Global Overview
Energy efficiencyi represents the opportunity to deliver more services for the same energy input, or the same amount of services for less energy input.1 Conceptually, this is the reduction of losses at each stage of energy conversion, transport, transmission and use, from primary fuel extraction through final energy use, as well as other active or passive measures to reduce energy demand without diminishing the energy services delivered. Energy losses occur during extraction, generation, transmission, distribution and end-use in lighting, appliances, buildings, mechanical work, transport and industry contexts. Consequently, the areas for energy efficiency improvement and investment can occur anywhere along the chain of energy production and use, from primary energy to final energy required to perform the service.
The year 2015 saw an increased emphasis on energy efficiency activities at the international, regional, national and sub-national levels. This was due to the recognition of energy efficiency’s key role in reducing energy-related emissions and in providing multiple economy-wide benefits – such as enhanced energy security, reduced fuel poverty and improved public health. By end-2015, at least 146 countries had enacted some kind of energy efficiency policy, while at least 128 countries had enacted one or more energy efficiency targets.2 (→See Figure 42.)
i Renewable energy and energy efficiency are twin pillars of a sustainable energy future. Synergies exist between the two across numerous sectors. This means that the interaction of renewables and energy efficiency can result in an outcome greater than the sum of the parts. In recognition of the important linkages between renewable energy and energy efficiency, this topic was introduced as an annual chapter in GSR 2015. (See Feature in GSR 2012 for more on renewable energy–energy efficiency synergies.)
The international community continued to pursue energy efficiency action by engaging in various collaborative activities such as the Sustainable Energy for All (SE4All) Global Energy Efficiency Accelerator Platform, the G20’s Energy Efficiency Action Plan, the Clean Energy Ministerial’s energy efficiency initiatives and the European Union’s Energy Union Framework Strategy.3 International organisations initiated several additional energy efficiency activities during the year.4
Out of the 189 countries that outlined voluntary plans to decelerate greenhouse gas emissions in their Intended Nationally Determined Contributions (INDCs) for COP21, 147 countries mentioned renewable energy, and 167 countries mentioned energy efficiency; in addition, some countries committed to fossil fuel subsidy reform.5 Over 50 countries had committed to phasing out fossil fuel subsidies under G20 and Asia-Pacific Economic Cooperation (APEC) processes by the end of 2015.6 Reducing or eliminating such subsidies brings prices closer to their true economic costs, removing artificial impediments to energy efficiency improvements and renewable energy deployment.
Cities, which accommodate over half of the world's population, also continued to play an increasingly prominent and active role in accelerating energy efficiency. In 2015, cities received international support from a number of initiatives and organisations, such as ICLEI, C40 and the Covenant of Mayors.7 Commercial and financial actors also mobilised to increase global investment in energy efficiency during the year.8
Due to a lack of better indicators, reduction in energy intensity of national economies typically is used as a proxy for improvements in energy efficiency at the national or global level.9 Energy intensity is calculated as units of energy consumed per unit of economic output, or gross domestic product (GDP). Changes in energy intensity can reflect changes in energy efficiency of an economy, but they also reflect the impact of other factors, such as structural changes in the economy to less energy-intensive activities and the effect of fuel substitution, particularly to renewable energy.10
At the global level, primary energy intensity has decreased continuously for more than two decades. Between 1990 and 2014, primary energy intensity dropped by more than 30%; the average annual rate of decline was 1.5%. Nonetheless, global economic growth has been far greater, resulting in steady net growth in energy demand, increasing by 56% between 1990 and 2014, with an average annual growth rate of 1.9%. Global total primary energy demand (TPED) exceeded 13.7 billion tonnes of oil equivalent in 2014. (→See Figure 43.)
Figure 43. Global Primary Energy Intensity and Total Primary Energy Demand, 1990–2014
Market and Industry Trends
Buildings and Appliances
Buildings accounted for 33% of global total final energy consumption (TFEC) in 2013 (the most recent data available), with the largest portion of the building sector’s TFEC (30%) coming from electricity, followed by traditional biomass (25%) for heating and cooking, and natural gas (21%).12 In 2013, global TFEC of buildings had increased by 34% in relation to 1990.13 Most of the TFEC used in buildings is for space heating, water heating and cooking.14 Residential buildings account for almost three-quarters of global building energy use, and non-residential (service sector) buildings account for the remaining share.15
Total energy demand in buildings is determined by a variety of factors, including structural design (building envelope); heating, ventilation and air conditioning (HVAC); and electricity load for lighting and appliances. Various options are available for retrofitting existing buildings to improve their energy efficiency and reduce energy demand, thereby lowering operational costs and helping to attract new occupants.16 Around the world, existing buildings are being retrofitted with improved insulation and windows, more-efficient lighting, and HVAC systems and controls, among others.
