Since 2000, energy efficiency gains across G20 nations have offset energy demand equivalent to India’s entire consumption. Yet, despite this staggering metric, global progress on energy efficiency has stagnated—undermining one of the most readily available levers for cutting emissions, reducing costs, and improving energy resilience.
Air Conditioners: A Cooling Crisis in Disguise
Air conditioning is no longer a luxury—it’s a lifeline. As global temperatures rise and urban middle classes expand, the market for cooling appliances is surging. Currently, five air conditioners are sold every second. But most of these units are only about 50% as efficient as the best available technology. This gap in performance translates into escalating electricity demand, stressed power grids, and increased greenhouse gas emissions.
The policy response is uneven. While the EU’s ecodesign requirements are projected to save the annual electricity use of 7 million households by 2030, implementation in fast-growing markets like India, Southeast Asia, and parts of Africa remains patchy. Without globally coordinated efficiency standards and enforcement, energy consumption from space cooling could triple by 2050, according to IEA data. The opportunity is not just technical but economic—best-in-class air conditioners not only reduce power use but ease peak demand, cutting infrastructure costs system-wide.
Buildings: The Efficiency Backlog
Buildings account for roughly 30% of global final energy consumption, yet the renovation rate in most regions remains well below the 2% threshold needed to meet net-zero targets. Two-thirds of buildings standing today will still be in use by 2040, locking in inefficiencies unless retrofit rates are urgently scaled.
Mandatory building codes—arguably the lowest-cost policy lever—remain limited in coverage. Globally, only around 80 countries have any form of mandatory building energy code, and enforcement is inconsistent. According to the IEA, doubling the rate of retrofits and expanding code coverage could reduce emissions by more than 5 gigatonnes cumulatively by 2030. Critically, this isn’t just a climate issue; energy-efficient homes reduce vulnerability to price volatility and lower the risk of energy poverty.
Appliances: The Case for Standards, Not Subsidies
Contrary to persistent myths, efficiency doesn’t always come at a price premium. In fact, many high-efficiency appliances now cost the same—or less—than inefficient models when total lifetime cost is considered. Refrigerators regulated under the EU ecodesign framework now consume 60% less energy than they did two decades ago. In some cases, lifetime energy savings translate into a 40% reduction in total ownership cost.
Yet appliance markets remain fragmented. In emerging economies, low-cost, high-consumption models continue to dominate shelves due to poor labelling standards, lack of enforcement, and weak incentives. Global alignment on Minimum Energy Performance Standards (MEPS), particularly for high-volume products like refrigerators, televisions, and washing machines, could drive down global energy use by several exajoules annually—equivalent to removing hundreds of coal plants from operation.
Industry: Digitally Capable, But Policy Deficient
Industry remains the largest final energy consumer, and its energy intensity is rising in some sectors due to increased output. Digital tools, including AI-driven process optimization, offer energy savings of up to 8% by 2035 in sectors like electronics and heavy machinery, according to recent IEA modelling. But the diffusion of such technologies is slow, constrained not by innovation but by policy inertia and fragmented industrial strategies.
Energy management systems (EMS), real-time monitoring, and process digitization represent proven pathways to industrial decarbonization. Yet their adoption is often siloed and project-based. Without robust policy frameworks—such as mandatory energy audits, reporting obligations, and performance-based incentives—the potential for system-wide gains will remain unrealized.
Global Momentum, Local Stagnation
At COP28, nearly 200 countries pledged to double the global rate of energy efficiency improvements by 2030. Eighteen months later, the global efficiency improvement rate sits stubbornly at around 1.3%—far below the 4% annual growth needed this decade to align with IEA net-zero scenarios. The ambition voiced in Dubai has not translated into tangible results.
The IEA’s Energy Efficiency Progress Tracker, launched to help nations benchmark and accelerate progress, reveals a sobering truth: ambition without implementation achieves nothing. The EU has taken steps, including the launch of the European Energy Efficiency Financing Coalition, but similar initiatives are missing in key regions like Latin America, Africa, and parts of Asia. This gap threatens to derail the potential co-benefits of efficiency—lower costs, greater energy sovereignty, and climate resilience.
Final Analysis
Efficiency remains the fastest, cheapest, and most universally applicable strategy for addressing the energy trilemma: affordability, sustainability, and security. But it continues to be overshadowed by flashier technologies, from green hydrogen to grid-scale batteries, many of which are still years from mass deployment.
As stakeholders convene at the IEA’s 10th Annual Global Conference on Energy Efficiency in Brussels, the message must be clear: the age of voluntary nudges and aspirational targets is over. What’s needed now is hard policy, enforceable standards, and investment aligned with measurable outcomes.
Efficiency is not a backup plan—it’s the main act. It’s time governments treated it that way.
