IEA Chief Sees ‘Disturbing’ Signal for Climate Target

(Bloomberg) -- Global efforts to reduce wasted energy have faced a major setback in 2020, sidelining a relatively simple way of slashing emissions and hitting climate goals.

That’s the conclusion from an International Energy Agency report, which recorded the weakest improvement in efficiency since 2010, as investments into technologies that can cut emissions have slowed amid the economic turmoil brought on by the pandemic.

“Global progress in energy efficiency in 2020 is the slowest in the last decade. It is a very disturbing message,” the IEA’s Executive Director Fatih Birol said in a press conference. “In the absence of very strongly and rapidly improving our energy efficiency, our chances to reach our energy and climate goals are very slim, if at all existing.”

The report highlights a challenge for policymakers looking to improve how the world consumes energy across almost every part of life. Even though emissions are set to drop in 2020, stuttering progress on energy efficiency could have long-term consequences for the climate far greater than this year’s temporary emissions relief.

Improving the way the world heats and cool its buildings as well as powers its cars over the next 20 years would see a drop of about half the energy-related pollution needed to ensure the countries hit climate targets set out in the Paris Agreement, the IEA said.

“Together with renewables, energy efficiency is one of the mainstays of global efforts to reach energy and climate goals,” Birol said in a statement.

The IEA expects energy intensity, defined as energy produced per dollar of economic activity, to improve by 0.8% this year, about half the rate of the previous two years.

Investments in energy efficiency are set to fall 9% this year. Increased sales of electric cars, which are much more efficient than their internal combustion engine cousins but a tiny fraction of total sales, were the only positive for the auto industry. Sales of new, more efficient ICE cars were down.

With lower power prices, there’s less incentive for industrial and commercial building operators to invest in measures to increase efficiency, which require upfront investment but end up saving more money in the long term through reduced energy bills.

Governments will need to step up efforts to boost energy efficiency, the IEA said. So far, most of the effort is being made in Europe, which made up 86% of announced stimulus for efficiency globally.

The lack of spending on energy efficiency may also be a missed opportunity for stimulus. Current stimulus spending in the area will help create about 2 million full-time jobs from 2021 to 2023, the IEA found, mostly in Europe. Further spending on energy efficiency could create another 4 million jobs, the IEA said.

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