Improving the energy efficiency of EU buildings (35% of which are over 50 years old) could reduce the region’s total energy consumption by an estimated 5–6%.17 In OECD countries, the efficiency of energy use in the residential sub-sector improved by 15% between 2002 and 2012.18
Increasingly, energy efficiency principles – such as better building design and orientation to take advantage of natural lighting, heat gain or shading, and prevailing breezes – are being integrated along with more-efficient systems and building materials in new buildings. In the EU, for example, new buildings in 2015 consumed about half as much energy as new buildings did in the 1980s.19
The market for energy-efficient building technologies as of 2014 was USD 307 billion, representing a wide range of technologies and services, with USD 68 billion coming from energy efficiency retrofits.20 The largest energy-efficient building market segment is building envelope technologies, including building materials, while mechanical and electrical systems (i.e., HVAC, lighting and controls) also represent major segments.21 The largest market for energy-efficient buildings is Western Europe, where it is driven by high energy prices and stringent building energy codes. North America and the Asia-Pacific region are major markets as well, and energy efficiency is increasingly important for building projects.22
Markets for more-efficient building materials are growing worldwide, both for retrofits and for new construction. For example, China’s insulation market has experienced rapid growth since 2000, with average annual growth rates exceeding 15% between 2006 and 2010; during the same period, the market share for low-emissivity glass increased from 1.3% to 7%.23 Integrating energy-efficient technologies and equipment in buildings can further reduce the sector’s energy use. For example, in the United States, the combined use of the most-efficient wall, window and HVAC equipment available on the market in 2015 could reduce the primary energy demand for residential and commercial cooling by 61% and 78%, respectively; decrease the primary energy demand for heating commercial buildings by 77%; and virtually eliminate external sources of heating for residential buildings with the contribution of waste heat from appliances and human occupants.24
Among environment-friendly technologies used in buildings, heat pumps offer the opportunity for efficient use of energy for space heating, cooling, and hot water supply, as well as utilisation of distributed renewable electricity (e.g., solar PV) for their operation.25 The installed capacity of ground-source (geothermal) heat pumps worldwide increased from an estimated 1.9 GWth in 1995 to 15 GWth in 2005 and to 50 GWth in 2015 (18% average annual growth between 1995 and 2015). The United States, China, Sweden, Germany and France were the five leading countries in installed capacity.26 The European heat pump market is growing at about 3% annually, averaged across all energy sources (air, water, ground and waste heat). However, the ground-source component of the European heat pump market has begun to contract, with sales dropping almost 13% in 2015.27
The number of net zero energy buildings (NZEBs) also continued to rise in 2015, although on a limited scale, exemplifying the synergies between energy efficiency and renewable energy. The global NZEB market reached USD 629 million in 2014, and it continued to grow rapidly throughout 2015, particularly in developed regions.28 In the United States, the number of NZE projects nearly doubled between end-2014 (213 projects) and early 2016, when there were at least 425 projects in at least 42 states.29
“Passive house” standards can serve as good guidelines for NZEBs and nearly zero energy buildings (nZEBs) by greatly reducing energy demand for heating and cooling.30 In 2015, the two leading regions on passive buildings – Europe (12,000 projects) and North America (230 projects) – updated their standards to require more on-site renewable energy generation.31
Electricity accounts for nearly one-third of global TFEC in the buildings sector. Electricity consumption per household is used as an indicator to suggest trends in the efficiency of electricity use at the global and regional levels; however, this does not isolate the effect of improved efficiency from the effect of changes in demand for electricity services.
