Green Gold Rush: Global Energy Efficiency Soars to $660 Billion in 2024, Leading the Charge in Slashing GHG Emissions

"Global Focus Shifts to Energy Efficiency as Key Strategy to Reduce Industrial Greenhouse Gas Emissions"

Most industrial greenhouse gas (GHG) emissions stem from energy usage, making enhancing energy efficiency a crucial solution to reduce consumption, emissions, and costs. The International Energy Agency (IEA) emphasizes the significance of energy efficiency initiatives and technologies as a primary step towards decarbonization. The IEA’s Energy Efficiency 2024 report outlines essential trends in energy intensity, demand, prices, and policies, shedding light on the ongoing investments in energy efficiency globally.

Driving Change: What Leads the Energy Revolution? The report forecasts that energy efficiency investments will remain robust in 2024, with total spending estimated to hit approximately $660 billion. This level mirrors the record set in 2022 and underscores the unwavering dedication to sustainable energy practices. Investments across various sectors like transport, buildings, and industry have surged since 2019, fueled by the energy crisis and substantial government spending post-Covid-19. Notably, the transport sector has witnessed the most significant growth at 77%, followed by buildings at 34% and industry at 13%.

However, a shift in trends occurred from 2022 to 2024. Building investments declined by 7%, while transport saw a 14% increase, and industry remained steady. The emphasis on efficient electrification, particularly in the electric vehicle (EV) sector in China, Europe, and North America, has been a key driver of this trend. The rise in EV sales, especially in emerging markets, has bolstered the shift towards energy efficiency. Nevertheless, as energy prices stabilize and government support diminishes, global investment in energy efficiency has reached a plateau, facing challenges from rising inflation and interest rates.

The spotlight on efficiency investments in 2024 is predominantly on emerging markets and developing economies (EMDEs). Africa is projected to experience a 60% surge, the Middle East 40%, Central and South America over 20%, and China nearly 10% growth. In contrast, advanced economies are stabilizing after years of crisis-driven spending, with Europe expecting a slight decline and North America a modest 5% increase. Despite slower growth in these regions, Europe, Asia Pacific, and North America account for 95% of global energy efficiency investments, reflecting about 75% of global energy demand.

The global trend towards transport electrification has gained momentum, with approximately one in five new cars sold expected to be electric by 2024. Electric vehicle (EV) sales hit 14 million in 2023, comprising 18% of total car sales, and are projected to reach 17 million in 2024. The majority of these sales occurred in China, Europe, and North America, which collectively represented 95% of global EV sales. In EMDEs, the focus remains on two- and three-wheelers, with China leading in two-wheeler sales despite a global 18% decline in 2023 due to supply chain disruptions. India, on the other hand, witnessed a 40% increase in electric two-wheeler sales, supported by government initiatives like the Electric Mobility Promotion Scheme.

Global passenger plug-in EV sales are forecasted to surpass 33 million units by 2028, indicating a significant 104% increase compared to 2024. China is expected to drive the largest growth in sales, with the number of EV users projected to double by 2028 in comparison to 2024. The electrification of transport is a pivotal aspect of the energy efficiency landscape, with EVs playing a crucial role in reducing emissions and enhancing sustainability.

Investment in energy-efficient buildings experienced a boom during the energy crisis, propelled by technologies like heat pumps. Heat pump sales peaked in 2022, especially in Europe, where they play a vital role in achieving long-term climate objectives. However, the momentum slowed in 2023 due to high electricity prices and reduced government support. For example, Italy’s Superbonus program, a significant contributor to the country’s building sector investments in 2023, was phased out in 2024. Conversely, heat pump deployment in China showed modest growth, underscoring the essential role of government policies in sustaining building efficiency investments.

The energy service company (ESCO) market witnessed a slight decline in 2023, dropping by 2.2%, yet it remains robust with a market size exceeding $35 billion. Strong policies in regions like the U.S. have supported ESCO activities, with federal programs such as the Federal Energy Management Program driving a 54% growth in ESCO activities between 2021 and 2023 in the U.S. China leads the global ESCO market, with investments surpassing $20 billion in 2023, accounting for half of the global total. ESCO investments primarily target the buildings sector, followed by industrial applications and energy storage.

Several notable companies are driving innovation in the ESCO market. Johnson Controls, a global leader in smart building solutions, has made significant strides in energy efficiency by implementing advanced technologies and services to enhance building performance and sustainability. Ameresco, a leading cleantech integrator, specializes in energy efficiency, renewable energy, and infrastructure modernization, contributing to substantial carbon reductions. Trane Technologies, through its flagship brand Trane, offers innovative HVAC solutions designed for energy efficiency and sustainability, furthering the drive towards a more sustainable future.

These companies exemplify the growing focus on energy efficiency and sustainability, playing a crucial role in the global transition towards a more energy-efficient and environmentally friendly future.

Matt Lyons

Matt Lyons

Matt Lyons is the founder of Forestry & Carbon. Matt has over 25 years as a forestry consultant and is invoilved in numerous carbon credit offset projects.

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