IEA Vision to Increase Energy Efficiency: Market Report 2015 and Multiple Benefits

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Energy Efficiency Unit Fifth Regional Energy

1 IEA Vision to Increase Energy Efficiency: Market Report 2015 and Multiple Benefits Samuel Thomas Energy Efficiency Unit Fifth Regional Energy Efficiency Dialogue Lima, 28 October 2014 OECD/IEA 2011

2 Energy efficiency can help drive economic prosperity 4% GDP in Efficient World Scenario versus New Policies Scenario, % 2% 1% Japan & Korea OECD Europe United States China India Cumulative investments in energy efficiency of $12 trillion are more than offset by fuel savings & trigger economic growth of a cumulative $18 trillion OECD/IEA 2012

3 A huge opportunity going unrealised Energy efficiency potential used by sector in the WEO 2012 New Policies Scenario 100% 80% 60% Unrealised energy efficiency potential Realised energy efficiency potential 40% 20% Industry Transport Power generation Buildings Two-thirds of the economic potential to improve energy efficiency remains untapped in the period to 2035

4 Facing up to the Fuels Competition EE keeps producing: 2014 Energy Efficiency OECD/IEA 2011

5 Impact of supply-and demand-side improvements on US oil import needs mb/d net oil import level Projected net imports Reductions due to: Demand-side efficiency Biofuels use in transport Natural gas use in transport Increased oil supply Source: WEO 2012 OECD/IEA 2012

6 IEA fuel market reports OECD/IEA 2011

7 IEA s Energy Efficiency Market Report Defining and Sizing the market: Inputs Outputs Diffuse and Varied: Local specificities w/common elements Prospects Data/methodological challenges OECD/IEA 2011

8 IEA s Energy Efficiency Market Report OECD/IEA 2011

9 Building bridges... The Public International National Energy prices Resource management GHG emissions abatement More Public/Private Stakeholders Macroeconomic effects Job creation Energy security Public budget impacts Sectoral Increased asset values Energy provider and infrastructure benefits Industrial productivity and competitiveness Individual Health, wellbeing and social improvements Poverty alleviation: energy affordability & access Increased disposable income OECD/IEA 2011

10 The many benefits of EE Enterprise productivity Energy provider benefits Asset values Sector-wide National Public budgets Disposable income Macro impacts Poverty alleviation Job creation Energy efficiency improvement Health & wellbeing Energy security Energy savings Individual Development International Resource management Energy prices Climate change mitigation OECD/IEA 2011

11 Differentstrokes for different folks Benefits vs. Co-Benefits Multiple Benefits Country or Stakeholder A Cty/Stk B Ctry/Stk C Etc. Industrial Competitiveness Fuel Imports Co-Benefit Primary Co-Benefit Poverty Alleviation and Development GHG Emissions Primary Primary Co-Benefit Job Creation Etc. Co-Benefit Co-Benefit OECD/IEA 2011

12 Multiple Benefits: a work-stream Raise Awareness Increase Analytical Substance Identify Methodological Tools Build Capacity OECD/IEA 2011

13 Launched Sept 9 by the IEA Executive Director at the 2014 IEPPEC Conference in Berlin OECD/IEA 2011

14 OECD/IEA 2011

15 Energy efficiency: still the first fuel Supplied more in 2011 to meet energy service demand than oil, electricity or natural gas in IEA-11* Mtoe Total final consumption of fuels and energy savings from energy efficiency in 11 IEA countries in 2011 Oil Gas Coal Electricity Other Efficiency savings *Australia, Denmark, Finland, France, Germany, Italy, Japan, Netherlands, Sweden, UK, USA TFC

Energy efficiency: still the first fuel Energy efficiency savings in 11 IEA countries rival TFC of major energy consuming countries and regions.