Globally, electricity consumption per household did not change significantly between 2000 and 2014 – improvements averaged 0.5% annually over this period.32 (→See Figure 44.) However, trends varied by region. In North America, Europe and the Pacific, electricity consumption per household rose between 2000 and 2010, followed by a decline by 2014, associated in part with improved energy efficiency.33 In the Commonwealth of Independent States (CIS) and Latin America, electricity consumption per household remained relatively unchanged over the period. In contrast, Africa and Asia saw a gradual increase in electricity consumption per household, and the Middle East experienced almost 50% growth.34
Figure 44. Average Electricity Consumption per Electrified Household, Selected Regions and World, 2000, 2005, 2010 and 2014
“Electricity intensity” is often used as an indicator of energy efficiency in the service sectori. The trends in the service sectors of Europe, the CIS, North America, Asia and the Pacific have shown declining electricity intensity since 2010 (and earlier in some regions). The Middle East stands apart, demonstrating a notable increase in electricity intensity in the service sector between 2000 and 2010, although it has levelled off in subsequent years. Africa’s electricity intensity in the service sector declined steadily, over the 14-year period. However, as with energy intensity in general, trends in this sector are likely to be the product of a complex set of factors, such as structural changes in economies and relative energy access, in addition to the availability and use of more-efficient technology.35 (→See Figure 45.)
i The electricity intensity of the service sector is defined as the ratio of the electricity consumption of the sector over its value added, measured in constant purchasing power parities.
Appliances and equipment (e.g., computers, fans, motors, etc.) saw a steady increase in final energy demand from 1990 to 2014 and are becoming large energy end-users.36 The increase is due largely to a rapid increase in the total number of electricity-using products per household, especially televisions and other information and communication technologies.37
On average in OECD countries, clothes dryers, refrigerators and freezers consumed about two-thirds as much energy in 2014 as in 1990. In North America, the efficiency of air conditioners, refrigerators and freezers improved rapidly between 1980 and 2010 and has stagnated in subsequent years.38 In the United States, new dishwashers use 40% less energy, and washing machines use 70% less energy, than they did in the 1990s. New refrigerators use only one-quarter of the energy that they used in the 1970s, offering 20% more capacity and a 50% reduction in purchase price.39 In the OECD countries as a group, demand growth for such appliances has slowed significantly over the past decade, while the energy efficiency of these appliances increased.40
However, energy efficiency improvements have not yet been able to cancel out the effect of growing demand for certain appliance categories, such as televisions and network devices. The average energy intensity of televisionsi more than doubled between 2000 and 2012 in Australia, Canada, Denmark, France and the Netherlands.41 This growth reflects a rapid increase in screen size, which has been mitigated to some extent in recent years by more-efficient screen technologies.42
In the lighting market, the share of incandescent bulbs continues to decrease, driven largely by phase-out regulations. In several OECD countries, where such regulations are in place, the market share of incandescent bulbs has dropped to a range of 10–20%.43 Across all developed countries, light-emitting diodes (LEDs) command 3–15% of the market.44 Even so, the market share of efficient lighting solutions at the global level is still very limited, but it is growing rapidly as prices drop.45
Among developing countries, China and India lead in LED manufacturing and usage. While China is already well-established as the world’s largest manufacturer, in India, governmental support, accelerated private sector engagement and declining prices are driving demand.46 In response to the government’s LED lamp distribution programme, the number of LEDs produced in India soared from 12 million in 2014 to about 360 million in 2015.47
Alongside advances in lighting technology, increased use of “smart” and cloud-based lighting controls is improving the technical efficiency of lighting systems. Such controls provide the opportunity for aggregating data from multiple lighting systems and enabling remote monitoring and control over their usage, resulting in energy savings.48
i Total energy consumption divided by overall stock.
Transport
Energy intensity of the global transport sector, defined as the ratio of energy consumption of transport to GDP, declined by an average of 1.8% per year between 2000 and 2014, reflected mostly in road transport.49 (→See Figure 46.) While transport energy intensity declined over this period in most regions, it remained virtually unchanged in Latin America and the Middle East.
