Energy Efficiency 2017

Energy Efficiency 2017

Energy efficiency at a crossroads

More than ever before, energy efficiency is central to the achievement of a range of policy goals, including energy security, economic growth and environmental sustainability.

Strong efficiency gains, despite the recent fall in energy prices, have had a significant impact on global energy demand, reducing consumers’ energy bills, holding back emissions growth and making energy systems more secure.

However, global progress has become dependent on yesterday’s policies, with the implementation of new policies slowing. If the world is to transition to a clean energy future, a pipeline of new efficiency policies needs to be coming into force. Instead, the current low rate of implementation risks a backward step.

The energy intensity of the global economy continues to fall

Global energy intensity – measured as the amount of primary energy demand needed to produce one unit of gross domestic product (GDP) – fell by 1.8% in 2016. Since 2010, intensity has declined at an average rate of 2.1% per year, which is a significant increase from the average rate of 1.3% between 1970 and 2010.

Gráfico 1

The improvement in intensity varies widely across countries and regions. In China, intensity fell significantly faster, reflecting the ongoing effects of efficiency policies. Without China, global energy intensity would have improved by only 1.1% in 2016.

The improvement in energy intensity is the main reason why global energy-related greenhouse gas emissions have levelled off since 2014. Lower energy intensity was responsible for offsetting three-quarters of the increase in emissions due to GDP growth, with the shift to renewables and other low-emission fuels offsetting the other quarter.

Gráfico 2

The decline in global energy intensity means that the world is able to produce more GDP for each unit of energy consumed – an energy productivity bonus. Measured as the difference between actual GDP and the hypothetical GDP that would have been generated had energy intensity stayed at the previous year’s level, this bonus was $2.2 trillion in 2016 – equal to twice the size of the Australian economy.

Energy efficiency is helping to reshape the entire energy system

In 2016, the world would have used 12% more energy had it not been for energy efficiency improvements since 2000 – equivalent to adding another European Union in the global energy market.

Among IEA member countries, efficiency improvements led to a peak in total energy use in 2007, and a subsequent fall to levels not seen since the 1990s.

Energy efficiency is bolstering energy security

Efficiency improvements since 2000 avoided $50 billion in additional spending on energy imports in IEA member countries in 2016. In Japan, for example, oil imports would have been 20% higher in 2016 and gas imports 23% higher had those efficiency gains not occurred.

The impact of efficiency on gas imports has been particularly pronounced in Europe. In Germany and the United Kingdom, Europe’s largest gas markets, energy efficiency improvements since 2000 resulted in gas savings in 2015 equivalent to 30% of Europe’s total imports from Russia.

Efficiency has also improved short-term energy security by reducing peak daily gas demand. Without energy efficiency improvements over the same period, the United Kingdom and France would have needed access to an additional 240 million cubic metres of daily gas supply during periods of peak demand.

Improved energy efficiency has reduced household expenditure on energy

Energy efficiency gains since 2000 helped households in several major economies avoid nearly $300 billion in additional spending on energy in 2016. For example, in Germany, France and the United Kingdom, household energy bills in 2016 were on average over $400 per capita lower than they would have been had energy efficiency not improved as it did since 2000.

Savings are also being made in large emerging economies, where demand for energy services is growing. For example, on average Chinese households would have spent 25% more on energy in 2016 if not for efficiency.

Gráfico 3

Policy implementation slowed in 2016, putting future energy efficiency gains at risk

The share of world final energy use covered by policies that mandate energy efficiency improvements grew to nearly 32% in 2016 – an increase of 1.4 percentage points on 2015, but still leaving 68% of global energy use uncovered.

In stark contrast with previous years, nearly all the 2016 increase in coverage was due to the continuing impact of existing policies, as old energy-using equipment was replaced. Just 1% of the increase was due to new policies, an historic low.

Gráfico 4

This is the slowest policy progress since 2009. The IEA Efficiency Policy Progress Index (EPPI), which measures changes in the coverage and strength of mandatory energy efficiency policies since 2000, increased by half a point to 6.3 globally in 2016, compared with average increases of around 0.75 since 2010.

