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IEA Urges ‘Massive’ Energy Efficiency Gains to Hit Net-Zero Targets

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Countries will need “massive improvements” in energy efficiency to achieve their net-zero targets under the Paris Agreement, International Energy Agency policy analyst Alyssa Fischer argues in a recent commentary.

Energy efficiency is the “first fuel”, Fischer writes, accounting for more than 40% of the greenhouse gas emission reductions to be achieved by 2040 under the IEA’s Sustainable Development Scenario, part of its annual World Energy Outlook. That role is all the more important given the economic assumptions surrounding the analysis.

“Maintaining global growth and supporting development in emerging economies implies a sharp rise in consumption habits,” she writes. “Meeting this need requires a transformation of the existing energy system,” which in turn means a starring role for energy efficiency in “reining in the scale of this unprecedented challenge, supporting net-zero energy goals at lower costs, and delivering a wide array of benefits for society.”

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Technologies that are affordable today and ready for prime time “are sufficient to double global energy efficiency by 2040,” and “next-generation solutions like digitalization of energy systems and behaviourally informed policy making are opening the door to even further potential for efficiency improvements,” she adds.

But to tap into that potential, she says countries will have to make “transformational energy efficiency” an economy-wide priority.

The building stock is one area where governments must “rapidly increase the ambition and scale of existing buildings policies, while also employing new policy tools, technologies, and business models,” Fischer says. She cites The Netherlands’ Energiesprong as a firm that “performs deep retrofits on entire neighbourhoods at once—an approach that leverages economies of scale to make deep retrofits more cost-effective.”

But to succeed, those innovative techniques must quickly become standard practice.

“Comprehensive energy efficiency renovations are key for decarbonization, potentially improving the energy intensity per square metre by more than 50%,” she writes. That’s because deep retrofits “go beyond one-off upgrades to insulation or heating systems, requiring a suite of upgrades to the building envelope, heating and cooling systems, and lighting. Some companies are already undertaking this critical work, but innovative business models are needed to bring deep retrofits to scale.”

To get that done, Fischer urges governments to introduce net-zero or net-positive building codes, set tougher performance standards for building components and energy-intensive appliances, and “prioritize public and social housing upgrades and large-scale, low-interest loan incentive programs to support the most vulnerable members of society.”

Those investments “will have the added benefit for creating jobs in the aftermath of the pandemic, potentially creating around 15 jobs per million dollars invested, the highest jobs per spend value of any energy subsector.”

Fischer surveys changes in consumer behaviour, insights from behavioural science, new digital technologies, and shifts in industrial processes that are all important parts of the picture, along with policies and incentives to push those options farther and faster. She urges governments to “take full advantage of the opportunities presented by next-generation energy efficiency to accelerate progress toward net‑zero goals and higher global climate ambition.”

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