EnergyWatch

Energy optimization loses steam: Slowest advance in 10 years

The world became 1.3 percent more energy-efficient in 2018 relative to the preceding year – the slowest rate of improvement since 2010 and markedly under the IEA's 3 percent gain target for annual energy optimization.

Photo: PR / Synergi

The energy-hungry global economy is wasting the largest volume of resources since 2010, the International Energy Agency concludes in its latest report summarizing progress on energy efficiency.

The report informs that the world's primary energy intensity increased by 1.2 percent in 2018 – a surge that pales in comparison to energy requirements, which concurrently grew 2.3 percent.

Primary energy intensity is the IEA's metric for energy efficiency and indicates how much energy is used relative to gross domestic product. When primary energy intensity rises, the world uses less energy to create each unit of monetary value.

In cool cash, the IEA assesses that the global improvement rate of 1.2 percent saved USD 1.6 billion.

The advance of 1.2 percent represents the slowest gain since 2010 and lies markedly under the target set by the IEA last month, aiming for a 3 percent global energy efficiency improvement per year. A range of nations including Denmark, Estonia, Honduras, Portugal, India and the UK have committed to this goal.

India is noteworthy in this context and can celebrate being the world leader in moving forward on energy efficiency. According to the IEA, the country achieved an improvement of just around 3 percent, which, however, is still a retreat compared to the last few years. Europe went forward by 2 percent and was the only region in the last few years to achieve a higher rate of improvement. Since 2015, Europe had made energy efficiency gains totaling around 1.5 percent.

The big black sheep can be found on the other of the Atlantic, where the US' primary energy intensity decreased by 0.8 percent since 2017. That's the first time since 2000 that one of the world's largest power guzzlers has become less capable of using its energy in an efficient manner.

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Photo: IEA

Technical improvements have also lost some steam, with the world going forward by 1.4 percent – similarly, back at the level from 2010.

According to the IEA, two factors were behind 2018's disappointing result. The US' negative development can be partially attributed to one very cold winter and a one very warm winter – and both extremes result in increased energy use. Furthermore, the country's use of coal increased again in 2018, this time by 2.5 percent.

Lagging behind Paris Accord target

Katrine Bjerre Milling Eriksen, managing director for Synergi, the Danish interest group for energy-efficient companies, says the IEA's latest report is a disheartening read.

"The conclusions speak for themselves. This is the lowest saving in the last ten years, and we'll not achieve our Paris agreement goals if we don't see a significant improvement. We have set targets for ourselves in an international forum, and Denmark, working in a group of 15 countries, has made commitments to improve by 3 percent each year," Eriksen says.

The figures for primary energy intensity are particularly demoralizing.

"There is, of course, a correlation between energy consumption and growth, but the US' energy intensity development speaks clearly and indicates that some places do a poorer job of creating growth without compromising energy efficiency," she adds.

More complicated than renewable power

The IEA's massage has been clear: The Paris agreement cannot be achieved without optimizing energy efficiency.

"Energy efficiency is the one energy resource that all countries share in abundance, and it can help reduce emissions while improving people’s well-being," said IEA Executive Director Fatih Birol last month after the 15 countries committed to 3 percent annual improvements.

Eriksen says this was an important initial achievement.

"This is first and foremost about setting some targets. We did that with the 3 percent club. This is the first step, and now financing will be needed. We talk a lot about reaching our green energy transition aims in Denmark, but there's no doubt that money is required. That's true irrespective of whether it's about energy efficiency or renewable power," Eriksen says.

Regarding Denmark, Synergi reckons that energy optimization as a climate change mitigation strategy is often overshadowed by renewables, as the former is more complex and more bottoms need to be pressed to make the area attractive for private investors.

One way of achieving this would be to ease access for private investors, says Eriksen, who would also be interested in seeing purchasing access be eased for pension funds to buy up real estate, make improvements and then operate residential leasing. Synergi holds that this would also be an attractive alternative for such institutional investors due to current negative interest rates.

"Energy efficiency gains could be achieved by making it easier for investors to buy up buildings, make improvements and then rent them out. This could also take place by pooling public institutions while being energy-optimized. Finally, it's important that home owners in outlying regions can have access to liquidity so they can improve their homes and participate in the green energy transition," Eriksen says.

English Edit: Daniel Frank Christensen

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