The slowdown in the EPPI was largely due to fewer new policies coming into force, a trend that continued in the first half of 2017. China, with an EPPI of 10.9 in 2016, has been the global leader in implementing mandatory efficiency policies in recent years, accounting for 70% of the increase between 2000 and 2016, mainly due to policies in the industrial sector.

Gráfico 5

Stronger policy development and implementation is essential if the current level of efficiency gains is to be maintained or accelerated.If stated policy ambitions are to be met, governments must recognise the importance of developing and putting into force new and more ambitious policies.

Industry, buildings and transport


Industry energy efficiency has improved, with use of energy management systems increasing

Energy use per unit of economic output in the industrial sector fell by nearly 20% between 2000 and 2016. The magnitude of the declines is similar both in IEA member countries and major emerging economies.

In some energy-intensive industries, such as aluminium smelting and cement manufacturing, average efficiency has improved sharply as a result of rapid expansion in production capacity, especially in emerging economies, since new facilities tend to be much more efficient than old ones.

The application of energy management systems, which provide a structure to monitor energy consumption and identify opportunities to improve efficiency, is growing, driven by policy and financial incentives. The number of certifications for ISO 50001 – a global standard for energy management developed by the International Organization for Standardization in 2011 – grew to nearly 12 000 in 2015, 85% of which were in Europe.

The energy efficiency of buildings has improved, but far more is possible

Energy efficiency in buildings continues to improve, thanks to policy action and technological advances. Policies have focused primarily on the building envelope, rather than heating and cooling equipment. There is considerable potential to achieve further energy savings by establishing standards.

Efficiency improvements of 10% to 20% are possible in most countries from appliances, equipment and lighting products that are already commercially available. There is strong global momentum towards more efficient lighting; by 2022, 90% of indoor lighting worldwide is expected to be provided by compact fluorescent lamps (CFLs) and light-emitting diodes (LEDs).

The motor vehicle market is changing rapidly, driven by policy, technology and fuel prices

Fuel efficiency standards for trucks, which represent 43% of total oil consumption for road transport, have come on the radar for policy makers. In 2016, only 16% of the energy use for trucks worldwide was covered by mandatory efficiency policies.

Fuel economy standards in Canada, China, Japan and the United States are leading the way. The European Union, India, Korea and Mexico are expected to extend and introduce standards in coming years.

Gráfico 6

Worldwide sales of electric vehicles, which are much more efficient than internal combustion engine vehicles, grew by 40% in 2016 due to an expansion in production capacity, a bigger range of models and improved vehicle performance. However, lower gasoline prices led to increased sales of less efficient large passenger vehicles, especially sports utility vehicles, which is dampening the global rate of improvement in passenger vehicle fuel-efficiency.

The future of energy efficiency

The global energy efficiency market continued to expand in 2016 

Global investment in energy efficiency continued to grow in 2016, increasing by 9% to $231 billion. The rate of growth was strongest in China at 24%, though Europe is still responsible for the largest share of global investment.

Among end-use sectors, buildings still dominate energy efficiency investment, accounting for 58% of the world total in 2016, with most investment in that sector going to building envelopes, appliances and lighting.

Gráfico 7

The global energy service company (ESCO) market expanded by 12% to $26.8 billion in 2016. China has by far the largest market, making up over 60% of global revenues, thanks to strong government incentives. The United States (20%) and Europe (10%) are the other two major ESCO markets. Over 1 million people are now employed by ESCOs around the world.

In addition, energy efficiency has become a tradeable commodity in several countries. In 2016, changes in policy drove up the market value of energy savings substantially in France and Italy, the world’s two biggest markets where savings, in the form of white certificates, are traded between energy providers that face obligations to achieve specified amounts of savings. Digital technology is expected to enhance the ability for energy efficiency to participate in electricity markets.

