07 Energy Efficiency

Global Overview

Many policy makers consider energy efficiency to be a priority for achieving various energy goals, including improved energy security and energy access, reduced air pollution and fuel poverty, employment growth and industrial competitiveness.1 Moreover, scenarios for achieving CO2 emissions reductions recognise that energy efficiency will play a critical role.2 Energy efficiency also has significant synergies with renewable energy; together they can achieve more than the sum of their partsi. For example, energy savings help renewable energy to meet a higher share of energy demand at a lower cost and open up new markets. Shifting from thermal power to non-thermal renewables also improves primary energy efficiency.

Energy efficiency policies are the main driver of investment in energy efficiency, with innovations in technology and finance also playing important roles. Thus, despite lower oil prices in 2015 and much of 2016, households, businesses and governments continued to invest strongly in energy efficiency.3

Due to a lack of precise indicators of energy efficiency, energy intensity often is used as a proxy for energy efficiency trends, even though it also is affected by structural changes in the economy and by changes in the energy mix. Primary energy intensity is measured as total primary energy supply (TPES) per unit of gross domestic product (GDP). Alternatively, final energy intensity is measured as total final consumptionii (TFC) per unit of GDP. TFC intensity may better reflect trends in end-use energy efficiency than TPES intensity because it excludes losses in power generation or fuel conversion.4 However, primary energy data usually are available earlier and generally are more reliable. Also, TPES intensity is more relevant to monitoring overall energy demand and related greenhouse gas emissions.

In 2015, global primary energy intensity improved by 2.6%.5 That is the average rate that needs to be achieved between 2010 and 2030 to meet the Sustainable Development Goal 7 target of doubling the rate of improvement in energy efficiency.6 However, between 2010 and 2015, energy intensity declined by only 10.2% overall – an average annual rate of 2.1%.7 Over the same period, TPES grew by 1.3% per year, amounting to a total increase of 6.8%.8 (→ See Figure 53.)

Energy intensity, whether primary or final, varies widely among regions and countries. In 2015, primary energy intensity improvements were less marked in developed economies than in developing and emerging economies, most of which are still growing rapidly and have more efficiency potential remaining. For example, China’s primary energy intensity improved by 5.8% in 2015 as the country’s TPES increased by 0.9% (the lowest rate since 1997), even as GDP grew by 6.9%.9 India’s economy also has become steadily less energy-intensive over the past decade.10 Brazil, on the other hand, has experienced rising primary energy intensity since 2012, and energy intensity of electricity generation in Vietnam increased by 70% between 2004 and 2014 (driven in part by a rising share of coal-fired power generation).11

Figure 53. Global Primary Energy Intensity and Total Primary Energy Supply, 2010-2015

High levels of primary energy intensity are due to some combination of: a relatively large share of energy-intensive economic activities, the use of less energy-efficient technologies, under-utilisation of power generation capacity, and a relatively large share of thermal power generation, in particular coal. For example, China’s primary energy intensity decline in recent years is due in large part to structural changes in the economy away from heavy industry and towards services and high value-added manufacturing (in line with China’s overall growth policy), as well as towards a more low-carbon energy mix.12 China’s 13th Five-Year Plan aims to lower coal’s 2020 share of primary energy from 62% to 58%.13 Structural change has been important for reducing energy intensity in several other countries as well, including the United States and Canada.14

Total final consumption in member countries of the Organisation for Economic Co-operation and Development (OECD) as a whole peaked in 2007.15 Isolating energy efficiency from activity and structural effects requires detailed data that are not always available. Nevertheless, decomposition analysis of IEA countries for which data are available finds that, in 2015, energy efficiency was responsible for more than 80% of the downward pressure on energy consumption.16

Global TPES in 2014 (the most recent data available) was 13,699 million tonnes of oil equivalent (Mtoe), of which nearly 38% was allocated to power generation.17 Global TFC in 2014 was 9,425 Mtoe; of this total, more than 32% was consumed in buildings, 29% in industry and nearly 28% in transport, with the remainder consumed in other sectors and for non-energy applications. Electricity makes up a portion of final energy use in all end-use sectors, and energy efficiency in power generation must be gauged in terms of its primary energy use. By contrast, the efficiency of end-use sectors is better measured in the context of final energy use.

