Investment in energy efficiency worldwide is on course to fall by 9% in 2020, the International Energy Agency (IEA) forecasts, warning that the Covid-induced slump threatens international climate goals.
The agency’s ‘Energy Efficiency 2020’ report estimates that global primary energy intensity will improve by less than 1% this year, its weakest rate in a decade and well below the level of progress needed to meet climate, pollution-reduction and energy-access targets.
The IEA calculates that improvements in energy efficiency can contribute around half of the reduction in energy-related greenhouse gas emissions required over the next two decades to put the world on a path to meeting international energy and climate goals.
The poor performance in 2020 has been driven by a plunge in investments in energy-efficient buildings, equipment and vehicles amid the economic crisis triggered by the pandemic.
Purchases of new cars, which are more efficient than older models, also slowed, while construction of new, more efficient homes and other buildings is expected to decelerate.
In industry and commercial buildings, lower energy prices have extended payback periods for key efficiency measures by as much as 40%, reducing their attractiveness compared with other investments.
The IEA says that the stimulus packages being introduced in a bid to recover from the pandemic could help drive the investments and structural changes needed to reduce energy intensity across all sectors of the economy.
More than 60% of the funding for energy-efficiency-related measures in stimulus packages announced by governments to date focus on either the buildings sector or on accelerating the shift to electric vehicles, including new vehicle charging infrastructure.
Spending on efficiency-related stimulus measures could generate almost two-million full-time jobs between 2021 and 2023, the IEA states, indicating that these jobs will arise mostly in the buildings sector and mainly in Europe.
However, the IEA says many opportunities remain untapped, noting that its own Sustainable Recovery Plan suggests that further recovery efforts related to energy efficiency could create another four-million jobs globally.
“No announcements have been made to increase the penetration of super-efficient appliances, while spending on vehicle efficiency beyond electric vehicles is minimal to date. The planned spending is also imbalanced on a regional basis, with announcements from European countries dwarfing those from other parts of the world.”