Fuel economy of road transport improved at an average annual rate of 2% between 2008 and 2013. Improvement rates were higher on average in OECD countries (2.6%) than in non-OECD countries (0.2%) due to national policies and programmes – particularly fuel economy standards – in the former.50 By 2013, eight countries (Japan, the United States, Canada, China, the Republic of Korea, Mexico, Brazil and India) and the EU had proposed or established fuel economy standards for passenger and light-commercial vehicles as well as light trucks.51
Although their contribution remains quite small, one of the factors driving improvements in fuel economy on a final energy basis is rising sales of electric vehicles (EVs) and plug-in hybrid (electric and natural gas) vehiclesi.52 By one estimate, global sales of plug-in EVs were up more than 70% in 2015, and by year’s end, more than 1 million plug-in EVs were estimated to be on the world’s roads, with the largest number operating in the United States.53 Despite federal and state subsidies, sales of plug-in EVs in the United States fell by more than 5% in 2015 due to the drop in gasoline prices.54 By contrast, EV sales rose in some countries, including China and Norway, due to aggressive incentives, and EV registration in Europe more than doubled in 2015, while new hybrid vehicle registration increased by 23%.55
Because, the share of EVs is less than 0.1% of the global vehicle market, continuing advances in internal combustion efficiency constitute a critical component of energy efficiency improvements in road transport.56
Efficiency of transport also is increasing through the promotion of more-sustainable mobility practices, such as bus rapid transit (BRT). BRT systems continue to spread, and by early 2016 were located in at least 200 cities on all continents, transporting more than 33 million passengers per day – up from 150 cities and 28 million passengers in 2013.57
Fuel efficiency is improving for other types of transport, such as aviation and shipping, both of which still have large potential for energy savings. Aviation accounts for about 13% of fossil fuel use in global transport.58 Between 1990 and 2000, the average fuel efficiency of new aircraft of similar size improved by about 10%, while aviation activity for both passenger travel and freight transport grew by a factor of 2.5, but it levelled off thereafter.59 Fuel efficiency can be increased further through improved infrastructure; operational measures, such as reducing the weight of on-board equipment; and improved aircraft design and materials.60
The shipping industry consumes about 250–325 million tonnes of fuel per year (4% of the total share of transport use).61 The efficiency of individual ships varies greatly based on design, fuel and power sources, and operations. The efficiency of ships built during the 1970s was consistently poor, followed by improvements across all ship types and size categories in the 1980s (by 22–28%) due to a combination of rapidly increasing fuel prices and constant or declining freight rates.62 Between 1990 and 2008, design-related efficiency of new ships declined by about 10% because cargo capacity or capital costs were given higher priority than fuel efficiency, but thereafter it began to improve again.63
i Except in the context of renewable power, EVs are not necessarily more energy-efficient than internal combustion engine vehicles on a primary energy basis (and emissions may be higher), depending on the energy source. As the shares of non-thermal renewables increase in the power mix, the contribution of these vehicles to overall (primary) energy efficiency will only increase.
Industry and Power
Industry accounted for approximately 29% of global TFEC in 2013, including electricity demand, and for almost 40% of TFEC when certain metals smelting and non-energy uses are included.64
Between 2000 and 2014, global energy intensity in industryi decreased by an average of 1.2% annually and declined across all regions except the Middle East.65 (→See Figure 47.) Energy intensity of industry declined by an average of almost 4% annually in the CIS, while in Latin America and Africa the rate of decline averaged below 1% a year.66 However, because this indicator is influenced largely by structural changes in the economy, it is unclear what portion of these reductions reflects improvements in energy efficiency. For instance, in OECD countries, reductions in industrial energy intensity were driven by a combination of changes in economic activities (e.g., caused by economic recession, energy efficiency improvements, and structural effects (e.g., displacement of energy-intensive manufacturing), with the latter taking a prevailing role.67
i The energy intensity of industry is defined as the ratio of the final energy consumption of industry over the value added, measured in constant purchasing power parities.
In the power sector, energy efficiency is affected mostly by energy losses in generation at thermal power plants and through transmission and distribution losses. Fossil fuel power plants convert only about one-third of their primary energy inputs into electricity, while conversion losses for non-thermal renewables are either relatively low or otherwise insignificant. Therefore, achieving greater shares of non-thermal renewable power increases primary energy efficiency by reducing conversion losses.
