Scenario and outlook for energy efficiency. Vida Rozite, Energy Efficiency Unit

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1 Scenario and outlook for energy efficiency Vida Rozite, Energy Efficiency Unit

2 The world energy scene today Some long- held tenets of the energy sector are being rewri:en Countries are switching roles: importers are becoming exporters and exporters are among the major sources of growing demand New supply op<ons reshape pa=erns of trade But long- term solu<ons to global challenges remain scarce Renewed focus on energy efficiency, but CO 2 emissions con<nue to rise Fossil- fuel subsidies increased to $544 billion in billion people lack electricity, 2.6 billion lack clean cooking facili<es Energy prices add to the pressure on policymakers Sustained period of high oil prices without parallel in market history Large, persistent regional price differences for gas & electricity Energy efficiency is key to secure and sustainable future energy systems

3 Energy Efficiency Market Report 2014 n Energy efficiency market es<mated value to be between USD 310 billion and 360 billion n Energy efficiency is s6ll the first fuel in IEA- 11 countries: avoided energy use was larger than the supply of oil, electricity or natural gas in 2011 n Energy efficiency market: diffuse, extensive and projected to grow

4 Energy efficiency - an invisible powerhouse n Energy efficiency savings rival the TFC of major energy- consuming countries and regions n Energy efficiency improvements over the last four decades saved more energy in 2011 than EU TFC Mtoe Energy efficiency savings of 11 IEA member countries Asia (excluding China) China EU United States

5 Indicators: TFC down in 12 of 18 countries largely from efficiency n Efficiency is helping efforts to decouple economic growth from energy consump<on 40% 30% 20% 10% 0% -10% -20% -30% -40% Changin g efficienc y Structur al change

6 The engine of energy demand growth moves to South Asia Primary energy demand, 2035 (Mtoe) Share of global growth United States Brazil Europe Africa Middle East Eurasia India China Japan Southeast Asia Africa Middle East La<n America 8% 10% Eurasia 8% 5% OECD 4% 65% Non- OECD Asia China is the main driver of increasing energy demand in the current decade, but India takes over in the 2020s as the principal source of growth

7 Globally, electricity demand is on the increase Differences in growth of electricity demand and sectoral distribu6on require targeted efforts

8 Industrial energy use is increasing EJ Other Paper,pulp and print Non- metallic minerals (incl. cement) Non- ferrous metals Chemical and petrochemical Iron and steel IEA Energy Technology Perspectives 2014 Constraining energy demand increase in large energy intensive industry is crucial but other segments also need acen6on

9 Energy produc<vity Amount of GDP produced for each unit of energy used, Canada Finland Korea Australia United States Poland France Netherlands Norway Turkey Japan Germany Italy UK How can productivity be increased? Thousand 2005 USD PPP per toe

10 Global energy efficiency poten<als 100% 80% 60% Unrealised energy efficiency poten<al Realised energy efficiency poten<al 40% 20% Industry Transport Power IEA Energy Technology Perspectives 2014 genera<on Buildings Two- thirds of the economic poten6al to improve energy efficiency remains untapped in the period to 2035

11 Global industrial energy use scenarios Other 200 Electricity EJ 150 Natural gas Oil DS 2DS Coal IEA Energy Technology Perspectives 2014

12 Energy efficiency finance n Energy efficiency finance is expanding and innova<ng n Third- party financing es<mated in range of USD 120 billion (drawing on WEIO es<mate of financing share) n Bilateral and mul<lateral development funding for energy efficiency was over USD 22 billion in 2012 n Energy efficiency finance is moving from niche to established financial market segment n Energy efficiency market will grow with greater transparency and standards for financial products

13 What is blocking investments in industrial energy efficiency? Energy efficiency is not a strategic priority Payback periods are too long Una:rac<ve to investors Companies lack technical capacity Banks lack technical capacity Insufficient methods for measurement and verifica<on Una:rac<ve to secondary markets

14 Compe<<veness Produc<on Opera<ons and maintenance Energy efficiency in the industrial sector: from savings to value crea<on ability to enter new markets, reduced produc<on costs etc. capacity u<lisa<on, improved product quality etc. improved opera<on, reduced need for maintenance etc. Working environment Environment site environmental quality, worker health and safety etc. air pollu<on, solid waste, wastewater, reduced input materials etc.

15 Roles for mul<ple stakeholders Companies Policy makers (na<onal and local) Financial sector Energy service providers Standards developers Equipment manufacturers/vendors Energy providers/u<li<es What is the business case for each of stakeholder?

16 Pathways to accelera<ng industrial energy efficiency Publica<on on s<mula<ng Energy efficiency in SMEs (2015) - Business case - Roles of stakeholders - Policy & programme op<ons - Suppor<ng measures & finance - Plan implement monitor evaluate Opportuni<es to par<cipate - Workshop 27 November in Paris - Examples and case studies