Energy Efficiency 2019

The authoritative tracker of global energy efficiency trends

"The historic slowdown in energy efficiency in 2018 – the lowest rate of improvement since the start of the decade – calls for bold action by policy makers and investors."
Fatih Birol, Executive Director, IEA

Energy efficiency has tremendous potential to boost economic growth and avoid greenhouse gas emissions, but the global rate of progress is slowing – a trend that has major implications for consumers, businesses and the environment. Energy Efficiency 2019 examines in detail the reasons for this recent deceleration in efficiency progress and also includes a special focus on the ways in which digitalisation is transforming energy efficiency and increasing its value.

 

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Global energy efficiency improvements are slowing

In 2018, primary energy intensity - an important indicator of how much energy is used by the global economy - improved by just 1.2%, the slowest rate since 2010.

This was significantly slower than the 1.7% improvement in 2017 and marked the third year in a row the rate has declined. It was also well below the average 3% improvement consistent with the IEA's Efficient World Strategy, first described in Energy Efficiency 2018.

	World	World
2000-09	1.3763079	0
2010-14	2.0635666	0
2015	2.9325519	0
2016	2.526278	0
2017	1.7152439	0
2018	0	1.2112331
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... which is a lost opportunity for the global economy

The 1.2% improvement in energy intensity equated to around $1.6 trillion more GDP for the amount of energy used compared to 2017.

However this figure could have been $4 trillion – an amount greater than the size of the German economy – had energy intensity improved at 3% every year since 2015.

	Actual energy productivity bonus	Additional bonus from 3% energy intensity improvement rate
2015	3.580101459	0.0848883
2016	3.184402034	0.618242223
2017	2.242147802	1.753541641
2018	1.639084237	2.573637345

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Three factors are driving the slowdown

1 – Industry and weather

In terms of demand, energy-intensive industries in countries including China and the United States increased their share of industrial production and pushed up demand for all primary energy fuels.

	China	Rest of the world
2010	638.7428	794.689554
2011	701.9684	836.0345562
2012	731.0395	829.0919449
2013	821.9996	828.3886166
2014	822.3063	847.0571736
2015	803.825	816.3587751
2016	807.6094	819.544249
2017	870.8545	858.968074
2018	924.3735	866.084799

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Source: World Steel Association

Weather also played a role: In the United States, a cooler winter and a warmer summer drove up energy use for both heating and cooling.

In Europe, a milder winter cut gas demand for heating, a major factor behind a 2% improvement in energy intensity, up from 1.4% in 2017.

	Monthly temperature anomaly (left axis)	Change in US residential gas demand (right axis)
April	-2.16	45
September	-1	0
October	-1.39	30
November	-2.42	41
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Source: NOAA and EIA

On the supply side, after three years of flat growth or decline, coal power generation increased in 2017 (3%) and 2018 (2.5%) to supply stronger electricity demand growth. More fossil fuel-based electricity generation increases primary intensity because energy is lost when these fuels are converted from primary to final energy.

	Renewables	Gas	Coal	Other	Primary energy intensity improvement (right axis)
2014	236.125	106.764	73.32	15.716	2.093866732
2015	218.966	403.73	-153.464	-15.23	2.932551867
2016	402.871	247.28	33.607	-11.646	2.526278014
2017	337.387	59.285	276.236	-56.522	1.715243925
2018	445.9430012	239.1554984	260.0089364	48.96648139	1.211233083

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2 – Broader trends

Longer-term structural factors are also playing a part in the slowdown. While technologies and processes are becoming more efficient, structural factors, like changes in transport modes and more building floor area per person, are dampening the impact of these technical efficiency gains on energy demand, and slowing global energy intensity improvements.

	Technical efficiency	Blank	Structural change	Structural change
2012	-2.013640392	-2.013640392	-1.850237531	
2013	-2.143622194	-2.143622194	-2.288356859	
2014	-3.477336422	-2.717758268		-0.759578154
2015	-6.436045349	-5.802572961		-0.633472388
2016	-6.401652216	-5.840509293		-0.561142923
2017	-5.301040499	-4.468070144		-0.832970355
2018	-3.648249616	-1.927171497		-1.721078119

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In transport, despite improvements in vehicle efficiency, energy use continues to grow.

Amongst other factors, sales of new, more efficient vehicles have slowed, consumers prefer larger cars, and typical vehicle occupancy rates have fallen.

 

In residential buildings, structural changes have consistently matched or outpaced efficiency gains since 2014.

These include increased device ownership and use and a significant growth in average per-capita residential floor area in all economies.

 

3– Policy progress and investment are flat

The coverage of mandatory efficiency policies increased in 2018, but this was almost exclusively due to existing policies. Meanwhile the strength of mandatory policies increased by less than 0.5%, slightly higher than the previous two years, though still below the five-year historical average, indicating more can be done to ensure mandatory policies are effective. The coverage and strength of energy efficiency obligation programmes remained largely unchanged.

