts for 86% of global public stimulus announcements regarding energy efficiency. The remaining 14% is split between the Asia-Pacific region and North America.

Birol said the EIA welcome plans by governments to boost spending on energy efficiency but what they see is uneven and far from enough. “Energy efficiency should be at the top of to-do lists for governments pursuing a sustainable recovery. It is a jobs machine, it gets economic activity going, it saves consumers money, it modernises vital infrastructure and reduces emissions. There’s no excuse not to put far more resources behind it.”

The IEA Energy Efficiency 2020 analysis says spending on efficiency-related stimulus measures announced by governments worldwide to date is set to generate almost 2 million full-time jobs between 2021 and 2023, mostly in the European buildings sector. The IEA’s Sustainable Recovery Plan though suggest further recovery efforts related to energy efficiency could create another 4 million jobs globally. This can be done through enhanced public and private sector investment in buildings, transport and industry.

You can track real-time data on approved public finance and policy measures targeting energy generation and consumption to stimulate economies in response to the COVID-19 pandemic at the International Institute for Sustainable Development’s Energy Policy Tracker online.