The deployment of connected devices is growing, which will impact energy efficiency

The number of household connected devices in use is growing rapidly.

These devices, which can be connected to networks and other devices, provide new opportunities for energy savings through more accurate control of consumption. By the end of 2016, half a billion smart meters, which track and display electricity use in real time, had been or were contracted to be installed. Among other benefits, smart meters can complement connected devices, allowing consumers to adjust energy use in response to changes in energy price.

Special Report: Energy efficiency in Indonesia

Imagem 2

There is great potential to boost energy efficiency in Indonesia

Indonesia — the subject of a special focus in Energy Efficiency 2017 — is the largest energy consumer in Southeast Asia and economic growth is expected to continue to drive up Indonesia’s energy needs. Efficiency will be essential to avoid unnecessary energy use and expenditure and emissions.

Implementing and enforcing current energy efficiency policies is expected to reduce energy use by 2% by 2025. Enhancing existing policies and implementing all planned policies could further reduce energy use by 4.5% compared with a scenario with no policy change. Without such action, an additional 4.1 GW of electricity generation capacity would be needed each year to 2025. Beyond such action, there remains considerable scope for even bigger savings from energy efficiency.

Improving the energy efficiency of lighting and space cooling.

Switching to CFLs with the help of government programmes over the past decadesavedIndonesian consumers $3.3 billion on their electricity bills in 2016 and LEDs are now taking a growing market share. If the current rate of LED adoption continues, Indonesian consumers could save nearly $560 million per year by 2030.

Demand for space cooling is likely to double between 2016 and 2020. A performance standard was introduced in 2016, but at its current levels this is not having a substantial effect on the market. Accelerating progress to keep pace with shared targets within Southeast Asia could save Indonesian consumers nearly $690 million per year by 2030.

Significant potential for efficiency savings in transport

Gráfico 8

Motorcycles are the leading form of passenger transport in Indonesia. If the penetration of electric two-wheelers was boosted to match the current level in China, Indonesia would avoid $800 million in oil imports in 2030 compared with current projections.

Meanwhile trucks account for 40% of Indonesia’s total road transport energy use. If fuel efficiency standards that improved efficiency at the same rate as in China were introduced, $630 million in oil imports could be avoided in 2030 alone. Combined, these two measures would reduce energy use in 2030 by over 75,000 barrels of oil per day, equivalent to 13% of Indonesia’s current net oil imports.


View the launch presentation here, or download the PDF.


World Energy Outlook 2017

World Energy Outlook 2017

Global shifts in the energy system

Four large-scale shifts in the global energy system set the scene for the World Energy Outlook 2017: the rapid deployment and falling costs of clean energy technologies, the growing electrification of energy, the shift to a more services-oriented economy and a cleaner energy mix in China, and the resilience of shale gas and tight oil in the United States.

These shifts come at a time when traditional distinctions between energy producers and consumers are being blurred and a new group of major developing countries, led by India, moves towards centre stage.

How these developments play out and interact is the story of this year’s Outlook.

Growing energy demand

In the New Policies Scenario, global energy needs rise more slowly than in the past but still expand by 30% between today and 2040. This is the equivalent of adding another China and India to today’s global demand.


A global economy growing at an average rate of 3.4% per year, a population that expands from 7.4 billion today to more than 9 billion in 2040, and a process of urbanisation that adds a city the size of Shanghai to the world’s urban population every four months are key forces that underpin our projections.

The largest contribution to demand growth – almost 30% – comes from India, whose share of global energy use rises to 11% by 2040 (still well below its 18% share in the anticipated global population).

Southeast Asia is another rising heavyweight in global energy, with demand growing at twice the pace of China. Overall, developing countries in Asia account for two-thirds of global energy growth, with the rest coming mainly from the Middle East, Africa and Latin America.

Renewables step up, coal strikes out

Compared with the past twenty-five years, the way that the world meets its growing energy needs changes dramatically in the New Policies Scenario, with the lead now taken by natural gas, by the rapid rise of renewables and by energy efficiency.


