Energy Efficiency

Overview

Energy efficiency is the measure of energy services delivered relative to energy input. Energy efficiency is gained when more energy services are delivered for the same energy input, or the same amount of services are delivered for less energy input.1 This can be achieved by reducing energy losses that occur during the conversion of primary source fuels, during energy transmission and distribution, and in final energy usei, as well as by implementing other measures that reduce energy demand without diminishing the energy services delivered.

The advantages of energy efficiency are well reported, with positive impacts on society, the environment, health and well-being, and the economy.2 Energy-efficient technologies and solutions can offer one of the most cost-effective ways of reducing energy costs, improving energy security, reducing local air pollution and mitigating climate change.3

Improvements and investments in energy efficiency can occur anywhere along the chain of energy production and use. Policy and regulatory drivers are instrumental to energy efficiency improvements, including building codes and energy performance standards. (→ See Buildings section in Policy Landscape chapter.)

Although most energy efficiency measures are not directly connected with the renewable energy sector, technical and economic synergies exist between efficiency improvements and renewable energy. Energy efficiency can support increased renewable energy deployment, and vice versa.

Reducing overall energy consumption through efficiency improvements means that any given amount of renewables can meet a larger share of overall energy use. For example, efficient building envelopes (i.e., improving the air-tightness of buildings) reduce energy demand for heating or cooling, making it easier and less costly to meet the remaining demand with renewable energy. Also, technologies that improve final energy efficiency in end-use sectors, such as electric vehicles (EVs) and heat pumps, may aid in the effective integration of variable renewable energy sources. (→ See Integration chapter.) Furthermore, in areas with low energy access, energy-efficient appliances combined with renewable energy are improving access to electricity for off-grid households.4 (→ See Distributed Energy chapter, and Sidebar 3 in GSR 2017.)

Renewable energy deployment can increase energy efficiency in energy production and distribution. For example, non-thermal renewable energy production reduces primary energy use and conversion losses when displacing thermal generation and may lessen transmission and distribution losses in some instances.

Despite these synergies, renewable energy and energy efficiency generally have been considered to be two distinct policy areas.5 As the deployment scales of efficiency measures and renewable energy technologies grow, policies designed in isolation are more likely to result in inefficient outcomes.6 Examples include duplication or gaps in policy formulation.7 As such, much global potential remains for more integrated policy and planning that considers demand and supply together.8

Dialogue at the international level has begun to recognise the importance of integrating energy efficiency and renewable energy, with international organisations, global campaigns and a host of other actors increasingly raising awareness and encouraging policy makers to consider the two in concert.9 Some policies have emerged in recent years that attempt to link renewables and energy efficiency. For example, an agreement was reached in late 2017 on updates to the European Union’s (EU’s) Energy Performance of Buildings Directive, designed to quicken the rate at which cost-effective renovations of existing buildings occur and to unlock public and private sector capital for energy efficiency and renewable energy in buildings.10 Meanwhile, India has incorporated joint consideration of on-site renewable energy and energy efficiency in its building code.11 (→ See Buildings section in Policy Landscape chapter, and Energy Efficiency chapter in GSR 2017.)

Because of the lack of precise indicators of energy efficiency, primary energy intensityii often is used to identify and monitor trends in energy efficiency across economies. Globally, the average decrease in primary energy intensity between 2011 and 2016 was appreciably greater than during the three preceding decades.12

Between 2011 and 2016, primary energy intensity decreased by about 10%, an average annual contraction of 2.1%.13 This greatly moderated the growth in primary energy consumption, which grew by 5.7% over the same period (average annual growth of 1.1%).14 (→ See Figure 54.) In 2016, global gross domestic product (GDP) grew 3%, whereas energy demand increased only 1.1%.15 However, countries outside of the Organisation for Economic Co-operation and Development (OECD) continue to see growing energy use with growing GDP, while OECD countries, as a whole, do not.16

The decline in energy demand per unit of economic output has been made possible by a combination of supply- and demand-side focused policies and mechanisms as well as structural changes. These include:

the expansion, strengthening and long-lasting impact of energy efficiency standards for appliances, buildings and industries;

improved fuel efficiency standards and, more recently, the growing deployment of EVs – especially when supplied by renewable energy sources;

fuel switching to less carbon-intensive alternatives, including renewables (for example, China’s 13th Five-Year Plan aims to lower the share of coal in the primary energy supply from 62% to 58% by 2020);

structural changes in industry, including a transition towards less energy-intensive and more service-oriented industries.17

At the regional level, annual changes in energy intensities vary widely. Asia and Oceania experienced the largest reductions in energy intensity between 2011 and 2016, with average annual declines of 3.3% and 2.5%, respectively.18 Latin America’s energy intensity remained flat over this period, while the Middle East was the only region that saw an overall increase, albeit ending the period with a decline of 3.1% in 2016.19 (→ See Figure 55.)

At least 25 countriesiii appear to have reached their peak energy demand and have since maintained lower demand, despite continued economic growth.20 Germany’s primary energy demand was more than 10% lower in 2016 than at its peak in 1979.21 Total energy demand across all OECD countries peaked in 2007.22

Most energy efficiency advances occur in the context of various end-uses of energy, as well as in the generation of electricity for various (final) energy applications. In 2016, an estimated 38% of primary energy supply was allocated to electricity generation.23 Total final consumption of energy (TFC)vi includes electricity, final uses of fuels and other sources of heat, and various non-energy uses. The buildings sector consumed 32% of TFC, industry 30% (excluding non-energy uses) and transport 29%, with the remainder consumed in other sectors and for non-energy applications, which comprise mainly industrial uses such as petrochemical manufacturing.24

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 following sections examine primary energy efficiency in electricity generation, followed by the efficiency of final energy use in the buildings, industry and transport sectors.