Energy Efficiency 2024

Table of Contents

• Energy Efficiency 2024 1
• Abstract 3
• Acknowledgements 4
• Table of contents 8
• Executive summary 9
• A year on from the historic agreement to double global energy efficiency progress, the world is not yet on track to achieve it 9
• Energy efficiency is key to meeting global goals such as moving away from fossil fuels and lowering emissions 10
• Meeting global efficiency ambitions requires a step up in policy implementation 10
• Efficiency investment in 2024 is projected to remain flat 11
• Nearly 10 million people work in energy efficiency-related jobs, but shortages of skilled workers risk hindering progress 11
• Coping with rising temperatures and spikes in electricity use from heatwaves requires faster rollout of efficient cooling 12
• Electrification is a bright spot in 2024, driven by rising sales of electric vehicles 12
• Governments increasingly turn to efficiency to lower bills 13
• Emerging and developing economies are key to global efficiency progress and are ramping up policy action 13
• International co-operation is crucial to accelerate progress 14
• The policies and technologies to double global efficiency progress by 2030 already exist today 15
• Chapter 1. Global trends 17
• 1.1 Energy intensity and demand 17
• A year on from the historic agreement to double global energy efficiency progress, the world is not yet on track to achieve it 17
• Industry and cooling-driven electricity demand is pushing energy use higher despite oil demand pressures easing 18
• Energy intensity progress slows in advanced economies while it accelerates slightly in many emerging economies 19
• Efficient electrification is a bright spot in an otherwise weak year of energy intensity progress at the global level 20
• Global energy intensity progress needs to accelerate to achieve a sustained rate consistent with net zero pathways 21
• Energy efficiency is key to moving away from fossil fuels 23
• Energy efficiency improvements could deliver over a third of all CO2 emission reductions between now and 2030 24
• IEA launches a new Energy Efficiency Progress Tracker to provide countries with the most recent data on global trends 25
• 1.2 Prices and affordability 25
• Consumer energy prices are slowly coming down in many regions, but remain higher than before the global energy crisis 25
• Short-term government initiatives designed to shield consumers from price spikes are ending in most countries 27
• Higher prices do not necessarily lead to immediate efficiency gains, but action on efficiency can mitigate future price rises 28
• Targeting energy efficiency measures at lower-income households can optimise impact while easing public spending 28
• Policy design can increase access to affordable energy efficient technologies for lower-income households 30
• 1.3 International developments 31
• Collective aim to double global efficiency improvements by 2030 sets benchmark for progress in coming years 31
• 1.4 Policy developments 32
• Over USD 1 trillion in government spending has been earmarked to support energy efficiency this decade 32
• Energy efficiency targets should be an important pillar of the updated Nationally Determined Contributions in 2025 35
• Chapter 2. Sectors 37
• Greater efficiency progress across all end-use sectors can help mitigate rising energy demand towards 2030 37
• 2.1 Buildings 38
• Energy intensity progress in buildings accelerates in 2023 38
• Almost half of newly built floor area is not yet covered by energy efficiency requirements 40
• Comprehensive building energy codes can help improve efficiency in buildings, lower bills and ensure optimal comfort 41
• New IEA methodology compares stringency of energy efficiency requirements in different countries and climates 43
• Improving efficiency in existing buildings is pivotal to accelerate progress, and requires an integrated approach 45
• Spotlight: Does a heat pump work in a house with poor insulation? 46
• Even with poor insulation, heat pumps still save energy 46
• Heat pumps can also lower energy bills, but this depends on the cost of gas and electricity in each country 47
• 2.2 Appliances 48
• Energy consumption of appliances is increasing, but efficiency offers rapid improvements due to high turnover rates 48
• Coverage of energy performance standards is rising across technologies, but there is potential for international alignment 49
• Energy performance standards are becoming more ambitious 50
• Many countries combine minimum energy performance standards with labels in an integrated policy approach 51
• More efficient devices are not necessarily more expensive 52
• Efficient models are significantly cheaper when considering both upfront investment and energy costs 53
• 2.3 Industry 56
• Industrial energy use is growing, but changes in the fuel mix are tempering the increase in emissions 56
• Less intensive industry can deliver on energy efficiency goals 58
• Electrification offers quick efficiency gains, particularly for less intensive industries 59
• Energy management systems have achieved energy savings across all industry sectors 60
• Industry players signal accelerating action on efficiency 61
• More stringent standards increase energy efficiency in motors 62
• 2.4 Transport 63
• Transport energy consumption passing pre-pandemic levels with regional differences 63
• Efficiency policy for heavy-duty vehicles steps up a gear 65
• Road fuel demand is approaching its peak 66
• Policy action on passenger cars is driving forward 67
• Affordability and accessibility are key for transport efficiency 68
• Clean transport alternatives keep gaining traction in cities 69
• Electric two- and three-wheelers become cost-competitive 70
• Chapter 3. System-wide themes 71
• 3.1 Electrification 71
• Electrification grows rapidly across all sectors, powering improved energy efficiency gains 71
• Efficient electrification can reduce energy use by more than two-thirds for key end-use technologies 72
