Action on energy demand by 2030 can save global economy $2 trillion a year, says WEF

The World Economic Forum’s 54^th annual meeting in the Swiss resort town of Davos-Klosters got underway on Monday, with stakeholders from the energy industry convening against the backdrop of a WEF report that called for urgent actions on energy demand that can reduce energy consumption by up to 31%, saving up to $2 trillion globally per annum.

In a white paper published in collaboration with PwC and the International Business Council, the World Economic Forum highlighted why transforming energy demand matters and said: “Reducing energy intensity – energy used per unit of gross domestic product (GDP) – would boost growth by enabling previously wasted or over-utilised energy to be redirected to more productive activities. It would also help companies save cash and maintain competitive advantage while reducing emissions.”

According to the report, the value of action on energy demand is compelling: a possible 31% reduction in energy intensity and up to $2 trillion in annual savings if measures were to be taken by 2030. Such a scenario would enable companies to consolidate their margins while simultaneously building both measurable progress on reducing greenhouse gas (GHG) emissions and delivering greater resilience in operations, the WEF said.

Chief Economists' Outlook: more economic uncertainty on the horizon

The potential benefits in energy efficiency for companies comes even as the forum warned on the first day that global economic prospects remain subdued and fraught with uncertainty, as the global economy continues to grapple with headwinds from tight financial conditions, geopolitical rifts and rapid advances in generative artificial intelligence (AI).

According to the WEF’s latest Chief Economists Outlook released on Monday, more than half of chief economists (56%) expect the global economy to weaken this year, while 43% foresee unchanged or stronger conditions. A strong majority also believe labour markets (77%) and financial conditions (70%) will loosen over the coming year. Although the expectations for high inflation have been pared back in all regions, regional growth outlooks vary widely and no region is slated for very strong growth in 2024.

Against such an outlook, measures to increase growth, save money, and deliver competitive advantage while contributing to the energy transition would be an enticing opportunity for companies.

“Policymakers and business leaders need to collaborate to accelerate an energy transition that creates positive outcomes for people, society and the planet,” said Olivier Schwab, Managing Director of the World Economic Forum. “The private sector can play a leading role in this transformation,” he added.

Energy demand levers

Focusing on the three energy demand levers of energy saving, energy efficiency and value chain collaboration, the WEF report urges the industry to adopt immediate steps to reduce their energy intensity for their direct and indirect operations.

For heavy industries such as steel, cement, chemicals, and aluminum, the WEF advocates limited interventions as well as concerted action from the companies. “Interventions have been identified that can reduce energy intensity of individual industrial processes by up to 90% (e.g. introducing high-efficiency electric motors). If implemented widely, these could drive a reduction of the vertical energy intensity of 29% compared to current levels, reducing overall global energy demand by 11%,” the report said.