Slow efficiency progress is a wasted opportunity

Global energy intensity progress is shaped by a wide range of factors, but four key trends help explain why current efficiency progress is slow.

Around two-thirds of global final energy demand growth since 2019 has been concentrated in industry, a sector where energy intensity progress has slowed sharply.Industrial energy demand growth has accelerated since 2019, while the average annual rate of industrial energy intensity improvement fell to under 0.5% over that same period, compared with almost 2% last decade. This global shift towards more intensive energy use in industry is offsetting gains made in other sectors and is a drag on overall efficiency progress.

Policies have lagged technology progress, leaving significant savings on the table. Many efficiency policies have not been updated to match recent technological gains. Today, many appliances are often only half as efficient as the best models, showing how policy has fallen behind technology. For example, the efficiency of best-in-class lightbulbs doubled in the last 15 years, while minimum performance standards have only gone up by 30%. If policy does not keep up, consumers waste money and an opportunity to reduce emissions is missed.

Increased access to air conditioners has pushed up cooling-related electricity demand. Higher living standards have allowed more people to afford much-needed cooling technologies such as air conditioners, especially in emerging economies. In fact, energy to keep people cool has seen the fastest growth of any end-use in buildings this century. But people are not always enabled or encouraged to buy the most efficient air-conditioning units, which means using them costs more than it needs to. If every air conditioner bought since 2019 had been the most efficient available, as opposed to the typical lower efficiency models that were bought, the world could have avoided electricity demand growth equivalent to the demand growth of data centres across the globe over the same period.

Accelerating electricity demand growth has, in some regions, led to an overall increase in less efficient power generation. In many regions, rising electricity demand is being met by more efficient technologies such as renewables. However, in some key regions, rapid demand growth is leading to greater use of older, less efficient generation sources, placing upward pressure on primary energy demand and slowing energy intensity progress. This highlights how the COP28 goals of doubling efficiency progress and tripling renewables capacity complement each other.

There are some glimmers of hope in our new 2025 data. Policy making is certainly accelerating in many areas, and preliminary estimates for 2025 show some strong progress in key regions. India, for example, is set to see intensity progress accelerate to more than 4% this year.But without further action, longer-term trends still suggest global progress will remain well below the doubling target agreed at COP28.