The average primary energy efficiency of electricity generationi increased between 2000 and 2014 across all regions but Latin America, where it declined by 0.5%.68 The efficiency of power generation ranges from about 30–35% in the CIS (a region heavily reliant on coal) and the Middle East (heavily reliant on oil), to almost 60% in Latin America, where a significant share of electricity is generated by hydropower. Efficiency of thermal power plants, which account for most of the world’s generating capacity, increased between 2000 and 2014 in all regions, with average improvements of around 9% in the Americas, 6% in Asia and under 5% in other regions.69 Efficiency of coal-fired power plants, specifically, increased during this period in most regions, with the greatest improvements seen in Asia (12%) and the CIS (8%). Among different types of thermal power plants mentioned above, gas-fired plants experienced the highest levels of improvement between 2000 and 2014, with the increase in average efficiency exceeding 20% in North America and Africa.70
About 8% of the world’s electricity generating capacity is in combined heat and power (CHP) facilities, with a total global installed electric capacity of 325 GW. CHP captures waste heat and utilises it to meet thermal energy demand. CHP systems, which capture and re-use waste heat from power generation, are generally 75–90% efficient in their overall use.71
The rate of transmission and distribution (T&D) losses, incurred through resistance and voltage conversion losses on the grid, varies across regions, ranging between 5% and 15% in 2014, with lower losses occurring generally in more-efficient power grids in developed regions.72 Efficient and superconducting transformers and high-temperature superconducting cables, including direct current and ultra-high-voltage transmission, are considered promising solutions for increasing electrical energy efficiency and reducing T&D losses.73 Other solutions may involve advanced demand monitoring and management to reduce losses; automation to measure and control the flow of power and improve system reliability; and movement towards smart gridsii to manage loads, congestion and supply shortages.74 The increased use of distributed energy also reduces T&D losses by producing electricity closer to where it is utilised.
Smart grids offer a potential to improve energy efficiency and reliability, better integrate high shares of renewable energy and improve the responsiveness of both supply and demand to conditions in real time.75 The global market for smart grid technologies – such as transmission upgrades, substation automation, distribution automation, smart metering, etc. – is growing rapidly; between 2010 and 2015, the market more than tripled (from USD 26 billion to USD 88 billion), while respective annual investments more than doubled (from USD 81 billion to USD 187 billion).76
i The efficiency of power generation is the net electricity production divided by energy inputs.
ii According to the European Technology Platform, a smart grid is an electricity network that can intelligently integrate the actions of all users connected to it in order to efficiently deliver sustainable, economic and secure electricity supplies.
Investment
Investment in energy efficiency can be defined as the monetary value of public expenditure, private funds, public-private ventures and commercial commitments to technologies and assets that lead directly and indirectly to energy savings relative to business-as-usual scenarios (energy productivity improvements not undertaken). It is estimated that investments in energy-efficient assets and technologies yield two- to four-fold returns in lifetime cost savings.77 In 2013, global investments in energy efficiency totalled an estimated USD 130 billion. This figure covers the end-user categories of buildings, transport and industry (but not fuel switching). It also includes associated costs, e.g., taxes, shipping and labour.78
Green bonds have emerged as one of the most substantial sources of capital for energy efficiency projects, especially in the transport sector. Energy efficiency improvements in industry and buildings (including efficient lighting and appliances) also source financing through debt. As of September 2015, an estimated 27% of all labelled green bond issuances was for energy efficiency projects (including low-carbon buildings).79
Historically, development banks dominated the green bond market in all categories, including those issued for energy efficiency; however, green bonds are being issued increasingly by corporations, municipalities and commercial banks, with additional activity from niche sources, such as universities.80 Bonds issued for energy efficiency categories increased considerably during 2013 through 2015. Specifically, debt issues covering certain categories of transport reached USD 418.8 billion in 2015 (16.8% average annual increase from 2013). Efficient buildings- and industry-related bonds, including appliances, surged to USD 19.6 billion in 2015 (nearly 58% average annual increase from 2013). In total, energy efficiency-related bonds reached USD 438.4 billion in 2015 (as of early December 2015; 17.8% average annual increase from 2013).81
