Global energy efficiency progress drops to slowest rate since start of decade, warns report

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Energy efficiency has potential to boost economic growth and avoid greenhouse gas emissions but the global rate of progress is slowing, states International Energy Agency’s (IEA) new report.

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

“The historic slowdown in energy efficiency in 2018 – the lowest rate of improvement since the start of the decade – calls for bold action by policy makers and investors,” said Dr Fatih Birol, the IEA’s Executive Director.

“We can improve energy efficiency by 3% per year simply through the use of existing technologies and cost-effective investments. There is no excuse for inaction: ambitious policies need to be put in place to spur investment and put the necessary technologies to work on a global scale.”

The rate of improvement has declined for three years in a row, leaving it well below the 3% minimum that IEA analysis shows is central to achieving global climate and energy goals.

If the rate had reached 3% over that period, the world could have generated a further USD 2.6 trillion of economic output, close to the size of the entire French economy, for the same amount of energy.

Energy Efficiency 2019 finds that the recent deceleration in efficiency progress results from a mixture of social and economic trends, combined with some specific factors such as extreme weather.

At the same time, policy measures and investment are failing to keep pace with the rising energy demand.

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

The new 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 enables these benefits to be measured and valued more quickly and more accurately.

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

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