The next few sections examine primary energy efficiency in the generation of electricity, followed by efficiency of final energy use in the buildings, industry and transport sectors. The chapter also covers recent trends and developments in energy efficiency investment and finance, as well as policies and programmes.

Electricity Generation

Primary energy efficiency in the power sector can be improved mainly by shifts in the energy mix and by improving the efficiency of electricity generation technologies. Further efficiency gains can be achieved through combined heat and power (CHP), which captures waste heat for thermal applications, as well as through reduced transmission and distribution losses.

Thermal power plants convert only about one-third of their energy inputs to electricity (38% on average for OECD generation), while conversion losses for non-thermal renewable energy such as hydro, wind or solar power are low and generally are not accounted for in energy balances.18 Therefore, achieving greater shares of non-thermal renewable power increases primary energy efficiency.

The efficiency of electricity generation ranges from about 30-35% in the Russian Federation and the Middle East to almost 55% in Latin America, where a significant share of electricity is generated by hydropower. Electricity generation efficiency improved between 2000 and 2014 in all regions except Latin America, where it declined by 0.6% because hydropower output declined and was replaced by fossil fuel generation.19 In Europe and North America, efficiency improved with rising shares of natural gas and increasing use of CHP.20

In addition to fuel switching, the efficiency of the electricity generation sector can improve through advances in the efficiency of generation technologies themselves. The efficiency of fossil fuel power plants increased in all regions between 2000 and 2014. Gas-fired plants experienced the highest rate of improvement, with the increase in efficiency exceeding 20% in North America and Africa.21

Energy also is lost through electricity dissipation in the grid and through non-technical losses. In 2014, global transmission and distribution losses averaged 8.6%, with lower rates in developed regions and far higher losses in some developing countries.22 More-efficient transformers and cables can reduce transmission and distribution losses, as can demand management and automation. In some circumstances, increased use of distributed energy can reduce transmission and distribution losses by producing electricity closer to where it is used. Non-technical losses may be addressed through better management of the grid and billing system.23

Buildings

Buildings account for nearly one-third of global TFC, of which almost three-quarters is consumed in residential buildings, with the remainder used in commercial facilities (services).24 The largest portion of TFC in the sector comes in the form of electricity (30%), followed closely by modern and traditional uses of biomass for heating and cooking (29%), and by natural gas (21%).25 Efficiency of energy use in buildings is affected by building envelopes, design and orientation, as well as by the efficiency of energy-consuming devices, including climate control systems, lighting, appliances and office equipment. Energy intensity per square metre in the buildings sector has improved in many regions, but not rapidly enough to offset the doubling of floor area since 1990.26

Markets for more-efficient building materials, technologies and equipment are growing worldwide, both for renovation and new construction. The largest market is in Europe, where it is driven by building energy codes and energy prices. North America and Oceania are major markets as well.27 Net zero energy buildings (NZEBs) take fullest advantage of the synergies between energy efficiency and renewable energy by facilitating the use of on-site renewable energy in meeting building energy loads (→ see, for example, heat pumps in the Enabling Technologies chapter.) The number of NZEBs remains small but continues to rise, particularly in Europe but also in the United States and Canada.28

The buildings sector accounts for around half of world electricity demand.29 In residential buildings, global average electricity consumption was nearly flat between 2010 and 2014 (0.2% average annual increase).30 In North America, Europe and the Pacific, electricity consumption per household declined between 2010 and 2014, in part a result of improved energy efficiency. These declines were outweighed by increases elsewhere.31 (→ See Figure 54.)