• Policy support for electrification is increasing, with a strong focus on incentives 73
• Tariff structures affect the benefits of faster electrification 74
• Spotlight: How can energy efficiency alleviate rising heatwave-driven electricity demand? 75
• Another year of high temperatures leads to new electricity demand records and power outages 75
• Electricity demand in emerging economies continues growing at a record pace, fuelled by new air conditioner installations 76
• Air conditioner sales are rising rapidly in many regions, with less efficient models dominating sales 77
• High-efficiency air conditioners limit the increase in power demand during heatwaves 78
• 3.2 Flexibility 79
• Unlocking flexibility can mitigate pressure on grids and improve affordability 79
• More countries experienced negative electricity prices in 2024, signalling the need for new tariff structures and more flexibility 80
• Governments are rolling out policies to support flexibility through storage, demand response and market mechanisms 81
• Digitalisation is presenting opportunities for consumers to help unlock flexibility 81
• 3.3 Finance 83
• Efficiency investment is resilient and projected to reach about USD 660 billion in 2024 83
• Emerging economies expected to lead investment growth in 2024, while larger markets stabilise after high crisis spending 84
• Around one in five new cars sold globally is electric, while two- and three-wheelers drive electrification in emerging markets 85
• Strong efficiency investment in buildings during the energy crisis fades as heat pump sales ease back from recent highs 86
• Lower interest rates set to help households continue to drive the bulk of efficiency investment 87
• The market for energy service companies posts a slight decrease in 2023, led by cuts in public subsidy programmes 88
• Spotlight: What is required to scale up energy efficiency investments by 2030? 89
• Governments should develop comprehensive investment strategies tailored to their unique circumstances 89
• Which sectors and regions are key for increasing investment? 90
• What are the key sources of investment in energy efficiency? 91
• What are the financing solutions and business models that can best support greater efficiency investment? 92
• What are the main steps that governments can take to help households and businesses increase investment levels? 93
• 3.4 Employment 94
• Energy efficiency employment has reached a total of nearly 10 million people in 2023, but growth is uneven across regions 94
• A shortage of skilled workers is a major barrier to meeting the growing workforce demand 95
• Increasing gender diversity can help address labour shortages 96
• Chapter 4. Regions 98
• Emerging markets and developing economies are key to a global doubling of energy efficiency progress 98
• 4.1 China 100
• China aims to accelerate progress following a recent slowdown in energy intensity improvement 100
• China launched a special action plan with updated energy efficiency targets for 2024 and 2025 101
• China scales up energy efficiency investment through retrofits and accelerated trade-in of appliances and cars 102
• Electricity demand continues to increase rapidly amid challenging peak summer temperatures 103
• Without energy efficiency, industrial energy demand in China would have been more than 50% higher 104
• 4.2 India 105
• India posts strong energy efficiency improvements in 2024, accelerating progress compared to the past four years 105
• India scales up investment in energy efficiency through a combination of policy instruments 106
• Two- and three-wheelers lead India’s electric vehicle momentum as government policies boost local manufacturing 108
• India is strengthening building energy codes, providing the policy signal to states for stronger compliance 109
• 4.3 Southeast Asia 111
• Energy efficiency progress in Southeast Asia follows global trends this year, seeing a slight improvement in 2024 111
• Accelerating progress requires a shift of investments from fossil fuels towards energy efficiency 112
• The projected rise in energy demand from cooling technologies can be tempered by improving efficiency 113
• Clean cooking has improved lives and greatly reduced kerosene and traditional biofuel use in the region 114
• Industry accounts for the largest source of energy demand and transport shows greatest potential for efficiency gains 114
• Opportunities to increase regional efficiency targets abound 115
• 4.4 Africa 116
• Annual efficiency progress has nearly doubled in 2022-2024 compared to the last decade, amid rapid economic growth 116
• Investments in efficiency can mitigate energy demand growth 117
• Regulation can drive efficiency in second-hand markets 118
• Growing momentum towards electric mobility paves the way for efficient transport 119
• Buildings continue to dominate energy consumption, but efficiency policies are reducing their energy intensity 120
• Spotlight: How is the dumping of inefficient equipment affecting efficiency progress? 121
• Differing regulatory frameworks open the door to inefficient equipment dumping 121
• Outdated used equipment is flooding markets in lower-income countries, leading to a dominance of inefficient appliances 122
• Appliances not in line with standards in producer countries are exported to regions with weaker regulations 124
• Good policies and international co-operation are needed to prevent the practice of inefficient equipment dumping 126
• 4.5 Latin America 127
• After several years of progress, energy efficiency in Latin America is showing signs of slowing down in 2024 127
• Investments in end-use sectors in Latin America are set to grow in 2024 128
• Latin America is a rapidly growing market for electric cars 129
• The energy efficiency potential of buildings in the region remains largely untapped 130
• A growing number of countries are implementing appliance standards, but existing ones can rapidly become outdated 131
• Annex 133
• Abbreviations and acronyms 133
• Units of measure 134