At the COP28 summit at the end of 2023, nearly 200 countries reached a landmark agreement to work together to collectively double the global average annual rate of energy efficiency improvements by 2030. This was the strongest recognition yet by governments of energy efficiency’s central role in clean energy transitions, providing an important focal point for greater national ambition and accelerated action. A year on from this historic agreement, however, this has yet to translate into faster efficiency progress, and a major step up in policy implementation is required.

Global energy efficiency progress – measured by the rate of change in primary energy intensity – is set to see only a weak improvement of about 1% in 2024. This is the same rate as in 2023, and around half of the average rate over the 2010-19 period. While energy efficiency progress had accelerated in some countries in response to the global energy crisis, overall improvements in energy intensity have since slowed. Recent years have produced large regional differences in progress, but the disparities have been smaller in 2024: intensity improvements in advanced economies slowed, while progress in many emerging and developing economies held steady or slightly increased.

Energy efficiency progress is crucial for the transition away from fossil fuels. In a pathway aligned with the IEA’s scenario for achieving net zero energy sector emissions by 2050, accelerating energy efficiency improvements can deliver over 70% of the projected decline in oil demand and 50% of the reduction in gas demand by 2030. This oil demand reduction, which would be roughly equivalent to total oil use in China in 2024, comes in large part from technical efficiency gains, such as improving the fuel efficiency of vehicles, and electrification, including switching to EVs. The reduction in natural gas demand related to efficiency, which would be more than Europe’s total natural gas use in 2024, comes largely from measures such as insulating buildings and the electrification of heating.

Accelerating energy efficiency improvements can deliver over a third of all carbon dioxide (CO₂) emission reductions between now and 2030 in a pathway aligned with reaching net zero emissions by 2050. This involves speeding up electrification and improvements in technical efficiency. From 2010 to 2022, improvements in energy intensity contributed to a cumulative reduction in global CO₂ emissions of almost 7 gigatonnes (Gt).

Governments representing more than 70% of global energy demand have implemented new or updated efficiency policies in 2024. Kenya, for example, updated its building energy code to make efficiency requirements for new buildings mandatory. The European Union updated regulations to achieve a zero-emission building stock by 2050, including measures to promote retrofits of existing buildings. China updated appliance standards and strengthened national targets for efficiency, and the United Stated tightened its fuel economy standards for heavy-duty vehicles. This past year, governments have allocated about USD 60 billion for efficiency measures in buildings and about USD 45 billion for low-emissions vehicles. This brings total efficiency funding earmarked by governments over the past five years to above USD 1 trillion.

However, policy implementation must accelerate to improve energy efficiency progress and align with global climate ambitions. For instance, around the world, almost half of newly built floor area is not yet covered by efficiency requirements, and the regulations in place vary significantly among countries in their scope and stringency. Similarly, just three out of five industrial electric motors in use globally are covered by minimum energy performance standards. 

Combined public and private investment on efficiency in end-use sectors (buildings, transport and industry), including investments in electrification such as electric vehicles or heat pumps, is expected to increase by around 4% in 2024 to about USD 660 billion, matching the all-time high set in 2022. This is around 10% more than all expected upstream investment in oil and gas in 2024. Energy efficiency investment has risen by nearly 50% since 2019. In some cases, efficiency investments quickly lead to energy intensity improvements, while in others, structural factors – such as increased industrial output – can offset some or all of the gains. On a net zero pathway, investments in improving the efficiency of buildings, transport and industry triple from USD 660 billion today to about USD 1.9 trillion in 2030. 

There are regional differences when it comes to efficiency investment, with emerging and developing economies expected to see the fastest growth this year. Efficiency investment is expected to rise by around 60% in Africa, about 40% in the Middle East and around 20% in Central and South America. However, these regions only account for about 5% of global end-use investment, which is heavily concentrated in Europe, the Asia-Pacific region and North America. In 2024, investment is expected to continue increasing by almost 10% in China, as well as in the broader Asia-Pacific region. Meanwhile, efficiency investment in advanced economies is projected to largely stay flat in 2024. 

As of 2024, the number of people employed in jobs related to energy efficiency has reached nearly 10 million. The number of efficiency jobs dipped significantly during the Covid-19 pandemic and only recovered to 2019 levels in 2023. Several regions have yet to return to pre-pandemic levels of efficiency-related employment, including China, which has the largest efficiency workforce at 3.5 million, and North America, which follows with 1.4 million. Most other major regions see efficiency employment at similar levels to 2019. India and Africa are among the few places that have seen efficiency employment grow in recent years, adding over 50 000 and 15 000 new jobs in this category since 2019, respectively.

Shortages of skilled workers persist across key efficiency occupations, often risking delays in project implementation. They are most pronounced for heating, ventilation, air conditioning (HVAC) and heat pump installers, construction workers and electricians. Almost four out of five construction companies globally indicate they experience a shortage in skilled workers. Across the whole energy sector, women accounted for less than 20% of workers in 2023, compared with 39% of the global labour force, highlighting a potentially important means of expanding the efficiency workforce.  

Another year of extreme heat is affecting people’s lives across the globe, with temperatures reaching 50°C in some places. As a result, sales of air conditioners (ACs) rose sharply in many parts of the world in 2024, providing much-needed cooling. At the same time, the increasing use of ACs has put strains on grids, with over 40 countries, representing about half of global energy demand, reaching new peak electricity demand records, with many others suffering blackouts. With AC sales projected to grow further, efficient models can mitigate their impact on electricity demand. Even though energy performance standards are implemented around the world, sales of inefficient appliances remain all too common.