Electricity demand for appliances has been increasing steadily for decades, due largely to a rapid increase in units per household, in addition to the growing number of electrified households. In developed countries, TFC growth for appliances has slowed significantly over the past decade as markets for some products have approached saturation and as energy efficiency has increased.32 However, energy efficiency improvements have not yet cancelled out growing demand for some categories, such as mobile phones, televisions and networked devices.33

Figure 54. Average Electricity Consumption per Electrified Household, Selected Regions and World, 2010 and 2014

The market share of efficient lighting solutions also is growing rapidly, as a result of declining light-emitting diode (LED) prices, international initiatives, green procurement policies and policies to phase out incandescent lamps.34 Smart lighting controls have the potential to improve the energy efficiency of lighting systems even further.

Energy efficiency in the service (commercial) sector can be indicated by the ratio of electricity consumption to value-added in commercial activity, in constant purchasing power parity (PPP). Between 2010 and 2014, the electricity intensity of the service sector declined in every region except the Middle East and Latin America.35 (→ See Figure 55.)

As with other sectors, the energy intensity of services is the product of several factors. These include structural changes within the sector (e.g., between more energy-intensive sub-sectors, such as hospitals, and less energy-intensive ones, such as warehouses) and across the economy, the growth of building size relative to sector GDP, and the uptake of more-efficient technologies.36

Industry

The ratio of industry TFC to industry value-added (PPP) is an indicator of the intensity of the industry sector as a whole. It can be improved by structural changes, such as displacement of heavy industry, higher utilisation rates of equipment during a period of strong economic activity, or growth in less energy-intensive sub-sectors, as well as improvements in energy efficiency.37 Measures of industrial energy intensity based on physical production would be better but require data that often are lacking.

Between 2010 and 2014, TFC intensity of the global industrial sector decreased by an average of 1.5% annually and improved in all regions, with the fastest improvement observed in Asia.38 (→ See Figure 56.)

In China, structural changes in energy-intensive sectors in recent years have tended to balance each other out.39 However, structural change is expected to be an important factor influencing energy use.40 India, driven by policy (e.g., Make in India), is seeing growth in the manufacturing sector. A focus on manufacturing brings economic benefits but also tends to increase the energy intensity of the economy, making energy efficiency improvements all the more important.41

Industrial energy efficiency can be influenced by changes in industrial processes and also by changes in capacity utilisation. For example, the energy intensity of the steel sector of the EU worsened after 2007 due to the economic recession, in large part because the energy consumption of steel-producing equipment did not decline in proportion to lower utilisation of plant capacity.42

Figure 55. Electricity Intensity of Service Sector, Selected Regions and World, 2010 and 2014

In general, varying performance by the steel sectors of different countries is explained in large part by their process mixes. For example, the use of electric-arc furnaces in steel production and recycling requires two to three times less energy than the oxygen process.43

Figure 56. Energy Intensity of Industry, Selected Regions and World, 2010 and 2014

Transport

There is significant untapped energy efficiency potential in the transport sector. The energy intensity of the sector is affected by energy efficiency improvements within transport modes (rail, road, aviation, shipping) and by shifts between transport modes (e.g., from private car use to public transport, from road freight to rail). Between 2010 and 2014, the final energy intensityi, of world transport overall declined by an annual average of 2.5%, driven mostly by advances in road transport.44 Most regions saw an improvement over the four-year period, except for Africa (1.3% annual growth) and Latin America (virtually unchanged).45

Road transport accounts for 75% of transport energy use.46 Improvements in the global average fuel economy (fuel used per unit of distance) of light-duty vehicles averaged 1.5% per year for the decade 2005-2015, slowing gradually to 1.1% in 2015.47 Improvements in OECD and EU countries have slowed after relatively rapid improvement of 2.8% annually between 2008 and 2010, falling to 0.5% in 2015.48 Conversely, annual improvements in non-OECD countries accelerated from 0.3% annually between 2008 and 2010, to 1.6% in 2015.49

Progress has been much slower in the freight sector than for passenger vehicles, due to a relative lack of fuel economy standards. Heavy-duty vehicles make up only 11% of the world’s vehicle fleet, yet they consume around half of all transport fuels.50

Electric vehicles, including plug-in hybrid vehicles, can drive improvements in fuel economy on a final energy basis.51 As the share of non-thermal renewable energy in electricity increases, the contribution of such vehicles to primary energy efficiency will increase as well. However, because the share of EVs is still extremely small, advances in internal combustion efficiency are still a critical component of energy efficiency improvements in road transport.52 (→ See Electric Vehicles section in the Enabling Technologies chapter.)

