Global Economy Is Failing on Vow to Use Energy More Efficiently

Though it’s more mundane than scaling up renewables or electrifying transportation, rapid improvements in how efficiently the global economy uses energy are seen as vital if the world has any chance of meeting its climate goals.

Author of the article:

Bloomberg News

Jennifer A. Dlouhy

Published Nov 15, 2024  •  2 minute read

An energy rating label displayed on a home appliance in . Photographer: Dhiraj Singh/Bloomberg Photo by Dhiraj Singh /Photographer: Dhiraj Singh/Bloom

(Bloomberg) — Though it’s more mundane than scaling up renewables or electrifying transportation, rapid improvements in how efficiently the global economy uses energy are seen as vital if the world has any chance of meeting its climate goals.

Efficiency encompasses everything from setting paring the electricity used by appliances and making industrial processes less power intensive to better insulating buildings and improving grids. According to calculations from the RMI think tank, two-thirds of today’s energy supply is wasted, representing about $4.6 trillion a year, or 5% of global GDP.

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At last year’s COP climate talks in Dubai, nations committed to doubling the global rate of annual energy efficiency improvements. To date, they’ve done little to meet the goal, according to  the Mission Energy coalition of governments, non-governmental organizations and think tanks at the COP29 summit in Azerbaijan.

Under the commitment, nations vowed to boost yearly efficiency improvements from about 2% to more than 4% every year through 2030. But new data and analysis show the rate holding steady instead — having achieved just a 2% efficiency gain in 2022 with even smaller improvement expected this year.

“Energy efficiency is the most important lever not being pulled right now,” said Jon Creyts, chief executive officer of  RMI. “It will make the entire energy transition cheaper, faster, fairer and more secure.”

Advocates say efficiency is the unseen workforce of the energy transition — a way to make more out of every kilowatt that gets generated and maximize today’s infrastructure, buying time for longer-term investment. The issue has become even more pressing as power demand growth is set to accelerate globally, fed by the installation of AI-driven data centers and the switch to electric vehicles.

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“You’re improving the effectiveness of every supply option, and you’re driving down the cost so that we get to a point where we can afford the grid of the future,” Creyts said.

Instead of working to improve efficiency, the world’s focus has been trained on boosting power supply, with promises of more renewables and nuclear generation, even as the world’s energy system leaks some of the output. 

At the negotiations in Azerbaijan, US and European nations have been pressing for ways to reaffirm and propel action to implement last year’s COP28 commitments on efficiency and renewables. A key issue is also ensuring efficiency is baked into countries’ emission-cutting pledges for 2035, due in early February.

In Ghana, work is already underway. Though the country has a history of cheap hydroelectric power, population growth and climbing demand encouraged Ghana to bolster efficiency, with new performance standards for appliances and other action. 

Between 2010 and 2023, the implementation of efficiency policy has saved Ghana over 12,000 megawatt hours and avoided an estimated 7 million metric tons of carbon dioxide emissions, said Kofi Agyarko, with the country’s energy commission.

“It’s cheaper to conserve than to just keep expanding generation capacity,” he said. “Energy efficiency is the unseen turbine that generates clean power at cheaper cost.”

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