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Energy efficiency markets and theenergy efficiency transition
Institute of Energy Economics, Japan
October 26, 2016
Tyler Bryant, Project Manager @tyler_bryant2
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The Paris Agreement is in effectSubmitted INDCs(1 October)

GHGs flattened in 2014 even with 3% global economic growth – first time in 40 years
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NDCs one step on the journey but we needa sustainable energy transition

GtWorld Energy Outlook Climate Special Report 201536
INDC Scenario
33

30

27
450 Scenario
24

2015

www.iea.org/eemr16

2020

2025

2030

© OECD/IEA 2015

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The global challenge: Climbing down themountain

40000“Getting to the
top is optional.

35000

Mt CO2e30000

Getting down ismandatory.”

25000

20000

Ed Viesturs

15000
10000
5000

2DS

01900
1925
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1950

1975

2000

2025

2050

Sources: CDIAC and IEA© OECD/IEA 2015

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To do this we’ll need a sustainable energytransition

Two transitions from 1850 to 1970, each taking
over 40 years to increase 5% to 25% of supply

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To do this we’ll need a sustainable energy
transition

In 1970, the world was ready for a third
transitionwww.iea.org/eemr16

Data from Smil (2010) and IEA (2015)© OECD/IEA 2015

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To do this we’ll need a sustainable energy
transition

But things have been relatively stable since 1970

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Data from Smil (2010) and IEA (2015)© OECD/IEA 2015

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Transitioning energy supply appears to beheaded in right direction

 Low carbon energy sources grow from 20 to 50% ofprimary energy supply Variable renewable electricity grows from 7 to 20%
100%

80

Renewable

90%

70

Hydro

80%

60

60%

50

50%

40

40%

30

30%

20

20%
10%

100%

0
1971

www.iea.org/eemr16

1990

2010

2030

2050

Biomass and waste
Mt CO2/EJ

70%

NuclearNatural Gas
Coal
Oil
Carbon intensity ofenergy supply© OECD/IEA 2015

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Is renewable energy the savior then?
Energy efficiency savings greater thanprimary renewable electricity
600

Savings
Coal500

OtherEJ

400

HydrogenOil300Commercial heat

200

Electricity
10002012

Natural gas

Biomass and waste
2020

2030

2040

2050

Energy efficiency provides savings by 2050 in the 2DS, being comparable to thefinal energy use of China and the EU combined in 2012.
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So what’s missing?
 The sustainable energy transition is more

fundamentally about how we use energy The age of rapid primary energy supply growth mustend to achieve climate targets

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Index 2012 = 100

The sustainable energy transition is an energy
efficiency transition
350

350

300

300

250

250

200

Decoupling GDPand energy

150
100

Decarbonisation

200
150
100

50

50

0
2000

02000

2010

2020

GDP

2030
TPED

2040

2050
CO2

2010

TPED per GDP

2020

2030

2040

2050

Carbon intensity

Rate of decoupling energy use from GDP needs to be more thandoubled over the next four decades
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Energy Efficiency Market Report The IEA’s flagshipefficiency report Change conversation toinfrastructure and energy
policy Emphasize investment,
markets, and importanceof efficiency in the system
 Backward looking –realevidence and impacts

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Energy intensity is improving but not fastenoughGlobal annual energy intensity gains

0.0%

-1.0%

-2.0%

-3.0%

2003-132013-142014-152016-30(2 degree goal)

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

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Good policy delivers the benefits of energyefficiency

 Energy efficiency is the one energy resource all countries possess inabundance, 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 $221billion.
 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.
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EEMR 2016 Contents

www.iea.org/eemr16

1.

Energy efficiency core indicators

2.

Energy efficiency in China

3.

Policy drivers of the efficiency market

4.

The impact of changing energy prices

5.

Energy efficiency investment

6.