Aviation accounts for about 13% of fossil fuel use in transport worldwide.53 Aviation fuel efficiency can be increased through operational measures such as reducing the weight of on-board equipment and through improved aircraft design and materials. Shipping consumes about 4% of total transport energy use.54 Technology and supply chain innovation can deliver savings in that sector.55

The efficiency of transport also is improving through the spread of more sustainable modes such as electric trams and bus rapid transit (BRT). By early 2016 at least 200 cities had BRT systems, transporting more than 33 million passengers per day.56 The BRT system in Bogota (Colombia) replaced ageing public buses with more efficient models, delivering 47% savings in fuel consumption.57

Finance And Investment

In 2015, global incrementali investments in energy efficiency in buildings, industry and transport increased by 6%, to USD 221 billion.58 The buildings sector led with an estimated 53% of the total, followed by transport (29%) and industry (18%).59 Investments in energy-efficient assets and technologies yield estimated two- to four-fold returns in lifetime cost savings.60 Most energy efficiency investments are made using the cash and savings of individuals and businesses, or directly from public money.61 The remainder is financed primarily by traditional commercial banks through loans and leases. Increasingly, however, financing is coming from other sources, including dedicated national energy funds, green banks, development finance institutions (DFIs) and green bonds.

As of 2016, at least 40 countries had dedicated energy efficiency funds, led by Germany's development bank KfW.62 During the year, new facilities were established in Poland, where a multistakeholder partnership set up a residential buildings energy efficiency financing facility of USD 214 million (EUR 200 million), produced a benchmarking report on operating costs in commercial buildings and created a platform for public-private dialogue and action; and in Latvia, which established an energy efficiency fund as part of its law to implement the Energy Efficiency Directive.63 In addition, Ukraine worked to develop an Energy Efficiency Fund for district heating and related energy efficiency activities. An amount of USD 31 million was allocated to the fund, and additional monies totalling up to USD 110 million were expected to come from international partners; the fund was scheduled to start operations in 2017.64

Green banks at the national level (e.g., United Kingdom) and sub-national level (e.g., the US states of Connecticut and New York) continued to scale up their lending in 2016, and more than a dozen banks were operational around the world by year’s end.65 These banks have a strong focus on energy efficiency, and they provide funds – as well as advice and clarity on default risk – for programmes in areas such as energy efficiency retrofits and street lighting.66

DFIs also play an important role in energy efficiency investment by providing loans, guarantees, credit lines and other products. In 2015, multilateral development banks invested an estimated USD 2.9 billion in energy efficiency (a slight drop relative to 2014).67 DFIs undertook a number of significant initiatives in 2016 as well.

In 2016, the Green Climate Fund allocated USD 378 million to support sustainable energy financing (including energy efficiency and renewable energy) by the European Bank for Reconstruction and Development (EBRD) in Armenia, Egypt, Georgia, Jordan, Moldova, Mongolia, Morocco, Serbia, Tajikistan and Tunisia.68 In November, the EBRD announced a USD 35 million expansion of the Kyrgyz Sustainable Energy Financing Facility, alongside grants from the EU, to improve energy and resource efficiency.69 An EBRD-arranged USD 122 million (EUR 116 million) package will allow the CEZ utility in Bulgaria to upgrade distribution infrastructure, which will reduce grid losses.70

In addition, the EBRD and the European Investment Bank (EIB) announced loans of USD 49 million (EUR 46.5 million) to Tunisia for the state utility to improve the efficiency of the country’s transmission infrastructure.71 The EIB approved two lending programmes under the European Fund for Strategic Investments for nearly zero energy buildings (nZEBs) in Finland, for a total of USD 337 million (EUR 320 million).72 Also in 2016, the EIB confirmed its contribution of an additional USD 26 million (EUR 25 million) to the Green for Growth Fund, to support energy efficiency and renewable energy projects across North Africa as well as in Jordan, Lebanon and the State of Palestine.73