Improvements in efficiency play a huge role in taking the strain off the supply side: without them, the projected rise in final energy use would more than double. Renewable sources of energy meet 40% of the increase in primary demand and their explosive growth in the power sector marks the end of the boom years for coal.

Since 2000, coal-fired power generation capacity has grown by nearly 900 gigawatts (GW), but net additions from today to 2040 are only 400 GW and many of these are plants already under construction. In India, the share of coal in the power mix drops from three-quarters in 2016 to less than half in 2040. In the absence of large-scale carbon capture and storage, global coal consumption flatlines.

Oil demand continues to grow to 2040, albeit at a steadily decreasing pace. Natural gas use rises by 45% to 2040; with more limited room to expand in the power sector, industrial demand becomes the largest area for growth. The outlook for nuclear power has dimmed since last year’s Outlook, but China continues to lead a gradual rise in output, overtaking the United States by 2030 to become the largest producer of nuclear-based electricity.

Bright future for renewables

Renewables capture two-thirds of global investment in power plants to 2040 as they become, for many countries, the least-cost source of new generation.

Grafico 2

Rapid deployment of solar photovoltaics (PV), led by China and India, helps solar become the largest source of low-carbon capacity by 2040, by which time the share of all renewables in total power generation reaches 40%.

In the European Union, renewables account for 80% of new capacity and wind power becomes the leading source of electricity soon after 2030, due to strong growth both onshore and offshore. Policies continue to support renewable electricity worldwide, increasingly through competitive auctions rather than feed-in tariffs, and the transformation of the power sector is amplified by millions of households, communities and businesses investing directly in distributed solar PV.

Growth in renewables is not confined to the power sector. The direct use of renewables to provide heat and mobility worldwide also doubles, albeit from a low base. In Brazil, the share of direct and indirect renewable use in final energy consumption rises from 39% today to 45% in 2040, compared with a global progression from 9% to 16% over the same period.

The future is electrifying

Electricity is the rising force among worldwide end-uses of energy, making up 40% of the rise in final consumption to 2040 – the same share of growth that oil took for the last twenty-five years.

Grafico 3

Industrial electric motor systems account for one-third of the increase in power demand in the New Policies Scenario. Rising incomes mean that many millions of households add electrical appliances (with an increasing share of “smart” connected devices) and install cooling systems.

Electricity makes inroads in supplying heat and mobility, alongside growth in its traditional domains, allowing its share of final consumption to rise to nearly a quarter. A strengthening tide of industry initiatives and policy support pushes our projection for the global electric car fleet up to 280 million by 2040, from 2 million today.

The scale of future electricity needs and the challenge of decarbonising power supply help to explain why global investment in electricity overtook that of oil and gas for the first time in 2016 and why electricity security is moving firmly up the policy agenda.

The increasing use of digital technologies across the economy improves efficiency and facilitates the flexible operation of power systems, but also creates potential new vulnerabilities that need to be addressed.

When China changes, everything changes

China is entering a new phase in its development. The president’s call for an “energy revolution”, the “fight against pollution” and the transition towards a more services-based economic model is moving the energy sector in a new direction – with the emphasis in energy policy now firmly on electricity, natural gas and cleaner, high-efficiency and digital technologies.

Grafico 4

Demand growth slowed markedly from an average of 8% per year from 2000 to 2012 to less than 2% per year since 2012, and in the New Policies Scenario it slows further to an average of 1% per year to 2040. Energy efficiency regulation explains a large part of this slowdown. Without new efficiency measures, end-use consumption in 2040 would be 40% higher. Nonetheless, by 2040 per-capita energy consumption in China exceeds that of the European Union.

China’s choices will play a huge role in determining global trends, and could spark a faster clean energy transition. The scale of China’s clean energy deployment, technology exports and outward investment makes it a key determinant of momentum behind the low-carbon transition: one-third of the world’s new wind power and solar PV is installed in China in the New Policies Scenario, and China also accounts for more than 40% of global investment in electric vehicles (EVs).

