IEA: Global Energy Efficiency Progress Shows Varied Trends and Challenges

Energy intensity improvement forecast IEA report

A recent report by the International Energy Agency (IEA) highlights significant strides in energy efficiency investments globally since 2020. According to the IEA’s Government Energy Spending Tracker, nearly USD 700 billion has been allocated for energy efficiency investment support, with major contributions from countries like the United States, Italy, Germany, Norway, and France.

The United States, through its Inflation Reduction Act of 2022, has earmarked a substantial USD 86 billion for energy efficiency measures. Simultaneously, the European Union has bolstered its Energy Efficiency Directive to curb energy demand, reflecting a global commitment to sustainability and resource optimization, the report said.

However, while new policies and investments are underway, their immediate impact on energy efficiency remains a challenge. Efficiency gains and energy intensity progress are anticipated over several years. The global intensity progress in 2023 conceals significant gains in specific countries and regions, with others experiencing slower progress.

The EU reported an impressive 8 percent energy intensity improvement in 2022, with an estimated 5 percent gain in progress expected for 2023. Similarly, the United States is on track to achieve a 4 percent improvement this year. Contrastingly, China foresees a 5 percent economic growth accompanied by increased energy demand, but without a substantial change in energy intensity. This is significant, considering it takes notably more energy to fuel GDP in China compared to the US or the EU.

Moreover, the shift towards energy-efficient technologies is evident in consumer behavior. The first half of 2023 witnessed a 75 percent surge in heat pump sales in Germany, the Netherlands, and Sweden combined. This inclination towards electric vehicles and heat pumps, powered by cleaner energy sources, signifies a transformative shift in energy use patterns.

A pertinent trend is the anticipated stabilization of global gasoline demand in 2023 and subsequent peaking in road transport fuel demand by 2025. This trend aligns with evolving consumer choices, as sales of gasoline and diesel vehicles peaked a few years ago, hinting at a broader shift towards energy-efficient alternatives.

Temperature fluctuations also wield influence over electricity demand. Regions like Texas experience a 4 percent rise in electricity demand for every 1°C increase above 24°C, while India sees a 2 percent rise due to lower air conditioner ownership.

The increasing peak electricity demands in several major countries further emphasize the strain on power grids, notably during hot weather conditions. In specific regions like the Middle East and parts of the US, space cooling comprises a substantial portion of residential peak demand on sweltering days.

Looking ahead, as the global target aims to double efficiency progress by 2030, international collaborations, including those envisioned at COP28, will play a pivotal role in shaping future energy efficiency trajectories and meeting sustainability goals. Achieving these targets will require concerted efforts to navigate the complex interplay between policies, consumer behavior shifts, and technological advancements.