The Asian Development Bank announced plans to loan India USD 200 million to install energy-efficient water pumps for farms and millions of LEDs via a public-private joint venture.74 The African Development Bank approved a USD 948 million (EUR 900 million) loan for Algeria to improve the efficiency of its energy sector and to promote renewable energy. The AfDB also approved USD 19 million for energy sector reform in Madagascar, including improvements to efficiency of the country’s electricity production.75 Also in 2016, the International Finance Corporation (IFC) offered technical assistance to Belgrade (Serbia) to boost the energy efficiency of public buildings, district heating and street lighting.76

In recent years, green bonds have emerged as a substantial source of capital for energy efficiency projects. As of November 2016, 19.6% of projects financed by green bonds were for energy efficiency improvements.77 DFIs have dominated the financing of such improvements through the issuance of green bonds. During the first half of 2016 alone, the IFC issued USD 1 billion of green bonds to fund projects in 22 countries, with green banking and green buildings being the two largest sectors.78 However, utilities and other businesses, local authorities, commercial banks, universities and governments are playing an increasingly important role. Luxembourg and Nigeria both announced forthcoming issuances, and the governments of France and Poland issued green bonds in December 2016 and January 2017, respectively.79 Also in 2016, the US state of California was the lead investor in a USD 200 million, two-year green bond issued by the International Bank for Reconstruction and Development.80

The G20 Energy Efficiency & Finance Task Group began to mobilise policy makers and financial institutions in 2016, notably by developing a set of voluntary energy efficiency investment principles to enhance capital flows.81 In addition, the EU launched an initiative to improve transparency and reduce risk for energy efficiency investors: the De-risking Energy Efficiency Platform (DEEP) is an online database that contains more than 7,800 industrial and buildings-related projects.82

Policies And Programmes

Throughout 2016, governments at the regional, national, state and local levels continued to expand and strengthen their policies to improve energy efficiency in the buildings, industry and transport sectors. Drivers for such policies include increasing energy security, advancing economic growth and competitiveness, reducing fuel poverty and mitigating climate change.83 In developing countries, increased efficiency can make it easier to provide energy services to those who lack access.84 Energy efficiency policies – including targets and plans; standards, labels and codes; monitoring and auditing programmes; mandates; and fiscal incentives – aim to address a number of barriers to accelerating energy efficiency actions. These include a lack of knowledge and capacity, energy subsidies and regulatory barriers, and misplaced incentivesi across different stakeholders.85

Targets help guide policy development and benchmark policy implementation. They vary in their time horizons, geographical areas, definitions, sectors and levels of ambition. Targets are articulated in terms of energy savings or reductions in energy consumption, improvements in energy intensity, or sales or dissemination of more energy-efficient products. Many targets do not provide sufficient detail regarding how or by when they are to be achieved, and many countries (developing and emerging economies, in particular) do not report regularly on progress towards national goals.

During 2015 and 2016, there was a surge in the adoption of energy efficiency targets, especially in developing and emerging economies.86 Of the 140 countries that had ratified the Paris climate change agreement and submitted Nationally Determined Contributions as of late March 2017, 107 mentioned energy efficiency, including both the United States and China.87 Among all NDCs submitted by developing and emerging economies, 79 included energy efficiency targets.88 Brazil, for example, pledged a target of 10% efficiency gains in the electricity sector by 2030 in its NDC.89 Members of the Association of Southeast Asian Nations (ASEAN) set a target to reduce energy intensity by 20% in 2020 compared to 2005.90

By end-2016, at least 137 countries had enacted some kind of energy efficiency policy, and at least 149 countries had enacted one or more energy efficiency targets. Of these countries, 48 enacted a new or revised policy in 2016, and 56 countries adopted a new target in 2015 or 2016.91 (→ See Figures 57 and 58.)

