© OECD/IEA 2015
Energy efficiency markets and the energy 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 effect
Submitted 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 need a sustainable energy transition
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2015 2020 2025 2030
Gt
450 Scenario
INDC Scenario
World Energy Outlook Climate Special Report 2015
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The global challenge: Climbing down the mountain
Sources: CDIAC and IEA 0
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“Getting to the
top is optional.
Getting down is
mandatory.” Ed Viesturs
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Two transitions from 1850 to 1970, each taking over 40 years to increase 5% to 25% of supply
To do this we’ll need a sustainable energy transition
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© OECD/IEA 2015 www.iea.org/eemr16 Data from Smil (2010) and IEA (2015)
In 1970, the world was ready for a third transition
To do this we’ll need a sustainable energy transition
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But things have been relatively stable since 1970
Data from Smil (2010) and IEA (2015)
To do this we’ll need a sustainable energy transition
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Transitioning energy supply appears to be headed in right direction
Low carbon energy sources grow from 20 to 50% of primary energy supply
Variable renewable electricity grows from 7 to 20%
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Renewable
Hydro
Biomass and waste
Nuclear
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Coal
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Carbon intensity of energy supply
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Energy efficiency savings greater than primary renewable electricity
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Biomass and waste
Energy efficiency provides savings by 2050 in the 2DS, being comparable to the final energy use of China and the EU combined in 2012.
Is renewable energy the savior then? IEEJ:November 2016 © IEEJ2016
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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 must end to achieve climate targets
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CO2
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TPED per GDP Carbon intensity
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Rate of decoupling energy use from GDP needs to be more than doubled over the next four decades
The sustainable energy transition is an energy efficiency transition
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Energy Efficiency Market Report
The IEA’s flagship efficiency report
Change conversation to infrastructure and energy policy
Emphasize investment, markets, and importance of efficiency in the system
Backward looking –real evidence and impacts
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Energy intensity is improving but not fast enough
Global annual energy intensity gains
In 2015, global intensity improved by three times the average of the last decade, despite a low price environment. Intensity gains need to increase to 2.6% to achieve our climate goals.
-3.0%
-2.0%
-1.0%
0.0%
2003-13 2013-14 2014-15 2016-30
(2 degree goal)
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Good policy delivers the benefits of energy efficiency
Energy efficiency is the one energy resource all countries possess in abundance, 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 $221 billion.
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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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
EEMR 2016 Contents
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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
Without efficiency gains energy demand in 2015 in IEA countries would have grown by 1% and would have been higher than the 2007 peak. Instead, energy demand is 1% below 2000 levels.
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2000 2002 2004 2006 2008 2010 2012 2014
Tota
l Fin
al C
on
sum
pti
on
(EJ)
Energy demand without efficiency
Actual energy demand
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In China, energy demand is decoupling from economic growth
Policies implemented in the 11th Five-Year Plan appears to be the
key factor driving efficiency.
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Index 20
00 =
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Energy intensity in China
GDP TPES TPES/GDP
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China World Non-OECD
Chan
ge in
TPES
TPES
2013-14 2014-15 CAGR (2003-2013)
Total Primary Energy Supply (TPES) growth in 2015 smallest since 1999
a significant change from the average over the last decade.
11th FYP
implemented
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In China, efficiency and renewables are decarbonizing its energy system
Primary energy savings from efficiency gains since 2000 and renewable energy supply in China
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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Renewable energy supply
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The scale of the challenge in China
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Energy intensity projection
China (Japan trajectory) China (450 Scenario)
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China Japan OECD United States
Energy intensity comparison
2000
2013
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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
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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GtCO
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China
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Energy efficiency reducing energy bills
Avoided expenditure on energy from energy efficiency improvements in IEA countries
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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Freight transport
Passenger transport
Residential
Industry and services
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Energy efficiency is improving energy security
Avoided imports for IEA members from efficiency gains, 2015
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 the expansion of policy
Share of global energy use covered by mandatory standards and regulations
30% of the world's energy consumption is now covered by mandatory standards and regulations, up from 11% in 2000.
0% 10% 20% 30% 40% 50% 60% 70%
World total
Electric motors
Heavy-duty vehicles
Appliances
Space heating
Light-duty vehicles
Lighting
2015
2000
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South Africa
United States
Mexico
Korea
Japan
Indonesia
India
European Union
China
Canada
Brazil
Australia
Policy coverage around the world
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 are strengthening
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Stringency increase
2005-2015
Proximity of 2015
standard to BAT
Stringency increase of performance standards for light-duty vehicles, 2005-15
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Performance Levels of standards are strengthening
Stringency increase of performance standards for air conditioning, 2005-15
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Stringency increase 2005-2015 Proximity to BAT
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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
The EPPI tracks combined progress of policy coverage and strength. The most progress was in the buildings sector and the largest potential for improvement is in the freight and industrial sectors.
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vehicles
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The world’s most important efficiency policies since 2005
Rank Country Sectors Policy Name
Share of global EPPI improvement
1 China Industry Top 1 000 - 10 000 programme 27%
2 United States
Transport Corporate Average Fuel Economy standards
21%
3 European Union
Buildings, appliances, small appliances and products, industry
Energy Performance of Buildings Directive and Ecodesign Directive
16%
4 United States
Residential buildings
Building energy codes and standards on space heating and water heating equipment
10%
5 Japan
Appliances,
small
appliances and
products,
transport
Top Runner Program 5%
The top five policies driving the improvement of the Efficiency Policy Progress Index between 2005-15
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Policies still have significant potential to save energy
Energy savings potential of standards as a share of global end-use energy, 2015
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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Space cooling Space heating Hot water Lighting
Best available
technologies
Highest existing
standards
Average
standards
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Small tech leads to big savings
Global annual energy savings from efficient lighting and LED bulb prices
Falling LED prices boosted global investment to $6 billion and generated incremental annual savings of 140 TWh.
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Price (left axis)
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Vehicle fuel economy standards have helped to moderate price falls
Sales and average annual fuel economy of light-duty trucks, United States
Light-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
Investment in energy efficiency increased by 6% in 2015, led by growth in the buildings sector.
53%
18%
29%
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25%
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9%
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13% 0%
Building envelope
Heating, ventilation and cooling
Appliances
Lighting
Energy-intensive industry
Other industry
Light-duty vehicles
Freight and aviation
Buildings
Transport
Industry
USD 221 billion
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The market for energy efficiency services appears poised for growth
The global energy services market was USD 24 billion in 2015 and indicators point to future growth.
Global energy service company revenues by country/region, 2015
United States
USD 6.3 billion
European Union
USD 2.7 billion
China
USD 13 billion
Other
USD 1.9 billion
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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. The IEA will continue to lead global analysis and knowledge exchange.
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