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IEA: Supercharging energy efficiency efforts could deliver a third of emissions cuts needed to reach net-zero

Pictured: The IEA's Faith Birol speaking on energy efficiency. Image: Dark Green PR for Danfoss

The measures the IEA has recommended when making this calculation – the headline finding of its new report on The Value of Urgent Action on Energy Efficiency – are “already cost-effective and pay for themselves”, the Agency is highlighting. This is particularly true given that global wholesale gas prices have increased sharply this year.

The IEA’s emissions calculation is predicated on the avoidance of 95 EJ (95 quadrillion joules) of final energy consumption globally this decade – around the annual energy consumption of China, the world’s largest consumer of primary energy, that the IEA is forecasting for 2030.

95 EJ is equivalent to around a 5% reduction in global energy demand in 2019.

The IEA’s report states that this level of energy consumption avoidance will be possible, even as the global population grows and efforts to provide those in need with improved energy access. It emphasises that improved energy efficiency is compatible with economic growth and could play a role in ensuring that economic growth contributes to levelling up, stating that households alone could see collective annual energy bills that are $650bn lower in 2030 than in 2020. Energy efficiency technologies could also be a market which would create an additional 10 million jobs by 2030, on top of those forecast to be created by existing policies.

Achieving these benefits for people, economy and planet will require fast-tracked action on energy efficiency from the public and private sectors across the world. Action will need to be coordinated but context-based – the report states that a “wide range of measures” will need to be deployed, accounting for the needs of different industrial sectors and the domestic building stock and transportation stock in different nations.

The IEA sees around a third of the avoided energy demand in its forecast scenario coming from the deployment of more efficient equipment. The report states that there is still much low-hanging fruit to be picked in terms of technical efficiency in homes, commercial buildings, vehicles and industrial operations.

A further 20% of avoidance comes from the electrification of transport and heat – both domestically and for industry. For example, the IEA’s 2030 scenario involves 20% of all cars globally being electric. The report highlights the importance of ensuring that electrified technologies are efficient and are powered by low-carbon electricity. It calls on wealthy nations with high levels of renewable energy to fast-track efforts to replace fossil boilers with heat pumps and to help low-temperature industrial processes to electrify.

Behaviour change will also play a key role – the IEA scenario forecasts that it could deliver 18% of the avoided energy demand it has identified. This covers simple changes, like building occupants lowering their thermostats by 1-2C, and more drastic changes to travel patterns, as highlighted in the IEA’s Ten-Point-Plan for reducing Europe’s oil consumption rapidly, first published in March. This plan outlines how urban areas, in particular, can discourage the frequent use of petrol and diesel cars for individual occupants, floating measures such as recommending remote working three days a week.

The remaining one-third of avoided energy demand is achieved, in the IEA’s forecast, through digitisation of energy and the shift to a circular economy. Digitisation enables the wider adoption of smart energy controls for buildings, industry and electric transport. And, on the circular economy piece, the IEA emphasises the energy-saving potential of reusing and recycling materials rather than using new virgin materials. You can read more about the intersections between net-zero and the circular economy here.

Across all of these fields, the IEA is compelling nations to focus short-term actions on transport and buildings, while laying the foundations for longer-term efforts to improve the energy efficiency of heavy industry.

A world off track                                                                                       

The levels of energy efficiency improvements that the IEA is outlining in the report are consistent with its Net-Zero Scenario for 2050. This scenario was published in 2021, ahead of COP26. The IEA warned at the time that the likelihood of delivering this scenario is slim, but that policymakers should focus efforts on its delivery.

While the Net-Zero Scenario includes a 5% reduction in global final energy consumption by 2030, the world is currently on track for at least an 18% increase. This increase calculation is based on the IEA’s forecast for a scenario in which all stated national policies are delivered.

Achieving that all-important 5% reduction in global final energy consumption this decade will require the global rate of energy intensity improvements to average 4% annually in the 2020s, the IEA has stated. An annual improvement of 1.9% is expected for 2021 and, in 2020, a minor improvement of just 0.5% was recorded by the IEA.

Today’s IEA report has been paired with a policy toolkit, outlining how changes to national strategic approaches and more specific policies can be made to speed up energy efficiency improvements.  The toolkit emphases how crucial it is to communicate the benefits of energy efficiency – in economic, social and climate terms – to all parts of society, and to ensure an equitable approach in order to maximise these benefits. It takes a three-pronged approach, covering regulation, information and incentives.

Launching the report and policy toolkit, the IEA’s executive director Fatih Birol said: “Energy efficiency is a critical solution to so many of the world’s most urgent challenges – it can simultaneously make our energy supplies more affordable, more secure and more sustainable.

“But inexplicably, government and business leaders are failing to sufficiently act on this. The oil shocks of the 1970s set in motion major advances in efficiency, and it is utterly essential that efficiency is at the heart of the response to today’s global energy crisis.”

Birol’s statement was made at the Agency’s annual global conference on energy efficiency, held this week in Denmark. The IEA is jointly hosting the conference with Denmark’s government and Danish engineering firm Danfoss.

The main events of the conference are set to unfold today (8 June). It will be closing on Thursday (9 June).

Danfoss’s chief executive and president Kim Fausing (pictured below) added: “The good news is that the solutions are there to improve energy efficiency in all sectors. We don’t need to wait. We need action because the greenest energy is the energy we don’t use.”

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