China has strengthened its policy framework for achieving energy savings in successive Five-Year Plans. The 13th Five-Year Plan (2016-2020) targets, by 2020, a 15% energy intensity improvement (relative to 2015 levels) and 560 Mtoe of energy savings annually.92 Economic restructuring is planned to make up 65% of the targeted energy savings; energy efficiency improvements are to deliver the rest.93

Norway presented a new energy policy that targets an energy intensity improvement of 30% between 2015 and 2030.94 In late 2016, Belarus called for energy efficiency improvements at all stages of energy supply as part of its effort to increase national energy security, and in early 2016 the country approved a state energy policy for 2016-2020 that includes energy-saving targets and programmes.95

Energy efficiency targets were adopted at the regional level as well. In late 2016, the European Commission published a new package of energy policy proposals that includes a binding 30% energy savings target by 2030.96 The EU’s previous (non-binding) target called for 27% energy savings by 2030 relative to 1990, which the region is on track to meet.97 European policy makers also have adopted an “Efficiency First” principle, which prioritises cost-effective end-use efficiency improvements over supply-side expenditures.98

A large number of energy efficiency targets are articulated in National Energy Efficiency Action Plans (NEEAPs) in the EU but also in other Eastern European and African countries.99 For example, Nigeria published its NEEAP in July 2016, and efforts were under way during the year to co-ordinate NEEAPs (and National Renewable Energy Action Plans) across Africa.100

Targets that address more than one end-use sector are the most common, yet many new sector-specific targets are being adopted. For example, India aims to replace 770 million incandescent lamps with LED bulbs by 2019; as of March 2016, the programme was running in 12 states, and over 170 million LEDs had been sold.101 Uganda and other countries have similar LED distribution programmes and targets.102 In mid-2016, as part of Japan’s effort to achieve its NDC commitments, the country announced its aim to make more than half of new built-to-order homes zero energy by 2020, and the government is providing subsidies to advance that goal.103

Figure 57. Countries with Energy Efficiency Targets, 2016

Many other countries have targets for both renewable energy and energy efficiency, often defined through roadmaps and national action plans.104 As of 2016, at least 103 countries addressed energy efficiency and renewable energy within the same government agency, and an estimated 81 countries had policies or programmes that combine them.105

To achieve their targets, governments are introducing new regulations or updating existing ones to drive efficiency improvements in all economic sectors. For example, in late 2016, the US state of Illinois introduced new electricity demand reduction mandates for utilities as part of the state’s Renewable Portfolio Standard.106 In 2016, the European Commission proposed an update to the EU Energy Efficiency Directive that included measures to ensure that new proposed energy efficiency targets (30% improvement by 2030) are met.107 Several governments in Europe and elsewhere – including China, India and the Australian state of Victoria – have experimented with the use of tradable certificates to meet energy efficiency mandates or targets.108 Design challenges with such schemes include verification and risk of leakage.109

In 2016, several countries advanced building codes, which generally establish minimum energy efficiency standards to guide construction or retrofit. For example, Norway and the US state of Alabama introduced building codes with tighter energy efficiency requirements.110 By year’s end, Indonesia was in the process of developing a Green Building Code, and several West African countries were implementing building energy codes in accordance with a directive of the Economic Community of West African States (ECOWAS).111 At the local level, the city of Santa Monica (United States) approved a mandate requiring that all new single-family homes qualify as zero net energy.112 As of early 2017, at least 139 building energy codes were in place worldwide, including many at the sub-national level.113

Figure 58. Countries with Energy Efficiency Policies, 2016

Standards and labelling programmes also are used to move markets towards more-efficient appliances and equipment. As of 2015, 30% of final energy demand globally was covered by mandatory efficiency policies, up from 11% in 2000; the average performance requirements of such policies have increased by 23% over the last decade.114 More than 50 types of commercial, industrial and residential appliances and equipment were covered by such programmes in more than 80 countries by 2015.115

In the transport sector, fuel economy standards are helping to advance the energy efficiency of passenger vehicles. By one estimate, car fuel economy standards worldwide saved 2.3 million barrels of oil per day in 2014, or 2.5% of global oil demand, assuming that efficiency would have remained stagnant in the absence of new standards.116 At least eight countries (Brazil, Canada, China, India, Japan, Mexico, the Republic of Korea and the United States) plus the EU have established fuel economy standards for passenger and light-commercial vehicles as well as light trucks.117