New IEA analysis shows that efficient cooling technologies do not necessarily cost more to buy than less efficient ones. In Southeast Asia and Latin America – regions heavily affected by heatwave-driven electricity demand peaks – it is possible to buy two different AC models at the same price point, with one twice as efficient as the other. However, due to their lower energy use, efficient appliances are usually much cheaper over their lifetime: Best-in-class models, such as highly efficient refrigerators, can save up to 40% in total costs compared with inefficient ones. However, more efficient models are often less readily available or identifiable compared with their less efficient counterparts.

Electrification is a major driver of efficiency improvements and an area where global progress has sped up this year. In 2024, the level of electrification – defined as the share of electricity in total final energy demand – is set to grow at a rate of nearly 2%, almost double the average annual rate of change achieved between 2010 and 2019. Still, annual growth in the electrification rate of 2% is about half of what is seen on a net zero pathway, where the level of electrification rises from 20% today to nearly 30% by 2030. China has seen a particularly strong growth rate in the level of electrification, achieving about 4% each year in 2010‑19 and around 3% annually from 2021 to 2024.

Electrification offers fast efficiency gains across technologies, but end-use energy prices matter for determining the effect on energy bill savings. Electrified technologies can be several times more efficient than those based on fossil fuels. The most efficient mid-size electric car, for instance, uses around half the primary energy of an equivalent internal combustion engine (ICE) vehicle. Similarly, heat pumps often consume less than 25% of the energy used by gas boilers. Still, the benefits of electrification for energy bills depend in part on the price difference, including taxes and other charges, between electricity and fossil fuels, particularly gas. 

In 2024, households and businesses are still living with the effects of the global energy crisis that led to an unprecedented rise in energy bills. Large spikes in gas, oil and electricity prices forced consumers to pay more for energy at home and at fuel pumps. In OECD countries for which data is available, consumer energy prices in 2024 have declined by an average of almost 15% from peak levels, yet they are on average still over 40% higher than in January 2021. At the same time, government initiatives to shield consumers from the worst of the price increases are coming to an end. Between early 2022 and mid-2023, governments across the world allocated USD 940 billion to short-term affordability measures, peaking at over USD 500 billion in 2022. They have fallen to USD 100 billion in 2024.

Policy action to improve efficiency is the single best approach to simultaneously achieve sustained energy intensity gains, reduce costs for consumers and enhance access to energy services. This year, several countries have turned to efficiency policies as a lever to lower bills, targeting those households most in need. In 2024, countries and regions representing at least 30% of global energy use – including Brazil, Canada, the European Union, Mexico, the United Kingdom and the United States – have policies in place specifically targeting affordability for lower-income families through enhanced energy efficiency.

Emerging and developing economies will account for an increasing share of global energy demand. The implementation of strong efficiency policies can help meet climate goals while creating jobs, improving lives and reducing costs. China, India, Southeast Asia, Africa and Latin America together account for almost half of global energy demand today and are expected to see rapid growth in coming years, making them a major force in global energy efficiency progress.

Many of these countries and regions have strong track records in energy efficiency improvements. China, which achieved an average annual energy intensity improvement of almost 4% over the 2010‑19 period, is a notable example. India, with strong policies for industry and electric vehicles, among others, is expected to see a 2.5% annual improvement in 2024. In an effort to mitigate rising electricity demand due to heatwaves, Southeast Asia is implementing policies to promote efficient cooling, while several African countries are implementing regulations to drive efficiency in second-hand markets for appliances and vehicles. The harmonisation of standards, which is key to accelerating the deployment of efficient devices, is also ramping up in some regions. 

The COP28 doubling goal is a global goal, and international co-operation can further enhance its achievement in varying economic, social and technological contexts. With governments currently preparing their next round of Nationally Determined Contributions (NDCs) under the Paris Agreement, there is a window of opportunity to ensure that ambitious energy efficiency measures are a central plank of long-term national plans. NDCs are an important focal point of international discussions and signal ambition on energy efficiency to other governments and investors.

International co-operation can also address issues that hinder efficiency progress, such as the dumping of inefficient equipment. Large quantities of equipment that do not meet efficiency standards in the countries where it is manufactured are currently exported to regions with weaker regulatory frameworks, especially to Sub-Saharan Africa. The harmonisation of standards between countries makes it easier to enforce regulations. Countries can share technical capacities, co-ordinate controls at borders, increase bargaining power in import negotiations, and reduce the risk that equipment enters from neighbouring countries with less strict regulations. Manufacturers also have an important role to play in both minimising the impacts of their operations and improving the efficiency of their products globally. 

To increase visibility of energy efficiency and progress towards the global target, the IEA is launching a new Energy Efficiency Progress Tracker. This extends the analysis of Energy Efficiency 2024 to provide detailed insights around the most up-to-date regional indicators on energy efficiency progress, such as energy intensity, demand and the level of electrification. 

The IEA is working closer than ever with governments to ensure that energy efficiency, as a central pillar of secure, affordable and inclusive energy transitions, is prioritised through well-designed and implemented policies and actions. The IEA is providing policymakers with concrete tools to accelerate progress through its Energy Efficiency Policy Toolkit, which is developed in consultation with energy ministers and senior officials each year at the IEA Annual Global Conference on Energy Efficiency. The IEA has trained close to 3 000 policy makers from 120 countries to support the implementation of more effective policies. It is also working directly with energy efficiency policy makers around the world to support the policy responses required to deliver the COP28 global energy goals. 

The policies and technologies required to accelerate efficiency progress are available today, but implementation needs to speed up across the world to reach global goals. The IEA publishes Energy Efficiency Policy Toolkits to help policymakers with concrete tools. An integrated policy approach – combining regulations, information and incentives – is the most effective way to realise progress across all sectors.