Grafico 5

China provides a quarter of the projected rise in global gas demand and its projected imports of 280 billion cubic metres (bcm) in 2040 are second only to those of the European Union, making China a linchpin of global gas trade.

China overtakes the United States as the largest oil consumer around 2030, and its net imports reach 13 million barrels per day (mb/d) in 2040. But stringent fuel-efficiency measures for cars and trucks, and a shift which sees one-in-four cars being electric by 2040, means that China is no longer the main driving force behind global oil use – demand growth is larger in India post-2025.

China remains a towering presence in coal markets, but our projections suggest that coal use peaked in 2013 and is set to decline by almost 15% over the period to 2040.

The US shale revolution turns to exports

A remarkable ability to unlock new resources cost-effectively pushes combined United States oil and gas output to a level 50% higher than any other country has ever managed; already a net exporter of gas, the US becomes a net exporter of oil in the late 2020s.

Grafico 6

In our projections, the 8 mb/d rise in US tight oil output from 2010 to 2025 would match the highest sustained period of oil output growth by a single country in the history of oil markets. A 630 bcm increase in US shale gas production over the 15 years from 2008 would comfortably exceed the previous record for gas.

Expansion on this scale is having wide-ranging impacts within North America, fuelling major investments in petrochemicals and other energy-intensive industries. It is also reordering international trade flows and challenging incumbent suppliers and business models.

By the mid-2020s, the United States become the world’s largest liquefied natural gas (LNG) exporter and a few years later a net exporter of oil – still a major importer of heavier crudes that suit the configuration of its refineries, but a larger exporter of light crude and refined products.

The era of oil is not yet over

With the United States accounting for 80% of the increase in global oil supply to 2025 and maintaining near-term downward pressure on prices, the world’s consumers are not yet ready to say goodbye to the era of oil.

Up until the mid-2020s demand growth remains robust in the New Policies Scenario, but slows markedly thereafter as greater efficiency and fuel switching bring down oil use for passenger vehicles (even though the global car fleet doubles from today to reach 2 billion by 2040).

Powerful impetus from other sectors is enough to keep oil demand on a rising trajectory to 105 mb/d by 2040: oil use to produce petrochemicals is the largest source of growth, closely followed by rising consumption for trucks (fuel-efficiency policies cover 80% of global car sales today, but only 50% of global truck sales), for aviation and for shipping.

Grafico 7

Once US tight oil plateaus in the late 2020s and non-OPEC production as a whole falls back, the market becomes increasingly reliant on the Middle East to balance the market. There is a continued large-scale need for investment to develop a total of 670 billion barrels of new resources to 2040, mostly to make up for declines at existing fields rather than to meet the increase in demand.

Even greater upside for US tight oil and a more rapid switch to electric cars would keep oil prices lower for longer. We explore this possibility in a Low Oil Price Case, in which a doubling of the estimate for tight oil resources, to more than 200 billion barrels, boosts US supply and more widespread application of digital technologies helps to keep a lid on upstream costs around the globe.

Extra policy and infrastructure support pushes a much more rapid expansion in the global electric car fleet, which approaches 900 million cars by 2040. Along with a favourable assumption about the ability of the main oil-producing regions to weather the storm of lower hydrocarbon revenues, this is enough to keep prices within a $50-70/barrel range to 2040. However, it is not sufficient to trigger a major turnaround in global oil use.

Grafico 8

Even with a rapid transformation of the passenger car fleet, reaching a peak in global demand would require stronger policy action in other sectors. Otherwise, in a lower oil price world, consumers have few economic incentives to make the switch away from oil or to use it more efficiently.

Meanwhile, with projected demand growth appearing robust, at least for the near term, a third straight year in 2017 of low investment in new conventional projects remains a worrying indicator for the future market balance, creating a substantial risk of a shortfall of new supply in the 2020s.

