energy efficiency markets and the energy efficiency …eneken.ieej.or.jp/data/7020.pdffinal energy...

© 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

www.iea.org/eemr16

IEEJ：November 2016 © IEEJ2016

© OECD/IEA 2015 www.iea.org/eemr16

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



NDCs one step on the journey but we need a sustainable energy transition

24

27

30

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36

2015 2020 2025 2030

Gt

450 Scenario

INDC Scenario

World Energy Outlook Climate Special Report 2015



The global challenge: Climbing down the mountain

Sources: CDIAC and IEA 0

5000

10000

15000

20000

25000

30000

35000

40000

1900 1925 1950 1975 2000 2025 2050

Mt C

O2e

2DS

“Getting to the

top is optional.

Getting down is

mandatory.” Ed Viesturs



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


© OECD/IEA 2015 www.iea.org/eemr16 Data from Smil (2010) and IEA (2015)

In 1970, the world was ready for a third transition




But things have been relatively stable since 1970

Data from Smil (2010) and IEA (2015)




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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1971 1990 2010 2030 2050

Mt

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Renewable

Hydro

Biomass and waste

Nuclear

Natural Gas

Coal

Oil

Carbon intensity of energy supply



Energy efficiency savings greater than primary renewable electricity

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2012 2020 2030 2040 2050

EJ

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EJ

Savings

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Hydrogen

Oil

Commercial heat

Electricity

Natural gas

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


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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2000 2010 2020 2030 2040 2050

Ind

ex 2

01

2 =

10

0

GDP

and energy

TPED

Decoupling GDP

CO2

Decarbonisation

TPED per GDP Carbon intensity

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2000 2010 2020 2030 2040 2050

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



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



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)



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.


© OECD/IEA 2015 www.iea.org/eemr16 © IEA 2016

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



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



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.

-50%

0%

50%

100%

150%

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250%

300%

2000 2002 2004 2006 2008 2010 2012 2014

Index 20

00 =

0

Energy intensity in China

GDP TPES TPES/GDP

0%

1%

2%

3%

4%

5%

6%

7%

8%

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



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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400

2008 2009 2010 2011 2012 2013 2014

Mto

e

Energy savings

Renewable energy supply



The scale of the challenge in China

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toe pe

r thou

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5 PP

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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



EE generates multiple benefits



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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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

GtCO

2

IEA countries

China



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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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

USD

bill

ion

s

Freight transport

Passenger transport

Residential

Industry and services



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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Coal Oil Natural gas Renewables Avoided import expenditure



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



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.

www.iea.

org/eemr1

6



Performance Levels of standards are strengthening

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United

States

Canada EU Japan China Korea Mexico Total

Stringency increase

2005-2015

Proximity of 2015

standard to BAT

Stringency increase of performance standards for light-duty vehicles, 2005-15



Performance Levels of standards are strengthening

Stringency increase of performance standards for air conditioning, 2005-15

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Canada China EU India Japan Korea Mexico Saudi Arabia US

Stringency increase 2005-2015 Proximity to BAT



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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Residential

buildings

Transport Industry Non-residential

buildings

Total

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5%

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35%

Space

cooling

Space

heating

Light duty

vehicles

Water

heating

Large

appliances

Electric

motors

Heavy duty

vehicles



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



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



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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Annual energy

savings

(right axis)

United States

India USD TWh

Price (left axis)



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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Fuel economy (right axis)



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%

0% 0% 0% 0% 0% 0% 0% 0% 0%

0% 0% 0%

25%

13%

6%

10% 9%

9%

15%

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



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



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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