More energy efficiency despite low oil prices - IEA | Fin24

More energy efficiency despite low oil prices - IEA

Oct 10 2016 12:07

Paris - Energy efficiency accelerated last year despite low oil prices, according to a report by the International Energy Agency (IEA) published Monday, driven in large part by gains in China.

The 1.8% efficiency gain last year came as crude oil prices had dropped as far as 60% from 2014 highs, yet still beat the 1.5% increase in 2014, and was triple the average annual gain in the previous decade.

Low oil prices typically reduce investment in energy efficiency as the returns are smaller, but the IEA found government regulations concerning vehicles and buildings were driving gains.

While good news for climate change efforts, the efficiency gains come at a delicate juncture for the oil market, with global demand growth slowing and supply rising.

Efficiency helped keep energy demand flat last year in the 29 industrialised nations that are members of the IEA, while it increased by just 0.9% in China - the slowest rate in nearly two decades despite 6.9% growth.

China led the efficiency pack, racking up a 5.6% gain. Given that it is the world's second largest economy, it contributed 0.4% to the 1.8% global gain.

"China's progress on energy efficiency is now at a scale where it is making a significant mark on global energy markets," said the IEA.

The gains from efficiency are as large as China's rapidly expanding renewable energy sector and provided the added benefit of reducing air pollution.

While the acceleration in global energy efficiency gains was positive, the IEA noted they would need to shift up from a trajectory of 1.8% to 2.6% annual gains to achieve global climate change goals.

However, there is much room for further improvement. The IEA said that efficiency standards still only cover 30% of global energy use, although that is up from 11% in 2000.

"Globally, two-thirds of the economic potential remains untapped," said IEA's executive director Fatih Birol in the introduction to the report.

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