Energy Efficiency Improvements Stall Out as COVID-19 Roils National Economies

The International Energy Agency is blaming the COVID-19 pandemic for dragging annual improvements in energy efficiency down to their lowest pace since 2010, in a report that urges governments to pick up the pace on efforts to reduce global primary energy intensity.

The expected energy intensity improvement of just 0.8% this year “is far below the level of progress needed to achieve the world’s shared goals for addressing climate change, reducing air pollution, and increasing access to energy,” Business Green reports. The IEA says an annual intensity improvement of 3% “would be consistent with meeting international climate and sustainability goals.”

“The downturn is due in part to a plunge in investments in energy-efficient buildings, equipment, and vehicles during the pandemic-induced economic crisis, with overall investment in energy efficiency forecast to fall by 9% through 2020,” the publication adds. “Purchases of new cars, which are more efficient than older models, have also dropped, while construction of new, more efficient homes and other buildings is also expected to slow.”

In industrial and commercial buildings, meanwhile, the low cost of fossil energy has “extended payback periods for key efficiency measures by as much as 40%, decimating their attractiveness compared with other investments.”

The results have the IEA urging governments to factor energy efficiency into the effort to reboot their economies in response to the pandemic. “For governments that are serious about boosting energy efficiency, the litmus test will be the amount of resources they devote to it in their economic recovery packages, where efficiency measures can help drive economic growth and job creation,” said Executive Director Fatih Birol. “We welcome plans by governments to boost spending on energy efficiency in response to the economic crisis, but what we have seen so far is uneven and far from enough.”

The IEA analysis shows the pandemic introducing a high degree of uncertainty on energy efficiency investments, behaviours, and markets. “For example, the unprecedented drop in aviation transport demand could change the energy intensity of international travel and freight forever, depending on how the aviation industry recovers after the pandemic,” the Paris-based agency writes. “Meanwhile, increased rates of teleworking are changing the way we move around cities. Such changes could reduce energy intensity in some instances but increase it in others.”

A deep shock like the pandemic makes it difficult to accurately measure changes in energy intensity, the IEA adds. For example, a pervasive, global health crisis that drives down the service economy, leaving a larger share of output to come from more energy-intensive industries, might still “reveal nothing about changes in energy efficiency in these economies”.

But the agency still points to the opportunity for greater energy efficiency in the aftermath of the pandemic, and not only because of the changes in lifestyle and perspective that have accompanied the COVID-19 lockdowns. With the energy system rapidly electrifying and shifting to renewable sources, and demand management receiving more attention, “efficient end-use technologies lower overall system size requirements and hence grid investment needs,” the IEA says. “Efficient technologies that modulate energy use depending on when renewables are available are becoming more widespread, offering the possibility of improving both end-use and system efficiency” along with greenhouse gas reductions and improved air quality.