Development finance institutions (DFIs), or multilateral development banks, have played a critical role in energy efficiency investments by providing loans, credit lines, partial risk guarantees and other products to both public recipients and private parties. Between 2012 and 2014, investments in energy efficiency leveraged through multilateral development banks climbed by almost 45%, from USD 3.5 billion to USD 5 billion.82 Among the initiatives undertaken by DFIs in 2015 was the launch of the Partial Risk Sharing Facility for Energy Efficiency project by the Global Environment Facility, the World Bank and the Government of India. This USD 43 million initiative is designed to help energy service companies mobilise investment by banks in India for energy efficiency opportunities by protecting against potential loss, which can inhibit upfront investment.83
The German development bank KfW continues to be a leader in energy efficiency investment; in 2015, it invested more than USD 4.1 million in its Energy Efficiency programme, up from approximately USD 3.4 million the previous year. Between 2006 and 2014, KfW invested more than USD 202.7 billion in its Energy-Efficient Construction and Refurbishment Funding programmes.84
The Green Climate Fund included in its initial set of investments (in November 2015) an allocation of USD 217 million for an energy efficiency green bond in Latin America and the Caribbean with the Inter-American Development Bank.85 Meanwhile, Goldman Sachs announced in late 2015 that it would expand its clean energy investment target – which includes energy efficiency opportunities – to USD 150 billion by 2025.86
Some innovative investment mechanisms have emerged that enhance financial activity in energy efficiency. For example, yieldcos, an investment instrument used for certain renewable energy assets, were employed for energy efficiency projects in the United States and Europe from the second half of 2013 to mid-2015; however, their role in the growth of renewable power mergers and acquisitions activity tapered off in the second half of 2015 due to a significant decline in the value of several publicly traded yieldcos.87 In addition, Property-Assessed Clean Energy (PACE) financing, a form of on-bill financing that was first developed in the early 2000s, continues to expand in the United States in both commercial and residential markets.88 PACE financing was designed to address one of the most significant barriers to energy efficiency and renewable energy retrofits: upfront costs.
In September 2015, 70 financial institutions from more than 20 countries – including national, regional and global banks – committed to increase financing for energy efficiency investments.89 In November 2015, 20 countries (including France, Germany, Japan, the Republic of Korea and the United States) formed the Mission Innovation initiative to double R&D investment in low-carbon technologies, including end-use energy efficiency.90 In parallel to the Mission Innovation, the Breakthrough Energy Coalition was launched by 28 private capital investors to invest in clean technologies, including energy efficiency.91
Policies, Programmes and Plans
An increasing number of governments worldwide – at the regional, national, state and local levels – have enacted policies to improve energy efficiency in the buildings, transport and industry sectors. Drivers for such policies include increasing energy security, advancing economic growth and competitiveness, reducing fuel poverty and mitigating climate change.92 In developing countries, increased efficiency can make it easier to provide energy services to those who lack access.93 Policies – including targets, regulations, standards and labelling, and fiscal incentives – aim to address a number of barriers to accelerating energy efficiency actions. These include a lack of capacity and knowledge, misplaced incentivesi across different stakeholders, energy subsidies and regulatory barriers.94
Additionally, some policies attempt to harness the synergies between energy efficiency and renewable energy, despite limited new examples addressing the two in concert. However, there are numerous examples of policies and programmes that are focused on renewable energy and energy efficiency simultaneously.
Targets to improve energy efficiency have been established at all levels of government, including the regional level. A large portion of existing targets is aimed at a particular sector or sub-sector. In late 2014, the EU updated its economy-wide efficiency improvements target (relative to 1990 levels) from 20% by 2020 to 27% by 2030, although the 2030 targets were adopted as non-binding.95 During the period 2014–2015, several EU Member States revised targets that they established in 2013 through National Energy Efficiency Action Plans (NEEAPs) under the EU Energy Efficiency Directive.
i Misplaced incentives occur if those who make decisions about investing in energy efficiency improvements are different from those who benefit from the resulting energy savings.