16 Energy efficiency: still the first fuel Energy efficiency savings in 11 IEA countries rival TFC of major energy consuming countries and regions. EE improvements over the last four decades saved more energy in 2011 than TFC in the European Union TFC Mtoe Energy efficiency savings of 11 IEA member countries Asia (excluding China) China EU United States

17 Mtoe Energy efficiency savings since 2001 in 18 IEA countries Since 2001 energy efficiency investments saved more cumulative energy (1700 Mtoe) than the annual TFC of the United States and Germany TFC and hypothetical energy use without energy efficiency improvements since Mtoe Actual energy use Hypothetical energy use without efficiency Cumulative savings

18 How different factors are affecting energy demand over time Energy efficiency has been the prime mover to reduce energy demand (TFC) Decomposition of Total Final Consumption by factor and isolated impact of each factor in on energy demand (compared to 2001) 2001 = 1 115% 110% 105% 100% 95% 90% 85% Economic and population growth Structural change TFC Changing efficiency

Transport: EE market driven by VFE standards Vehicle fuel economy standards (VFE) affect 70% of global new vehicle fleet (50 million vehicles in 2011)

19 Transport: EE market driven by VFE standards Vehicle fuel economy standards (VFE) affect 70% of global new vehicle fleet (50 million vehicles in 2011) Standards could achieve between USD 40 and 190 billion in fuel savings by 2020 pending ambition and effectiveness Source: Global fuel economy initiative

20 Transport: a shift in geography All new transport demand estimated to come from non-oecd: source for demand translates into EE market opportunity Billion pkm Passenger Billion tkm Freight OECD Non-OECD World Source: Energy Technology Perspectives, IEA

21 Energy efficiency finance Energy efficiency finance is expanding and innovating Third-party financing estimated in range of USD 120 billion Bilateral and multilateral development funding for energy efficiency was over USD 22 billion in 2012 Energy efficiency finance is moving from niche to established financial market segment Energy efficiency market will grow with greater transparency and standards for financial products

22 11 countries evaluated Country case studies Canada China EU India Indonesia Ireland Italy Japan Korea The Netherlands Thailand Highlighted sub-markets and innovative policies harnessing market factors

23 China: increasing investments in EE from 11 th to 12 th Five-Year Plan 11 th FYP: Invested USD 120 billion between to achieve between Mtoe of energy savings 12 th FYP: Target of USD billion in efficiency investments between to achieve Mtoe Energy savings Investment Total (Mtoe) Savings achieved by energy efficiency (Mtoe) Total (USD billion) Public funds Commercial funds 11th FYP actual % 81-82% 12th FYP needed

24 Conclusions Energy efficiency market a significant component of the global energy system Market is growing with drivers strengthening Issues such as economic growth and climate change to drive further attention Policies, standardization, information and data, critical to achieve the opportunity

25 A huge opportunity going unrealised Two-thirds of the economic potential to improve energy efficiency remains untapped in the period to 2035 unless policy activity increases

26 Multiple benefits of energy efficiency improvements Energy efficiency is a means to enhance energy security, support economic and social development, promote environmental goals and increase prosperity.

27 Coverage Macroeconomic development Public budgets Health and wellbeing Industrial productivity Energy providers Companion Guide to the multiple benefits approach methodologies

28 Macroeconomic development

29 Balancing public budgets Integrating multiple benefits into the calculation more than doubles the return on public investment in energy efficiency Investment effects Energy savings effects

30 Improving health & well-being

31 Industrial productivity and competitiveness Competitiveness Production Operations and maintenance Working environment Environment Ability to enter new markets; reduced production costs etc. Capacity utilisation; improved product quality etc. Improved operation; reduced need for maintenance etc. Site environmental quality; worker health and safety etc. Air pollution; solid waste; wastewater; reduced input materials etc.

32 Expanding energy provider business models Transmission and distribution costs can be deferred or, in 1 out of 3 of cases, completely avoided, by targeted energy efficiency

33 Energy Security Environmental Protection Economic Growth Engagement Worldwide

Energy efficiency: Market Report 2014 and Capturing the Multiple Benefits

Energy efficiency: Market Report 2014 and Capturing the Multiple Benefits Didier Houssin Director, Sustainable Energy Policy and Technology International Energy Agency EUFORES 14 th Inter-Parliamentary