A new order for global gas markets

Natural gas grows to account for a quarter of global energy demand in the New Policies Scenario by 2040, becoming the second-largest fuel in the global mix after oil.

In resource-rich regions, such as the Middle East, the case for expanding gas use is relatively straightforward, especially when it can substitute for oil. In the United States, plentiful supplies maintain a strong share of gas-fired power in electricity generation through to 2040, even without national policies limiting the use of coal.

But 80% of the projected growth in gas demand takes place in developing economies, led by China, India and other countries in Asia, where much of the gas needs to be imported (and so transportation costs are significant) and infrastructure is often not yet in place. This reflects the fact that gas looks a good fit for policy priorities in this region, generating heat, power and mobility with fewer carbon-dioxide (CO2) and pollutant emissions than other fossil fuels, helping to address widespread concerns over air quality.

Grafico 9

But the competitive landscape is formidable, not just due to coal but also to renewables, which in some countries become a cheaper form of new power generation than gas by the mid-2020s, pushing gas-fired plants towards a balancing rather than a baseload role. Efficiency policies also play a part in constraining gas use: while the electricity generated from gas grows by more than half to 2040, related gas use rises by only one-third, due to more reliance on highly efficient plants.

A new gas order is emerging, with US LNG helping to accelerate a shift towards a more flexible, liquid, global market. Ensuring that gas remains affordable and secure, beyond the current period of ample supply and lower prices, is critical for its long-term prospects. LNG accounts for almost 90% of the projected growth in long-distance gas trade to 2040: with few exceptions, most notably the route that opens up between Russia and China, major new pipelines struggle in a world that prizes the optionality of LNG.

Grafico 10

Gas supply also becomes more diverse: the amount of liquefaction sites worldwide doubles to 2040, with the main additions coming from the United States and Australia, followed by Russia, Qatar, Mozambique and Canada. Price formation is based increasingly on competition between various sources of gas, rather than indexation to oil. With destination flexibility, hub-based pricing and spot availability, US LNG acts as a catalyst for many of the anticipated changes in the wider gas market.

The new gas order can bring dividends for gas security, although there is the risk of a hard landing for gas markets in the 2020s if uncertainty over the pace or direction of change deters new investments.

Over the longer term, a larger and more liquid LNG market can compensate for reduced flexibility elsewhere in the energy system (for example, lower fuel-switching capacity in some countries as coal-fired generation is retired). We estimate that, in 2040, it would take around ten days for major importing regions to raise their import levels by 10%, a week less than it might take today in Europe, Japan and Korea.

Falling short on access, air pollution and GHGs

Access to electricity and clean cooking

Universal access to electricity remains elusive, and scaling up access to clean cooking facilities is even more challenging.

There are some positive signs: over 100 million people per year have gained access to electricity since 2012 compared with around 60 million per year from 2000 to 2012. Progress in India and Indonesia has been particularly impressive, and in sub-Saharan Africa electrification efforts outpaced population growth for the first time in 2014.

Grafico 11

But, despite this momentum, in the New Policies Scenario around 675 million people – 90% of them in sub-Saharan Africa – remain without access to electricity in 2030 (down from 1.1 billion today), and 2.3 billion continue to rely on biomass, coal or kerosene for cooking (from 2.8 billion today). Household air pollution from these sources is currently linked to 2.8 million premature deaths per year, and several billion hours are spent collecting firewood for cooking, mostly by women, that could be put to more productive uses.

Air quality

Policy attention to air quality is rising and global emissions of all the major pollutants fall in our projections, but their health impacts remain severe.

Ageing populations in many industrialised societies become more vulnerable to the effects of air pollution and urbanisation can also increase exposure to pollutants from traffic. Premature deaths worldwide from outdoor air pollution rise from 3 million today to more than 4 million in 2040 in the New Policies Scenario, even though pollution control technologies are applied more widely and other emissions are avoided because energy services are provided more efficiently or (as with wind and solar) without fuel combustion.

