Energy efficiency goes global

I have just returned from India, where there is a lot of positive talk about energy efficiency. In GDP terms, India has been becoming steadily less energy intensive for many years now, but of course still increasing its demand in absolute terms, as it will continue to do. In per capita terms, energy use is still relatively low, and access is still an issue (more half of the population still cook using traditional biomass), and so there are strong social improvement reasons to anticipate continued growth.

But energy growth requires investment, and has environmental implications, potentially huge. These implications can be vastly reduced by an efficiency-led approach. Energy efficiency is the first fuel, and can be exploited as a resource to provide cheap and clean energy services to society, in any part of the world. Whether the focus is on growth, security, energy access, air quality or climate, energy efficiency makes it cheaper and easier to get there. In India, energy efficiency actions, such as strong programmes in industry and in LED lighting for example, are making an important contribution.

India is just one of many large emerging economies placing a stronger emphasis on energy efficiency as part of their wider policy approach. Brazil has started work on a new ten-year energy efficiency strategy in the context of its Paris commitment. Mexico is developing new policies and programmes, as are Indonesia and South Africa, among others. Not that energy efficiency wasn’t always a global issue, but I do think now we are seeing at the least the beginnings of a step up in interest and activity in all parts of the world.

In terms of change, the biggest story is China. Of the total global energy intensity improvement measure in 2015 (1.8%), a quarter comes from China alone. In the early 2000s, in the context of rapid economic growth, energy intensity was worsening, despite a range of efficiency policies in place. However the 11^th Five-Year Plan of 2005 put, for the first time, a full national framework in place of energy efficiency policy, and gave it political profile. This caused a turn-around in the intensity trend, and by 2014 the energy savings in China were as much as total energy use in Germany. China is still more energy intensive than most, but it has made huge progress on efficiency in the past decade.

Of course, energy intensity is driven by many factors, not just energy efficiency itself. Intensity drops when economies move structurally towards lighter industry and services, for example. Interestingly, in China, structural changes in industry in recent years have tended to balance each other out in terms of energy intensity effects – some heavy sectors have grown, some have shrunk. However, we now expect future structural change to be the biggest driver of future intensity gains there. By contrast, structural change in India will see greater levels of energy access, and also growth in the manufacturing sector driven by policy. These both bring social and economic benefits, but of course put upward pressure on energy intensity. This makes the energy efficiency opportunity all the greater.

The IEA’s work on energy efficiency has become truly global. As I visit various countries to discuss energy efficiency, from Europe and North America, to large emerging economies in both hemispheres, I am struck by how much commonality there is in these discussions. The demand side of energy is much more universal than the supply side, and the range of policies and actions Governments choose from to tackle energy efficiency tends to be very similar. Of course issues such as infrastructure, income, and of course culture, make a difference. But it still comes down to finding ways to motivate, enable and finance changes in behaviour and investment.

This means that all countries, in their energy efficiency efforts, have something to teach others and plenty to learn from others. That is why a global conversation on energy efficiency is so important.

Previously published by the European Council for an Energy Efficient Economy