As fuel prices rose in 2022, the government’s efficiency ambition grew, with many significant policies, spending commitments, and public campaigns launched.
Energy efficiency actions accelerated globally in 2022 as governments and consumers increasingly turned to efficiency measures in response to fuel shortages and sky-soaring energy prices, signalling a possible turning point after many years of slow progress.
According to the IEA’s latest market report, global investments in energy efficiency – such as building renovations, electric car infrastructure and public transportation – reached USD 560 billion in 2022, a 16% increase over 2021.
Preliminary data show that the global economy used energy 2% more efficiently in 2022 than in 2021, a rate of improvement nearly four times that of the previous two years and nearly double that of the last five years. Suppose the current rate of progress is maintained in the coming years. In that case, 2022 could be a watershed moment for efficiency, which is one of the critical areas for international efforts to achieve net zero emissions by 2050.
This year’s improvement follows Covid-19, which resulted in two of the worst years ever for global energy efficiency improvement, with annual gains falling to around 0.5% in 2020 and 2021. A higher share of energy-intensive industry in energy demand as other sectors contracted, as well as a slowing pace of retrofits and upgrades in buildings and factories, were crucial factors. Moreover, progress in energy efficiency had already slowed before the pandemic. For example, the global rate of improvement fell from 2% in the first half of the last decade to 1.3% in the second half.
To meet the IEA’s Net Zero Emissions by 2050 Scenario, efficiency improvements must average about 4% per year this decade. However, there are positive signs of progress. For example, the electrification of transportation and heating is accelerating, with one in every eight cars sold globally now being electric. Furthermore, nearly 3 million heat pumps will be sold in Europe alone by 2022 – up from 1.5 million in 2019 – as they become a more cost-effective heating source.
Moreover, there is improvement in existing building codes, and fresh ones are being introduced in emerging economies. A growing wave of energy-saving awareness campaigns is assisting millions of citizens in better managing their energy use. For example, all governments in Southeast Asia are now developing policies for efficient cooling, which is critical in a region with one of the fastest growth rates in electricity demand.
Several significant policy and spending announcements this year point to continued efficiency investment and progress in the coming years. These include the United States Inflation Reduction Act, the European Union’s REPowerEU plan, and Japan’s Green Transformation (GX) programme, which total hundreds of billions of dollars in spending on more energy-efficient buildings, cars, and industries over the next few years. However, these packages, like much of the overall energy efficiency investment, are concentrated in advanced economies, and much more investment is required in emerging and developing economies.
To coincide with the release of Energy Efficiency 2022, the IEA announced today that its 8th Annual Global Conference on Energy Efficiency will be held in Paris from June 6-8, 2023. Agnès Pannier-Runacher, France’s Minister for Energy Transition, and Fatih Birol, IEA Executive Director, will host the event, which is being held in collaboration with Schneider Electric.
The Global Conference provides a high-level forum for ministers, CEOs, and other senior leaders from around the world to share their perspectives on the most recent advances in energy efficiency. It will expand on the topics covered in Energy Efficiency 2022, looking at how electrification, digitalization, and finance can improve efficiency to address today’s global energy challenges. The 7th Global Conference, which will be held in Denmark in June 2022, will bring together over 400 leading figures from 26 countries, including ministers and senior officials.