Grafico 12

GHG emissions

Despite their recent flattening, global energy-related CO2 emissions increase slightly to 2040 in the New Policies Scenario. This outcome is far from enough to avoid severe impacts of climate change, but there are a few positive signs. Projected 2040 emissions in the New Policies Scenario are lower by 600 million tonnes than in last year’s Outlook (35.7 gigatonnes [Gt] versus 36.3 Gt). In China, CO2emissions are projected to plateau at 9.2 Gt (only slightly above current levels) by 2030 before starting to fall back.

Grafico 13

Worldwide emissions from the power sector are limited to a 5% increase between now and 2040, even though electricity demand grows by 60% and global GDP by 125%. However, the speed of change in the power sector is not matched elsewhere: CO2 emissions from oil use in transport almost catch up with those from coal-fired power plants (which are flat) by 2040, and there is also a 20% rise in emissions from industry.

The Sustainable Development Scenario

The Sustainable Development Scenario offers an integrated way to achieve a range of energy-related goals crucial for sustainable economic development: climate stabilisation, cleaner air and universal access to modern energy, while also reducing energy security risks.

This scenario starts from a set of desired outcomes and considers what would be necessary to deliver them. Central to these outcomes is the achievement of an early peak in CO2 emissions and a subsequent rapid decline, consistent with the Paris Agreement.

Grafico 14

A key finding is that universal access to electricity and clean cooking can be reached without making this task any more challenging. We also investigate, in a Faster Transition Scenario, how policies could push an even more rapid and steeper decline in CO2 emissions and limit climate risks further.

In the Sustainable Development Scenario, low-carbon sources double their share in the energy mix to 40% in 2040, all avenues to improve efficiency are pursued, coal demand goes into an immediate decline and oil consumption peaks soon thereafter. Power generation is all but decarbonised, relying by 2040 on generation from renewables (over 60%), nuclear power (15%) as well as a contribution from carbon capture and storage (6%) – a technology that plays an equally significant role in cutting emissions from the industry sector. Electric cars move into the mainstream quickly, but decarbonising the transport sector also requires much more stringent efficiency measures across the board, notably for road freight.

Grafico 15

The 2030 targets for renewables and efficiency that are defined in the Sustainable Development agenda are met or exceeded in this scenario; renewables and efficiency are the key mechanisms to drive forward the low-carbon transition and reduce pollutant emissions. Considering the inter-linkages between them and aligning policy and market frameworks –  notably in the residential sector – is essential to ensure cost-efficient outcomes. The provision of highly efficient appliances, combined with decentralised renewables, also play a major role in extending full access to electricity and clean cooking, especially in rural communities and isolated settlements that are hard to reach with the grid.

Natural gas and the clean energy transitions

As oil and coal fall back and renewables ramp up strongly, natural gas becomes the largest single fuel in the global mix in the Sustainable Development Scenario. Securing clear climate benefits from gas use depends on credible action to minimise leaks of methane – a potent greenhouse gas – to the atmosphere.

Consumption of natural gas rises by nearly 20% to 2030 in the Sustainable Development Scenario and remains broadly at this level to 2040. The contribution of gas varies widely across regions, between sectors and over time in this scenario. In energy systems heavily reliant on coal (as in China and India), where renewable alternatives are less readily available (notably in some industrial sectors), or where seasonal flexibility is required to integrate high shares of variable renewables, gas plays an important role.

Stepping up action to tackle methane leaks along the oil and gas value chain is essential to bolster the environmental case for gas: these emissions are not the only anthropogenic emissions of methane, but they are likely to be among the cheapest to abate. We present the first global analysis of the costs of abating the estimated 76 million tonnes of methane emitted worldwide each year in oil and gas operations, which suggest that 40-50% of these emissions can be mitigated at no net cost, because the value of the captured methane could cover the abatement measures.

Grafico 16

Implementing these measures in the New Policies Scenario would have the same impact on reducing the average global surface temperature rise in 2100 as shutting all existing coal-fired power plants in China.

Launch presentation

Download the launch presentation