Annual global investments in energy efficiency will need to reach $900 billion by 2030 to be consistent with levels foreseen in the International Energy Agency’s net zero emissions by 2050 scenario, according to a report released Wednesday by the Paris-headquartered agency.
Government policies are expected to help energy efficiency investment rise by 10% in 2021 to almost $300 billion.
However, overall annual investment would need to triple by 2030, the IEA said.
Recent investment growth has been concentrated largely in Europe, suggesting polices are needed in other regions to achieve global climate goals.
Energy efficiency offers some of the fastest and most cost-effective actions to reduce carbon dioxide emissions, reckons the agency.
"We consider energy efficiency to be the ‘first fuel’ as it still represents the cleanest and, in most cases, the cheapest way to meet our energy needs," said IEA executive director Fatih Birol.
“There is no plausible pathway to net zero emissions without using our energy resources much more efficiently,”
In the above scenario, the energy intensity of the global economy improves (decreases) by 35% by 2030, driven by energy efficiency combined with related measures such as electrification and behavioural change.
This enables growth in clean energy sources, such as wind and solar generation, to outpace overall demand for energy services.
In this scenario, the global economy grows by 40% by 2030, driven by higher populations and income levels, but uses 7% less energy, the IEA explained.
More than 40 milestones
However, the agency's scenario of net zero emissions by 2050 involves more than 40 energy efficiency milestones, without which total final energy consumption would be around 30% higher by 2030.
Most of these incorporate technologically mature solutions that can be scaled up very quickly, the agency added.
Energy efficiency-related spending today makes up around two-thirds of the total $400 billion a year mobilised by governments with their recovery measures over the next three years, as monitored by the Autumn 2021 update of the IEA Sustainable Recovery Tracker.
However, the economic recovery in 2021 has increased demand for commodities, putting pressure on supply chains and creating shortages and bottlenecks for goods and services described asessential for energy efficiency investment.
Steel prices in the US in August 2021 were also more than 60% higher than in January 2019; while a survey of contractors in the UK indicated supply constraints including for electrical components, steel and paints.
Also, wages in the construction sector rose by up to 13% in the year to May 2021 in some markets, adding to project costs.
As energy efficiency offers some of the fastest and most cost-effective actions to reduce CO2 emissions, front-loading efficiency measures into net zero strategies will be crucial for closing the gap between climate ambitions and current trends, the IEA said.
- Adnoc chief says $600bn annual global oil and gas investments needed until 2030
- Al Jaber spearheading UAE energy transition
- Repsol in the black, streamlines upstream focus
- Leaked documents show fossil fuel producers lobbying against aggressive climate action
- 'We have to come clean' about massive fossil fuel subsidies, says renewable energy expert