While most efficiency standards in the transport sector focus on light-duty vehicles, China, Japan and the United States also have set fuel economy standards for heavy-duty vehicles.118 In 2016, the United States announced a new regulation for medium- and heavy-duty trucks, and China was updating its fuel consumption regulations for heavy-duty vehicles.119 As of 2015, Canada and Japan had implemented efficiency regulations for heavy-duty vehicles.120

Monitoring and auditing energy use helps governments and businesses establish a basis for energy management systems in buildings and industry. Energy audits analyse energy flows within a building, process or system to identify ways to reduce energy use without negatively affecting output. Audits are mandatory for EU Member States as part of their implementation of the Energy Efficiency Directive.121 In addition, many developing and emerging economies, such as Mali and Morocco, require energy audits for large industrial energy users.122 Singapore requires more than 165 energy-intensive industrial companies to implement energy management programmes.123

The need for careful design and monitoring of standards and labelling programmes can pose challenges in implementation, particularly where adequate funding and policy support are lacking. For instance, Uganda has Minimum Energy Performance Standards (MEPS) for five product groups (refrigerators, air conditioners, motors, lighting and freezers) but has had difficulty implementing and enforcing them because the country lacks funding, personnel and testing equipment.124

Fiscal incentives – including rebates, tax reductions and low-interest loans – also have been employed to stimulate energy efficiency improvements. In 2016, for example, Ireland implemented a three-year Warmth & Wellbeing pilot scheme with a budget of approximately USD 21 million (EUR 20 million) to provide home energy efficiency improvements for people living in energy poverty and suffering from chronic respiratory diseases.125

Further, reductions in subsidies for fossil fuels, while politically difficult, make energy efficiency improvements (and renewable energy deployment) more attractive and reduce the burden on national budgets. Conversely, greater energy efficiency can make subsidy reform more feasible.126 By the end of 2016, more than 50 countries had committed to phasing out fossil fuel subsidies under G20 and Asia-Pacific Economic Cooperation (APEC) processes.127

In addition to government policies and programmes, several collaborative activities to advance energy efficiency were undertaken by the international community during 2016. The SEforALL Global Energy Efficiency Accelerator Platform developed implementation projects in 110 countries.128 In addition, the Global Fuel Efficiency Initiative continued its work with developing countries to develop appropriate national approaches and targets for improved car-fleet fuel economy.129

The Building Efficiency Accelerator held events in several cities in 2016, including Belgrade (Serbia), Bogota (Colombia), Da Nang (Vietnam), Eskisehir (Turkey) and Rajkot (India). Each city will be supported in 2017 to develop and implement at least one policy and one project on energy efficiency in buildings, to track progress and to share lessons learned.130

The District Energy in Cities Initiative, co-ordinated by the UN Environment Programme and launched in 2015, aims to double the rate of energy efficiency improvements for heating and cooling by 2030.131 In 2016, the initiative worked in several countries, including Bosnia and Herzegovina, Chile, China, India and Serbia.132 New funding announced by Italy in 2016 will be used to expand the initiative to Africa.133

Non-governmental organisations, the private sector, and regional and local entities have become an intrinsic part of the policy-making process, and cities are among the front runners.134 City authorities play a growing role in accelerating energy efficiency, in some countries moving faster than national administrations. For example, local energy efficiency activity is growing in the United States, with seven cities passing energy benchmarking and transparency laws in 2016.135 Cities also continue to co-operate internationally through initiatives such as Habitat III’s New Urban Agenda and organisations such as ICLEI-Local Governments for Sustainability, the Compact of Mayors and C40.136

Cities account for 65% of world energy consumption and for more than half of world population.137 In general, urbanisation has been a driver of improved energy efficiency because connectivity and density lead to benefits of scale and specialisation.138 Where appropriate, district heating and cooling systems allow greater energy efficiency and penetration of renewables than is possible for a single building. However, challenges remain as urbanisation continues, particularly in Africa where many cities may be vulnerable to sprawl and where infrastructure development may be lagging.139