The energy efficiency services market© IEA 2016
© OECD/IEA 2015

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

Total Final Consumption (EJ)

170

Energy demand
without efficiency

160

150
Actual energydemand
140

130
2000

2002

2004

2006

2008

2010

2012

2014

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

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In China, energy demand is decoupling from
economic growth Policies implemented in the 11th Five-Year Plan appears to be thekey factor driving efficiency.

300%

Energy intensity in China
8%

250%

TPES

Change in TPES

7%

Index 2000 = 0

11th FYP

200%

implemented

150%
100%

6%
5%
4%
3%

50%

2%

0%

1%

-50%
2000 2002 2004 2006 2008 2010 2012 2014

GDPTPES

TPES/GDP0%

2013-14

China

World
2014-15

Non-OECD
CAGR (2003-2013)

Total Primary Energy Supply (TPES) growth in 2015 smallest since 1999
a significant change from the average over the last decade.
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In China, efficiency and renewables aredecarbonizing its energy system

Primary energy savings from efficiency gains since 2000 and renewable energy supply in China
400

Mtoe

300

Energysavings

200

Renewableenergysupply

100

0
2008

2009

2010

2011

2012

2013

2014

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

toe per thousand USD 2005 PPP

0.25

Energy intensity projection

0.25

0.20

0.20

0.15

0.15

0.10

0.10

0.05

0.05

0.00

2000

2005

2010

China (Japan trajectory)

www.iea.org/eemr16

2015

2020

2025

2030

0.00

Energy intensity comparison
2000

2013

China

Japan

OECDUnited States

China (450 Scenario)© OECD/IEA 2015

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EE generates multiple benefits

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Energy efficiency is saving CO2 emissions
CO2 emissions savings from efficiency improvements since 2000 in IEA countries and China
3.5

3.0

GtCO2

2.5

IEA countries

2.0
1.5
1.0

China

0.5
0.0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

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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Energy efficiency reducing energy bills
Avoided expenditure on energy from energy efficiency improvements in IEA countries
600

500

USD billions

400
Freight transport
Passenger transport

300

Residential
Industry and services

20010002000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Energy efficiency led to average per capita savings of $500 and $4 trillion cumulatively since 2000.
Savings in Japan were USD 90 billion in 2015 and $700 (JPY 73000) per capita (highest in OECD).

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Energy efficiency is improving energy
security

120

30

100

2580

2060

1540

1020

500EUJapan
CoalOilNatural gas

Korea
Renewables

USD billion (2015)

Mtoe

Avoided imports for IEA members from efficiency gains, 2015

United States

Avoided import expenditure

Efficiency gains in Japan avoided $20 billion in imports and boosted its current
account by 10%.
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Efficiency gains have been driven by theexpansion of policy

Share of global energy use covered by mandatory standards and regulations
Lighting
Light-duty vehicles
2015

Space heatingAppliances
Heavy-duty vehicles

2000

Electric motors
World total0%10%20%

30%

40%

50%

60%

70%

30% of the world's energy consumption is now covered by mandatory standards andregulations, up from 11% in 2000.
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Policy coverage around the world

CanadaEuropean Union
China
United States

Japan
Korea

MexicoIndia

Indonesia

BrazilSouth Africa

Australia

China has the world’s largest coverage thanks to its industrial energy savings targets, Japan increased
its coverage from 14% in 2000 to 40% in 2015, third largest coverage of any country.
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Performance Levels of standards arestrengthening

Stringency increase of performance standards for light-duty vehicles, 2005-15
60%
50%

Stringency increase
2005-2015

40%

30%

Proximity of 2015
standard to BAT

20%
10%
0%

UnitedStatesCanadawww.iea.org/eemr16

EUJapan

China

Korea

MexicoTotal© OECD/IEA 2015

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Performance Levels of standards arestrengthening

Stringency increase of performance standards for air conditioning, 2005-15
70%
60%
50%
40%
30%
20%
10%
0%

