Home / Industry / Energy /  Global investments in energy efficiency will rise to $560 bn in 2022: IEA

New Delhi: Progress towards energy efficiency has accelerated globally this year as a result of high energy prices and disruptions to fuel supply but it is still not enough to meet climate change targets, the International Energy Agency (IEA) said on Friday. Global investments in energy efficiency such as heat pumps and building insulation will increase 16% this year to $560 billion, the Paris-based watchdog added.

Preliminary data indicate that in 2022 the global economy used energy 2% more efficiently than it did in 2021, a rate of improvement almost four times that of the past two years, and almost double the rate of the past five years.

“If the current rate of progress can be built upon further in the coming years, then 2022 could mark a vital turning point for efficiency, which is one of the key areas for international efforts to reach net zero emissions by 2050," the report said.

The IEA analysis found that, thanks to energy efficiency actions taken since 2000, total energy bills in IEA countries in 2022 are set to be $680 billion less than they would have been otherwise – or around 15% of their total energy expenditure this year – with past investments in building insulation and efficient cars saving many consumers thousands of dollars each year.

The global energy crisis sparked by Russia’s invasion of Ukraine has dramatically escalated concerns over energy security and the inflationary impact of higher energy prices on economies and people’s livelihoods around the world. The IEA report stresses that more efficient use of energy is the first and best response.

“The oil shocks of the 1970s led to a massive push by governments on energy efficiency, resulting in substantial improvements in the energy efficiency of cars, appliances and buildings," IEA head Fatih Birol said in a statement.

“Amid today’s energy crisis, we are seeing signs that energy efficiency is once again being prioritised. Energy efficiency is essential for dealing with today’s crisis, with its huge potential to help tackle the challenges of energy affordability, energy security and climate change," he said.

“This year’s improvement comes after Covid-19 led to two of the worst years ever for global energy efficiency progress, with annual gains falling to around 0.5% in 2020 and 2021. Key factors included a higher share of energy-intensive industry in energy demand as other sectors contracted and a slowing pace of retrofits and upgrades in buildings and factories," IEA said.

Energy efficiency progress had already slowed before the onset of the pandemic, with the global rate of improvement falling from 2% in the first half of the last decade to 1.3% in the second half, it added.

Efficiency improvements need to average about 4% a year this decade to align with the IEA’s Net Zero Emission by 2050 Scenario.

Nearly 3 million heat pumps, which use electric-powered mechanical energy rather than fossil fuels to heat and cool buildings, are projected to be sold in Europe this year, double compared with units sold in 2019, the IEA said.

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