Global progress on energy efficiencyEnergy Efficiency Market Report 2016

Tyler BryantProject Manager and Lead on Energy Efficiency Markets

© IEA 2016

Energy efficiency core indicators

Policy drivers of the efficiency market

The impact of changing energy prices

Investment and market development

Energy Efficiency Market Report 2016

Intensity improving but not fast enough

Global annual energy intensity gains

In 2015, global intensity improved by three times the average of the last decade, despite a low price environment. Intensity gains need to increase to 2.6% to achieve our climate goals.

-3,0%

-2,0%

-1,0%

0,0%

2003-13 2013-14 2014-15 2016-30

(2 degree goal)

© IEA 2016

Policy delivers the benefits of energy efficiency

• Energy efficiency is the one energy resource all countries possess in abundance, and is an essential part of delivering all energy goals.

• Global energy efficiency gains are accelerating, even in the current low price environment.

• 2015 saw global investment in energy efficiency grow 6% to $221 billion.

• Energy efficiency is now at a scale to influence global energy markets, and is becoming more central in climate change responses.

• Strong Government policies are essential to deliver the energy efficiency improvements the world requires.

Energy efficiency is the main driver of intensity improvements

Final energy demand and energy demand if efficiency had not improved over 2000 levels in IEA countries

Without efficiency gains energy demand in 2015 in IEA countries would have grown by 1% and would have been higher than the 2007 peak. Instead, energy demand is 1% below 2000 levels.

130

140

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170

2000 2002 2004 2006 2008 2010 2012 2014

Total Fina

l Co

nsum

ption

(EJ)

Energy demand

without efficiency

Actual energy demand

Energy efficiency is saving CO2 emissions

CO2 emissions savings from efficiency improvements since 2000 in IEA countries and China

In 2015, efficiency gains in IEA and China reduced their combined emissions by 15%. Efficiency policy in China has become one of the most important global actions to reduce emissions.

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1,0

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

GtCO

2

IEA countries

China

Energy efficiency reducing energy bills

Avoided expenditure on energy from energy efficiency improvements in IEA countries

Energy efficiency led to $4 trillion cumulative savings since 2000, in Canada savings were $16 billion

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

USD

bill

ion

s Freight transport

Passenger transport

Residential

Industry and services

Energy efficiency improving energy security

Avoided imports for IEA members from efficiency gains, 2015

The EU made up half of all IEA import savings and reduced imports bills by $27 billion (10% of its total energy import bill)

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EU Japan Korea United States

USD

bill

ion (

2015)

Mto

e

Coal Oil Natural gas Avoided import expenditure

China - an energy efficiency heavyweight

Primary energy savings from efficiency gains since 2000 and renewable energy supply in China

Dramatic progress on energy efficiency since 2006 saved 350 million tonnes of coal in 2014. Energy savings are as large as China’s renewable energy supply.

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-5

0

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2000 2005 2010 2014

EJ

Other

Natural gas

Oil

Coal

Renewable energy supply

Energy Savings

Gains are driven by the expansion of policy

Share of global energy use covered by mandatory standards and regulations

30% of the world's energy consumption is now covered by mandatory standards and regulations, up from 11% in 2000.

0% 10% 20% 30% 40% 50% 60% 70%

World total

Electric motors

Heavy-duty vehicles

Appliances

Space heating

Light-duty vehicles

Lighting

2015

2000

South Africa

United States

Mexico

Korea

Japan

Indonesia

India

European Union

China

Canada

Brazil

Australia

Policy coverage around the world

China has the world’s largest coverage thanks to its industrial energy savings targets, EU increased its coverage from 6% in 2000 to 23% in 2015.

Not just about coverage, policies are strengthening

Weighted increase in the stringency of energy efficiency standards

Canadian policies have strengthened in-line with the OECD average

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5%

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15%

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25%

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45%

Canada China France Germany India Italy Japan Korea Spain UK United States Total

Performance weighted by TFC Performance of only regulated end uses

Measuring growth in policy effectiveness: The EPPI

IEA Efficiency Policy Progress Index (EPPI) increase by end use, 2005-15

The EPPI tracks combined progress of policy coverage and strength. The most progress was in the buildings sector and the largest potential for improvement is in the freight and industrial sectors.

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5%

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25%

30%

Air

conditioning

Space

heating

Light-duty

vehicles

Water

heating

Large

appliances

Electric

motors

Heavy-duty

vehicles

Increase in

the EP

PI

© IEA 2016

EPPI shows large EU members as leaders:

0% 2% 4% 6% 8% 10% 12% 14%

India

Korea

Spain

Canada

UK

Japan

Italy

China

US

Germany

France

EPPI score in 2015

France, Germany leading in our EPPI score driven almost exclusively by standards for residential heating systems and building code improvements

Still significant potential to save energy

Energy savings potential of standards as a share of global end-use energy, 2015

If all standards matched the best standards, total savings could be up to 50%

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Space cooling Space heating Hot water Lighting

Highest existing

standards

Average

standards

© IEA 2016

Technology prices drops are opening up new markets

Global annual energy savings from efficient lighting and LED bulb prices

Falling LED prices boosted global investment to $6 billion and generated incremental annual savings of 140 TWh.

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2010 2011 2012 2013 2014 2015 2016

Annual energysavings

(right axis)

United States

IndiaUSD TWh

Price (left axis)

Energy efficiency investment is growing in response to policy

Global incremental investment in energy efficiency by sector, 2015

Investment in energy efficiency increased by 6% in 2015, led by growth in the buildings sector.

USD 221 billion53%

18%

29%

25%

13%

6%

10%9%

9%

15%

13%

Building envelope

Heating, ventilation and cooling

Appliances

Lighting

Energy-intensive industry

Other industry

Light-duty vehicles

Freight and aviation

Buildings

Transport

Industry

The market for energy efficiency services appears poised for growth

Mergers and acquisitions for energy service firms is up since 2000 with their revenues growing to USD 24 billion globally in 2015.

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2000 2002 2004 2006 2008 2010 2012 2014

Number of mergers and acquisitions for energy efficiency services firms

ESCO Market Share(Total market size: USD 24 billion)

United States

6 254

European Union

2 700

China

13 279

Other

1 945

© IEA 2016

EEMR Concluding messages

• Global energy intensity improvement is accelerating, despite declining energy prices, but more is required.

• Policy delivers, but stronger policy is required: Still 70% of global energy use is outside of any mandatory efficiency requirements.

• Energy efficiency is a central component of any suite of actions to meet GHG targets.

• Countries can learn from each other on energy efficiency. The IEA will continue to lead global analysis and knowledge exchange.

Energy efficiency is key to the 2 degree scenario

World Energy Outlook 2016

World energy-related CO2 abatement by scenario

Deintensifying and decarbonizing the energy sector

Global GDP, energy demand and energy-related CO2 emissions trajectories by scenario

World Energy Outlook 2016

© IEA 2016

History indicates that different paths are possible

• A tale of two centuries: OECD Europe

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1820 1840 1860 1880 1900

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= 1

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1900 1920 1940 1960 1980 200019

00 =

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The energy transition: Below 2 degrees is a question of when

All low carbon pathways drive to zero emissions, the issue is how quickly this can be achieved.World Energy Outlook 2016

Indicative global energy sector emissions budgets and trajectories for different decarbonization pathwaysWORLD ENERGY OUTLOOK 2016

© IEA 2016

Thank you

www.iea.org/eemr16