IEA report shows energy efficiency investments in 2023 set to hit record levels

Ramping up global annual energy efficiency progress from 2.2% today to more than 4% annually by 2030 would deliver vital reductions in greenhouse gas emissions and at the same time create jobs, expand energy access, reduce energy bills, and reduce the reliance on fossil fuel imports, according to a new report by the International Energy Agency.

The special briefing report published by the IEA on Wednesday, Energy Efficiency: The Decade for Action, highlights that energy efficiency investment in 2023 is expected to reach record levels, despite a slowdown in year-on-year growth as the high cost of capital weighs heavily on potential new projects.

The report said that the world needs to double progress on efficiency between now and 2030 as part of efforts to improve energy security and affordability while keeping the goal of limiting global warming to 1.5°C within reach. Under current expected and announced policies, efficiency-related investment is projected to rise by a further 50%. However, to see annual progress double, investments in the sector must increase from US $600 billion today to over $1.8 trillion by 2030, the IEA said.

“Today, we are seeing strong momentum behind energy efficiency. Countries representing over 70% of the world’s energy consumption have introduced new or improved efficiency policies since the global energy crisis began over a year ago. We now need to push into a higher gear and double energy efficiency progress by the end of this decade,” IEA Executive Director Fatih Birol said.

According to Jean-Pascal Tricoire, Chairman of Schneider Electric, optimising how the world consumes energy is now the priority. “We have all the ingredients. What we don’t have is time: We simply can’t let more time go by before we deploy the power of electrification and digital energy-efficiency technologies to the fullest.”

Policy will have a critical role to play in whether the world delivers on energy efficiency in the short, medium and long term, the report said. The RePowerEU plan in Europe, the Inflation Reduction Act in the United States and Japan’s Green Transformation (GX) initiative are a few examples of policy makers making renewed efforts to deliver on the energy efficiency agenda. Various emerging and developing economies – including India, Chile and South Africa – have also enacted progressive measures to bring energy efficiency to the fore, the report said.

The new IEA report shows how doubling energy efficiency efforts can also deliver positive knock-on effects for society. Today, the sector employs tens of millions of people worldwide. With increased ambition, energy efficiency activities could lead to another 12 million jobs globally by 2030. Importantly, more efficient and lower energy demand supports faster progress towards universal access to modern and affordable energy in emerging and developing economies. The shift toward efficient electrification through the phasing out of the traditional burning of biomass such as charcoal and wood for heating and cooking also brings multiple benefits in terms of improved air quality and health.