Energy efficiency across the global economy continued to improve in 2018, with global primary energy intensity falling by 1.3%. But this was lower than improvement rates seen in recent years. Although efficiency was still the biggest source of carbon dioxide emissions abatement in the energy sector, 2018 marked the third consecutive year in which the improvement rate for energy efficiency slowed.

Energy efficiency continued to show improvements in 2018, with the global economy requiring an average of 1.3% less energy inputs for every unit of GDP than in 2017. However, the annual rate of improvement in global primary energy intensity has been falling in recent years, dropping from a high of nearly 3% in 2015 to 1.9% in 2017, and falling again in 2018.

The slowdown in the rate of energy efficiency improvement means that efficiency offset 40% less CO₂ emissions in 2018 relative to 2017, although it remains the largest contributor to emissions abatement. The progressive step-down since 2015 is in stark contrast to the acceleration required in the IEA Sustainable Development Scenario.

Limited improvement in global energy efficiency in 2018 can be attributed to a number of factors. Among these is the static energy efficiency policy environment in 2018, with lacklustre progress on implementing new energy efficiency policies or increasing the stringency of existing policies.

Today only around one-third of final energy use is covered by mandatory energy efficiency policies, such as codes and standards, with only marginal coverage growth in recent years. Efforts to strengthen existing energy efficiency policies also remained weak in 2018. Increasing the coverage and strength of codes and standards is a key lever of energy efficiency gains.

Progress on policy measures such as financial incentives, market-based instruments, and information and capacity building programmes also remains limited. For example, many countries drive efficiency gains by placing an obligation on utilities to meet energy saving targets. However, these targets have not changed since 2014 in over half of the obligation schemes, globally.

The global trend regarding energy efficiency hides significant regional disparities, including certain bright spots. Europe and India both saw an increase in the rate of improvement for energy efficiency in 2018 relative to 2017. Nonetheless, slowdowns in other major regions dictated the direction of the global average.

In China, where robust policies implemented in recent years have increased levels of efficiency and limited emissions growth, primary energy intensity improved by 2.9% in 2018. Although more than double the global average rate of energy efficiency improvement, this was the slowest rate of improvement in China since 2011. Energy efficiency gains were not enough to offset the effects on energy demand of increased coal-fired electricity generation, called upon to service economic growth of 6.6%.

In the United States, long-standing policies and technological change underpinned efficiency gains. However, in 2018 the impact of these policies was outweighed by unusually high gas consumption on the back of a colder than average winter and hotter than average summer. Strong economic growth (2.9%) fueled energy use in more energy-intensive sectors of the economy. The result was a 0.8% increase in primary energy intensity. Weather was responsible for around half of the increase in energy demand in the United States in 2018. Without this increase, energy intensity would have continued to improve in 2018, albeit at a rate well below that seen in 2017.

Primary energy intensity declined in both Europe and India. In Europe, mild weather conditions at the end of the year reduced gas demand. This contributed to a flattening of total primary energy demand and an intensity improvement of 1.6%. In India, primary energy intensity improved by just over 3% although energy demand was still 4% higher.

Economic growth, particularly in emerging economies, will continue to put upward pressure on energy demand and emissions. To curb the impact of growing energy service demand and unlock the significant cost-effective energy efficiency potential, governments need to scale up the use of all policy tools at their disposal. Examples of these policies, as outlined in the IEA’s Efficient World Strategy, have been implemented in some form, providing the basis for further development.