Energy efficiency investment growth slows in 2023: IEA

The international energy agency (IEA) is expecting global energy efficiency investment to rise at a slower pace this year, as a result of higher capital costs.

The IEA sees investment growth in energy efficiency measures standing at 4pc this year, down from 16pc in 2022, but still reaching an all-time high of $624bn. Higher costs of capital could weigh on energy efficiency investment in the buildings sector. Global sales in digitalised energy management systems are due to increase by over 17pc this year, the IEA said.

Several countries have strengthened their energy efficiency policies to respond to the energy crisis, with global energy efficiency progress — as measured by improvements in primary energy intensity — reaching 2.2pc last year, double the average over the previous five years and four times the rate achieved in the last two years. Without this progress on energy efficiency, global energy demand would have grown by 3pc last year instead of 1pc, according to the IEA.

Primary energy intensity improvements in Europe hit 8pc in 2022, as a result of a decline in energy demand because of a warmer winter and reduced economic activity in some sectors. "When adjusted for these factors, the improvement would have been around 4pc," the IEA said.

The organisation called on countries to triple their annual investment in energy efficiency by the end of the decade. Bringing energy intensity improvement to a 4pc/yr rate, from the current 2pc/yr, would reduce global energy-related CO2 emissions by around 11 gigatonnes (Gt) CO2 in 2030, it said.

Buildings sector

In Europe, the buildings sector was identified as having the highest potential for energy efficiency improvement. Heating and cooling represent half of energy demand in buildings, and the marginal cost of decarbonising those two segments will be lower in the future than in the industry sector, according to director at the European Commission's directorate-general energy, Paula Pinho.

"There are simple and replicable technologies to drive energy efficiency in buildings, which is the fastest path towards energy efficiency," energy management company Schneider Electric's executive vice-president for Europe, Philippe Delorme, told Argus. Accelerating the renovation of existing buildings — which at the moment is advancing at half of percent rate — should also be "key task" for Europe, head of IEA's energy efficiency division Brian Motherway said.

Delorme also highlighted the industry as a sector to prioritise for energy efficiency measures in Europe, with the installation of energy monitoring systems and covering roofs with solar photovoltaic (PV) panels listed as main solutions.

The EU earlier this year updated its energy efficiency directive, raising its 2030 energy efficiency target to 11.7pc for final and primary energy.

By Tatiana Serova