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
Energy efficiency can help drive economic prosperity 4% GDP in Efficient World Scenario versus New Policies Scenario, 2035 3% 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
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
Facing up to the Fuels Competition EE keeps producing: 2014 Energy Efficiency 2014 2018 2018 2028 2028 OECD/IEA 2011
Impact of supply-and demand-side improvements on US oil import needs mb/d 10 8 6 4 2 2011 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 0 2011 2015 2020 2025 2030 2035 Source: WEO 2012 OECD/IEA 2012
IEA fuel market reports OECD/IEA 2011
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
IEA s Energy Efficiency Market Report OECD/IEA 2011
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
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
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
Multiple Benefits: a work-stream Raise Awareness Increase Analytical Substance Identify Methodological Tools Build Capacity OECD/IEA 2011
Launched Sept 9 by the IEA Executive Director at the 2014 IEPPEC Conference in Berlin OECD/IEA 2011
OECD/IEA 2011
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 1 400 1 200 1 000 800 600 400 200 0 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. EE improvements over the last four decades saved more energy in 2011 than TFC in the European Union. 2 000 1 500 TFC Mtoe 1 000 500 0 Energy efficiency savings of 11 IEA member countries Asia (excluding China) China EU United States
Mtoe 3 100 3 000 2 900 2 800 2 700 2 600 2 500 2 400 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 2001 2001 2003 2005 2007 2009 2011 Mtoe Actual energy use Hypothetical energy use without efficiency Cumulative savings 2 000 1 800 1 600 1 400 1 200 1 000 800 600 400 200 0 2001 2003 2005 2007 2009 2011
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% 2001 2003 2005 2007 2009 2011 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) Standards could achieve between USD 40 and 190 billion in fuel savings by 2020 pending ambition and effectiveness Source: Global fuel economy initiative
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 70 000 60 000 50 000 40 000 30 000 20 000 10 000 Passenger Billion tkm 30 000 25 000 20 000 15 000 10 000 5 000 Freight 0 2000 2005 2010 2015 2020 0 2000 2005 2010 2015 2020 OECD Non-OECD World Source: Energy Technology Perspectives, IEA
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
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
China: increasing investments in EE from 11 th to 12 th Five-Year Plan 11 th FYP: Invested USD 120 billion between 2006-2010 to achieve between 238-287 Mtoe of energy savings 12 th FYP: Target of USD 200-270 billion in efficiency investments between 2011-15 to achieve 235-268 Mtoe Energy savings Investment Total (Mtoe) Savings achieved by energy efficiency (Mtoe) Total (USD billion) Public funds Commercial funds 11th FYP actual 441 238-287 120 18-19% 81-82% 12th FYP needed 469 235-268 200-270 -
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
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
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.
Coverage Macroeconomic development Public budgets Health and wellbeing Industrial productivity Energy providers Companion Guide to the multiple benefits approach methodologies
Macroeconomic development
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
Improving health & well-being
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.
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
Energy Security Environmental Protection Economic Growth Engagement Worldwide