Although most of the absolute targets for 2020 remained unchanged in 2015, three countries (Bulgaria, Croatia and Slovakia) reduced their targets, while several others (including Cyprus, France, Greece, Hungary, Malta, Spain and Sweden) made their targets more ambitious.96
Some countries have defined both energy efficiency and renewable energy targets through roadmaps and national action plans. In late 2015, Chile adopted an Energy Roadmap to 2050 that includes the reduction of energy poverty, improvements in energy efficiency (i.e., equipment standards, new buildings standards) and an increase in renewable energy generation (to 70% by 2050) throughout the period.97 In 2014, Japan adopted its Strategic Energy Plan, which describes the need for energy-efficient construction and renovation, LED lighting, Intelligent Transportation Systems (ITS) and energy management systems in industrial facilities, while also planning for accelerating deployment of renewables and achieving grid parity over the mid to long term.98 Also adopted in 2014, Indonesia’s National Energy Plan aims to transform the country’s energy mix by 2025 by improving energy efficiency and increasing the renewable energy share in the energy mix from 2% up to 23%.99
In Africa, some countries furthered their efforts to advance renewables and energy efficiency in national initiatives in 2015. Algeria adopted its Renewable Energy and Energy Efficiency Program, which includes a strategy to develop and expand the integration of renewable energy in the long term, while emphasising the important role of energy savings and energy efficiency.100 Tanzania issued a draft plan to promote energy efficiency in various sectors and increase the contribution of renewable energy to the electricity generation mix.101 Additionally, a Demand Side Management Campaigns Unit was created within TANESCO (Tanzania Electric Supply Company Limited) to build awareness of peak load management among large power consumers and to install power factor correctors.102 Rwanda’s grid system loss-reduction plan proposes an investment of USD 60 million to reduce losses from 23% to 15% (which would produce capacity savings equivalent to constructing a 15 MW power plant). The country’s Energy Sector Strategic Plan (ESSP) also calls for the development of solar water heater regulations and a dedicated demand-side management unit within its power utility.103
A few countries also developed national roadmaps and plans focusing specifically on energy efficiency. For example, the Philippines’ Energy Efficiency Roadmap 2014–2030 aims for a 40% reduction in energy intensity over that period, calling for a 1.6% annual reduction in energy consumption against baseline forecasts and energy savings of approximately 10.7 million tonnes of oil equivalent per year by 2030 (all relative to a 2010 baseline). This was followed by the Philippines’ National Energy Efficiency and Conservation Action Plan 2016–2020, which outlines initiatives to expand on those in the Roadmap.104
To achieve their energy efficiency targets, governments are introducing new regulations or updating existing ones to drive efficiency improvements. In order to comply with the EU target for energy efficiency improvement, a number of EU Member States are implementing various regulatory measures. For example, Luxembourg modified existing regulations on building energy performance to comply with directive 2010/31/EU.105 Hungary adopted a National Building Energy Performance Strategy 2015–2020 that established primary energy-saving targets to be achieved through buildings refurbishment and introduced stricter requirements for the cumulative primary energy performance for buildings – while also promoting the use of renewable energy sources for heating and cooling in buildings (e.g., solar collectors, biomass and heat pumps).106
In late 2015, the Energy Community Ministerial Council adopted EU Directive 2012/27/EU, setting a 20% energy efficiency target for 2020 within the Energy Communityi and paving the way for additional improvements in the future, while also including consideration of increasing renewables. As in the EU, the Energy Community Directive requires Contracting Parties to adopt energy savings obligation schemes for energy distribution and retail companies; to enact policies to improve efficiency in heating and cooling and to advance co-generation; and to establish annual targets for the renovation of central government buildings. Notably, efficient heating and cooling in the Directive includes the use of renewable energy sources and the reduction of non-renewable primary energy.107
Also in 2015, Belarus updated its energy efficiency legislation to improve data, monitoring, education, training and international collaboration.108 Kazakhstan amended its Law on Energy Efficiency (2012) to provide more legal details on the functioning of energy service companies.109 In Kenya, Energy Management Regulations (2012) mandate that consumers of more than 180,000 kWh annually conduct energy audits every three years.110
i Members of the Energy Community include the EU and eight Contracting Parties: Albania, Bosnia and Herzegovina, Kosovo, the former Yugoslav Republic of Macedonia, Moldova, Montenegro, Serbia and Ukraine. As of April 2016, Armenia, Georgia, Norway and Turkey participated as Observers.
