Energy efficiency is the first fuel, and demand for it needs to grow

The global economy is set to double in size over the next 20 years. But that does not mean it will need twice as much energy to power all the extra cars, homes and factories such growth will bring. By taking the available opportunities to become more energy efficient, we would need only the same amount of energy we use today. The result would be a global economy with reduced emissions, lower pollution and enhanced energy security – we would live more comfortable lives and receive lower energy bills.

In order to make this scenario a reality and to put the world on track to meeting our international climate targets, efficiency must be at the forefront of global policy-making. And yet we are headed in the opposite direction. What we are actually witnessing is an alarming slowdown in global efficiency progress. In fact, last year saw the slowest improvement rate this decade.

What can we do today to change course? The International Energy Agency has made energy efficiency a top strategic priority. Two weeks ago, the Global Commission for Urgent Action on Energy Efficiency met for the first time at the IEA headquarters in Paris. Ministers, business leaders and thought leaders from around the world came together to discuss how to accelerate global progress on energy efficiency.

I was delighted that so many senior thinkers from across the globe joined this important discussion – a real sign that the desire to accelerate progress is widely shared. It was clear that we no longer need to focus on making the case for efficiency – its benefits are well understood. The question is not why, but how.

How can we scale up and speed up action on all fronts to see more efficient technologies deployed and more efficient behaviours take hold? This is the question the Global Commission is tackling.

While the participants came from different parts of the world and brought different perspectives, it was striking how much the discussions centred around the same questions: How can we get wider engagement in efficiency? How can we build markets and encourage uptake of technologies? How can we ensure all the actions, right across government, are taken to enable an acceleration of efficiency progress?

The focus of the Commission’s deliberations was on people and the narratives that can engage them. Efficiency is a means to other ends, such as environmental or economic gains. The current push by people around the world for stronger climate action and waste reduction is a great opportunity to get more movement on efficiency. The economic benefits can also help bring governments along. More investment in efficiency creates new jobs. And for many, a message about well-being and comfort in our daily lives is much more appealing than a discussion of kilowatt hours and payback periods.

In India, for instance, energy efficiency has become an important issue on the political and social agenda in recent years. The National Energy Conservation Day, which was held last week, included a painting competition led by the Bureau of Energy Efficiency that received 9 million entries on the theme of energy efficiency. This is due to the success of a number of programmes that have brought benefits to many, through lighting in homes and on streets, appliances that cost less to run, and lower costs for many large industries.

It is clear also that simple platitudes for energy efficiency are not adequate. The costs, the benefits and the means of achieving them must all be set out clearly. This is essential to build support for action, and to set out what that action should be.

IEA analysis shows a clear correlation between policies and results. Where good policies are put in place, efficiency gains are made. Without them, efficiency stalls. Therefore, government action is key – provided it is taken by the government as a whole. Energy ministers do not usually have control over building standards, transport planning or tax policy. But all of these domains, and many more, help determine efficiency outcomes. Only a determined, cross-government approach can deliver efficiency gains.

We see such approach applied to climate action in the United Kingdom, for example, where a framework under a Climate Change Law sets out procedures for setting and then meeting targets that involves all government departments, overseen by a strong, well-resourced Climate Change Committee.

Another interesting example from outside energy efficiency comes from Ireland, driven by the country’s Climate Action and Environment Minister, Richard Bruton, who chaired the Global Commission meeting. In 2012, when he was Minister for Enterprise, Ireland was in the midst of a deep recession with high unemployment. Mr Bruton’s action plan involved every government department and national agency, and contained 270 distinct actions with targets, owners and reporting mechanisms. A wide range of actions, united by the common theme of creating jobs, were given the support and prioritisation they needed. 

The questions policy makers face around the world are often quite similar, and some policies apply universally. Standards and labels have made appliances hugely more efficient without raising purchase costs and are a ready option for countries where they are not in place.

Often, though, policy choices reflect the many differences in local circumstances, and the right solutions are those that fit with local conditions. Some countries are comfortable with regulatory approaches, others not. Some can make good use of corporatist, collaborative actions, others prefer to use incentives and markets.

Experience suggests that a set of policies driven by long-term strategies and targets is more effective than individual, isolated ones. A holistic set of policies – from research to incentives and regulation – has made China the world leader in electric vehicle deployment. Europe is making progress on efficiency in buildings through a suite of measures that sets out a clear trajectory and gives strong signals to the market.

As we prepare for the next phase of the Global Commission’s work, which will culminate in a set of key policy recommendations for ramping up efficiency progress worldwide, I would like to thank the Irish Prime Minister, Leo Varadkar, in his capacity as Honorary Chair of the Global Commission. I would also like to thank Mr Bruton for chairing the meeting, and all the Commission members for their active participation and great ideas. And I thank the many stakeholders from around the world who submitted ideas and participated in our global survey, the results of which can be found here.

Faster action on efficiency is both essential and achievable. There are many choices for policy makers, and many good examples showing what makes them work. What is most important is a stronger focus on efficiency, leading to renewed action. This is why the Commission’s work is so important and timely. Energy efficiency is the first fuel – the fuel you do not have to use – and in terms of supply, it is abundantly available and cheap to extract. But demand for the first fuel needs to grow, and that’s where policy action matters the most.