CanadaChinaEUIndia

Japan

Stringency increase 2005-2015

www.iea.org/eemr16

Korea

MexicoSaudi Arabia

USProximity to BAT© OECD/IEA 2015

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The IEA’s Efficiency Policy Progress Index
measures growth in policy effectiveness

IEA Efficiency Policy Progress Index (EPPI) increase by end use, 2005-15
18%

35%

16%

30%

14%

25%

12%
10%

20%

8%

15%

6%

10%

4%
2%

5%0%

0%
Residentialbuildings

Transport

Industry

Non-residentialbuildings

TotalSpace
coolingSpace Light duty Water
Large
Electric Heavy duty
heating vehicles heating appliances motors vehicles

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

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The world’s most important efficiency
policies since 2005

The top five policies driving the improvement of the Efficiency Policy Progress Index between 2005-15
Share ofglobal EPPI
improvement

Rank

Country

Sectors

Policy Name

1ChinaIndustry

Top 1 000 - 10 000 programme27%

2

UnitedStates

TransportCorporate Average Fuel
Economy standards

21%

3EuropeanUnion4UnitedStates

5Japanwww.iea.org/eemr16

Buildings,
Energy Performance ofappliances, small
Buildings Directive andappliances andEcodesign Directiveproducts, industry
Building energy codes andResidentialstandards on space heating andbuildings
water heating equipment
Appliances,small
appliances and Top Runner Program
products,
transport

16%

10%

5%

© OECD/IEA 2015

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Policies still have significant potential tosave energy

Energy savings potential of standards as a share of global end-use energy, 2015
80%
70%

Best available
technologies

60%
50%
40%

Highest existing
standards

30%
20%
10%0%

Space coolingSpace heating

Hot waterLighting

Averagestandards

If the best in class standards had been implemented in all countries, global
residential energy consumption would have been 14% lower in 2015.
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Small tech leads to big savings
Global annual energy savings from efficient lighting and LED bulb prices
801607014060

120

50100

USD 4080 TWh30602040

10200020102011201220132014

2015

Price (left axis)
United States

India

Annual energysavings(right axis)

2016

Falling LED prices boosted global investment to $6 billion and generated incremental
annual savings of 140 TWh.
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Vehicle fuel economy standards havehelped to moderate price falls

Sales and average annual fuel economy of light-duty trucks, United States
11.5

8

10.5

6

9.5

4

8.5

2

7.5

0

6.5
2010

2011

2012

2013

2014

Fueleconomy(right axis)

Lge per 100 km

Sales (millions)

102015Light-duty truck sales hit record levels in the United States in 2015, but standards
ensured overall new vehicle fleet efficiency still improved.
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Energy efficiency investment is growing in
response to policy
Global investment in energy efficiency by sector, 2015
Building envelope
Transport

13%

Heating, ventilation andcooling
Appliances

0%
0%

25%

29%

Lighting

15%

USD 221 billion 53%
9%

13%
18%

6%

9%

Industry

Buildings

Energy-intensive industry
Other industry
Light-duty vehicles

10%

Freight and aviationInvestment in energy efficiency increased by 6% in 2015, led by growth in thebuildings sector.
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The market for energy efficiency services
appears poised for growth

Global energy service company revenues by country/region, 2015
Other
USD 1.9 billion

China
USD 13 billion

United States
USD 6.3 billion

European Union
USD 2.7 billion

The global energy services market was USD 24 billion in 2015 and indicators point tofuture growth.
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Conclusion Global energy intensity improvement is accelerating, despite

declining energy prices, but more is required.
 Because of the sheer size of its energy use, energy efficiency

gains in China will continue to impact global energy markets.
 Policy delivers, but stronger policy is required: Still 70% of global

energy use is outside of any mandatory efficiency requirements.
 Countries can learn from each other on energy efficiency. TheIEA will continue to lead global analysis and knowledge
exchange.
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