IEA: Latest trends in energy efficiency

2018. 3. 23.

Improvements in global energy efficiency slowed down dramatically in 2017, because of a weakening of efficiency policy coverage and stringency as well as lower energy prices. Global energy intensity improved by only 1.7% in 2017, compared with an average of 2.3% over the last three years.

Improvements in global energy efficiency slowed down dramatically in 2017, broadly caused by an apparent weakening of efficiency policy coverage and stringency, and by lower energy prices.
Global energy intensity, defined as the energy consumed per unit of economic output, has been decreasing for two decades. But the rate of decrease slowed in 2017. Globally, energy intensity in 2017 fell by only 1.7%, much less than the 2.3% registered on average over the last three years, and half of what is required to remain on track with the Paris Agreement.
Energy intensity is one of the two drivers of carbon emissions, the other being carbon intensity (defined as CO2 emitted per unit of energy consumed). While global carbon intensity declined less in 2017 than in 2016, the rate remains similar to the average rate of improvement in 2014-16 – partly driven by the increasing expansion of renewables. However, the slower improvement in the energy intensity of energy demand in 2017 was not sufficient to counteract the effect of higher economic growth, leading to the increase in global energy related carbon emissions in 2017. Understanding the reasons for this slow down in energy intensity improvements is therefore crucial for understanding the future direction of global carbon emissions.
Coverage of policies targeting energy efficiency has been steadily increasing in recent years, and 31.5% of final energy consumption was subject to mandatory energy policy in 2016, up from only 14% in 2000. However, the rate of increase of coverage slowed in 2016 and early indications are that it slowed again in 2017. Further, the increased coverage in 2017 appears to have come mostly from extensions to existing policies, rather than new policies in previously uncovered sectors and countries.
Another important element is the stringency of these policies. The increase in policy stringency also slowed in 2016 with an increase of just 0.3%. Governments need to redouble efforts to take a strategic approach to energy efficiency, anchoring it as the basis of long-term energy transition plans and pursuing a balanced approach of regulations, standards and market-based policies.
The slowing in energy intensity improvement is also a symptom of the sustained low fossil-fuel price environment of recent years. For example, low fuel prices have been potentially supported a shift in consumer preferences towards larger vehicles such as Sport Utility Vehicles (SUVs). However, as global fossil-fuel consumption subsidies remain high, reaching $260 billion in 2016, the low price environment can be an opportunity for governments to reform their subsidy policies, effectively counteracting price drops and bolstering intensity improvements. There are some indications of those reforms having rapid impacts. For example, following energy subsidy reforms in several Middle Eastern countries in recent years, demand for oil in the Middle East did not increase in 2017.