In 2014, Austria adopted the Federal Energy Efficiency Act, setting the national target for the country’s final energy consumption not to exceed 1.05 PJ in 2020.111 As of January 2015, energy suppliers in Austria are required to implement demonstrable measures to increase energy efficiency to achieve the targeted annual increase in efficiency of 0.6% through an energy-savings obligation system; large-scale consumers must implement an energy management system or otherwise face an energy audit every four years, while small and medium consumers can participate voluntarily.112
A number of new policies in the United States focused on the buildings sector. The national-level Energy Efficiency Improvement Act was enacted into law in 2015, promoting energy efficiency in commercial buildings; establishing new regulations for smart grid-enabled water heaters; ensuring public disclosure of building energy performance and usage; and establishing efficiency requirements for building space leased by any federal agency.113 Atlanta (Georgia) and Portland (Oregon) became the 12th and 13th US cities to adopt energy efficiency benchmarking through policies to improve building energy performance.114
Standards and labelling programmes are the primary tools used to improve the efficiency of a variety of appliances and other energy-consuming products. As of end-2015, such programmes were operational in at least 80 countries and covered more than 50 types of commercial, industrial and residential appliances and equipment.115 Developments in 2015 include an update to the EU Minimum Energy Performance Standards (MEPS) for low-voltage motors and transformers, with the enactment of more-stringent energy efficiency requirements.116
Kenya adopted its Energy Bill to (among other things) establish a designated agency that is responsible for energy efficiency improvements, including the adoption or development of standards (notably, the Energy Bill is also designed to clarify issues related to the ownership of renewable energy sources and licensing and to establish a feed-in-tariff system).117 Kenya’s standards and labelling programme proposes MEPS for a range of appliances, and the country also has set a standard for improved biomass cook stoves.118 Additionally, Uganda developed MEPS for several appliances, and its National Bureau of Standards has a testing laboratory to support appliance quality monitoring.119
Many of the new standards set in 2015 were in the transport sector. For example, a new EU mandate requires that all new passenger cars registered from 2015 onwards consume no more than 5.6 litres per 100 km (l/km) of petrol or 4.9 l/100 km of diesel. By 2021, this requirement will be further tightened to 4.1 l/100 km of petrol or 3.6 l/100 km of diesel.120 Japan also increased its performance requirements under existing fuel-efficiency regulations for light- and heavy-duty vehicles.121 Saudi Arabia set new regulations for light-duty vehicles to improve vehicle performance by 4% annually, increasing from an average fuel economy of 8.3 l/100 km in 2015 to 5.3 l/100 km by 2025.122 Uganda’s Fuel Efficiency Initiative Programme supports the development of policies and regulations that promote the use of fuel-efficiency vehicles.123
Fiscal incentives – including rebates, tax reductions and low-interest loans – also have been employed to stimulate improvements in energy efficiency. Italy is offering USD 382 million (EUR 350 million) of soft financing for energy efficiency improvements in public school and university buildings.124 Lithuania is using structural funds from the EU to provide investment incentives for industry to implement efficiency measures between 2014 and 2020.125 In 2015, Germany began encouraging municipalities, municipal companies, religious communities and small and medium-sized enterprises (SMEs) to implement energy performance contracting through the provision of grants for consulting on related matters.126
Spain introduced several programmes and allocated funds to support fiscal incentives in 2015. Through its National Energy Efficiency Fund (established in 2014), Spain allocated USD 184 million (EUR 168 million) for energy renovation of buildings, efficiency improvements in the transport and industrial sectors, and more-efficient street lighting.127 In addition, Spain initiated the Efficient Vehicle Incentives Program, with a budget of USD 191 million (EUR 175 million), to encourage the purchase of new energy-efficient vehicles.128 The country also launched a subsidy scheme, allocating USD 219 million (EUR 200 million) for energy efficiency improvements, including improving the thermal insulation of buildings and advancing the efficiency of heating and lighting systems.129 Beyond Europe, Canada started to offer a number of rebates for energy-efficient equipment in 2015, such as ductless heat pumps, cold-climate ductless heat pumps, Energy Star-certified refrigerators and efficient clothes washers.130
In terms of financing, energy efficiency and renewable energy actions often are considered within a broader area of clean or sustainable energy, and, therefore, both types of projects can be eligible under the same financing scheme. For example, in 2015, the US Environmental Protection Agency introduced the Clean Energy Incentive Program (CEIP) to reward early investments in renewable energy generation and demand-side energy efficiency measures that generate carbon-free energy or reduce end-use energy demand by 2020 and/or 2021.131 In terms of financial incentive programmes that explicitly target both renewables and efficiency, Nigeria’s National Renewable Energy and Energy Efficiency Policy, adopted in April 2015, provides incentives for selling, manufacturing and importing energy-efficient products, while also promoting policies for renewable energy sources.132