	Covered	Uncovered
2010	21.77624507	78.22375493
2011	26.53768965	73.46231035
2012	27.8627322	72.1372678
2013	28.82992375	71.17007625
2014	29.89775547	70.10224453
2015	30.87012792	69.12987208
2016	32.13937005	67.86062995
2017	33.21860604	66.78139396
2018	34.6770481	65.3229519

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Levels of investment targeting efficiency have remained largely unchanged since 2014.

At $240 billion, incremental efficiency investments across the buildings, transport and industry sectors were about 0.6% higher in 2018 than in 2017, but still well below the levels required to capture the cost-effective opportunities available.

	China	Europe	North America	Other
2014	49.04559096	72.17559348	47.1866515	68.03776324
2015	56.90114005	73.52854017	53.62668643	47.26603596
2016	50.24218858	78.35943106	58.16327269	50.97979015
2017	60.33499281	76.00079137	48.24163952	54.84903767
2018	61.14619174	76.4854785	46.80521683	56.54068587

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Efficiency continues to deliver benefits

For energy security...

In terms of energy security, importing countries reduced their exposure to oil market instability through technical efficiency improvements. In 2018, efficiency improvements since 2000 reduced oil imports in the world’s major economies by over 165 mtoe, similar to the combined annual primary oil demand of Germany, Australia and Belgium.

This had signifcant financial benefits for oil importers. For example, in 2018 Japan spent $20 billion less on imported oil thanks to a 20% reduction oil imports due to efficiency improvements since 2000. China reduced spending on imported oil by a similar amount, as efficiency gains since 2000 cut oil imports equivalent to 10% of total imports.

	Oil import reduction
Japan 	-20
South Africa 	-13
Germany	-11
China	-10
India	-8
Mexico	-7

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... and lowering emissions

Technical efficiency gains continue to deliver cuts in energy-related emissions. Between 2015 and 2018, technical efficiency improvements reduced energy-related carbon emissions by 3.5 gigatonnes of carbon dioxide (GtCO2), roughly the equivalent of the energy-related emissions of Japan over the same period.

This is helping to bring the world closer to an emissions trajectory consistent with achieving global climate change goals.

	Emissions without technical efficiency gains	Actual emissions	Primary intensity improvement consistent with EWS
2000	23.71285936	23.588433	
2001	24.12773656	23.906096	
2002	25.29281218	24.942655	
2003	26.42518488	26.117202	
2004	27.3450442	27.074804	
2005	28.79248489	27.933529	
2006	30.31807567	28.983814	
2007	30.86176857	29.229233	
2008	30.31848026	28.845301	
2009	31.86187341	30.571351	
2010	33.17599169	31.392577	
2011	33.76687016	31.777485	
2012	34.52096347	32.362856	
2013	34.92502486	32.43916	
2014	35.53204216	32.430863	32.430863
2015	36.15374609	32.413755	32.413755
2016	37.20383462	32.839858	32.1166837
2017	38.18623705	33.4638153	32.1166837
2018			32.12265875
2019			32.04543254
2020			31.75516571
2021			31.61577484
2022			31.44281203
2023			31.26342149
2024			31.09136443
2025			30.99920006

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Modernising energy efficiency through digitalisation

Digitalisation is modernising energy efficiency and increasing its value – and it can unlock greater efficiency if barriers are removed.

At a time of deep change in the energy system, with larger shares of intermittent generation being added to electricity systems, digitalisation is making demand-side energy efficiency a more valuable resource than in the past. This is because in addition to providing gains in end-use efficiency, many digital technologies also provide other services, such as flexible load, that increase the efficiency of the entire system.

While end-use efficiency has always had system benefits, digitalisation allows for these benefits to be measured and valued more quickly and more accurately. 

Digitalisation can unlock greater efficiency if barriers are removed

 

Returning the world to a less energy-intensive pathway will require new approaches to boosting energy efficiency. Digitalisation offers opportunities for gains in both end-use and system energy efficiency– if the right policies are in place.

Policy recommendations

Policy could accelerate the adoption of digital technologies for energy efficiency but policy focused on digital technologies for efficiency is still rare.

The IEA has identified a set of critical policy considerations within its new Readiness for Digital Energy Efficiency policy framework. The framework is designed to ensure the benefits of digital energy efficiency are realised through policies that address a range of issues: from balancing data accessibility with data privacy, to helping remove regulatory barriers to innovation.

  • Improve access to energy-related data
  • Ensure adequate protection from cyber security and data privacy risks
  • Strengthen trust in digital technologies
  • Ensure energy markets value the services provided by digital energy efficiency
  • Ensure equitable access to digital technology and infrastructure
  • Increase digital skills and plan for job market transformation
  • Minimise negative environmental impacts
  • Encourage technology and business model innovation

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