This section summarises energy efficiency trends in 2019. It updates and builds on analysis from several IEA publications, including Global Energy Review 2019, Tracking Clean Energy Progress and World Energy Investment 2020.

Global energy intensity improved by 2% in 2019. While notionally a significant increase on the 2018 rate of 1.1%, these numbers on their own mask the strong influence of weather in both years.

In 2019, more temperate weather in key regions contributed strongly to improving energy intensity, mostly in the form of reduced heating and cooling demand, while in 2018 the opposite occurred. Normalising for the weather impact, the improvement in the energy intensity of the global economy was 1.6% in 2019, almost identical to the weather-corrected 2018 rate of 1.5%. 

Despite contributing the most to energy intensity improvements in 2019, total energy savings from efficiency were around 5% lower than in 2018. This decline partly reflects stagnation in the passing of new energy efficiency policies in recent years. In addition, slower economic growth reduced purchases of new equipment covered by energy efficiency regulations, thereby slowing the replacement of inefficient stock.

The major global energy users – in order, China, the United States, Europe and India – contributed the most to global energy efficiency savings in 2019, owing to their size. Although China’s energy efficiency savings were large in absolute terms, they dropped substantially in 2019. This greatly reduced global efficiency-related energy savings, because of the magnitude of China’s energy demand relative to other countries. Although several factors reduced China’s efficiency savings, a key cause was a stimulus package implemented in 2019 that channelled support to energy-intensive sectors and industrial plants that are less energy efficient. As a result, energy use in some of the most energy-intense segments of the economy increased in 2019, including 5% growth in cement and 7% in steel.

In India, Japan, Russia and the United States, savings from technical efficiency increased substantially in terms of gross primary energy. Europe’s annual technical efficiency savings also increased from 2018 levels. In the United States, energy efficiency improvements were the largest contributor to a 2.9% improvement in energy intensity, following 2018 when energy intensity worsened, largely due to weather conditions. 

Energy efficiency improvements in 2019 avoided an increase of around 200 MtCO₂ in global emissions, almost equivalent to the energy-related CO₂ emissions of Spain. This was the second-largest source of avoided energy sector emissions, just behind renewables.

A total of USD 250 billion was invested in energy efficiency across the buildings, transport and industry sectors in 2019, almost the same level as the previous year. While there were signs of new activity in some areas, annual changes for each sector remained moderate.

The outlook for new efficiency technologies was better, with inflation-adjusted public spending1 on energy efficiency technology research and development (R&D) for new technologies growing 12% to USD 4.5 billion, surpassing the previous high of USD 4.4 billion set in 2009. Energy efficiency was one of the largest targets of total energy-related R&D investment.

In contrast to public investment in new technologies, private venture capital funding for startups developing new energy efficiency technologies was less than half of 2018 levels, although the decline was only slight when outlier investments of over USD 500 million are excluded. Most venture capital was allocated to the buildings sector, with investments spread fairly evenly across buildings technologies. 

Startup investments in heating, ventilation and air-conditioning in 2019 that were under USD 500 million (i.e., excluding larger outlier deals to avoid skewing trends) were almost double 2018 levels, an encouraging sign after drops in investment in 2017 and 2018. Innovative cooling technologies targeted for investment in 2019 included technologies for converting waste heat to power refrigeration and air conditioning loops, solar storage cooling technologies, and intelligent devices for improving the efficiency of existing residential air conditioners.

Between 2010 and 2019, startups in the United States have been the largest recipients for efficiency-related venture capital, receiving around 70% of investments. Businesses based in the European Union have received around 16% of investments and Chinese businesses another 7%. Technologies targeted for investment in these three major regions partly reflect each region’s comparative advantages. For example, in the United States, home to Silicon Valley, investments in IT and data centre energy efficiency have been strong.

Under the IEA Sustainable Development Scenario, the energy used per square metre of building floor area decreases globally by at least 2.5% per year on average. This could be achieved by 2030 with more efficient new buildings, deep energy renovations of existing buildings, a tripling of heat pump uptake and a 50% improvement in the average seasonal performance of air conditioners, as well as other energy efficiency measures. Alongside these technologies, digital systems such as intelligent building energy management systems and smart controls continue to be deployed to great effect but have yet to achieve widespread adoption. Only lighting and data centres are currently on track.

Modular construction continued to improve building efficiency in developed economies

The use of modern methods of construction, such as prefabricated, offsite and modular construction, continue to be the major innovation area for energy-efficient building construction. Modern methods of construction more readily maintain construction quality and energy efficiency in their production process. The global value of modular building construction in 2019 was estimated at USD 70 million to USD 110 billion. The construction industry continues to invest in advanced design and manufacturing facilities for increasing bespoke building production for a range of building types, including multi-family, education and hospital buildings.

In 2019, for example, the United Kingdom announced that GBP 2.5 billion (USD 3.2 billion) of its Home Building Fund was allocated to modern methods of construction and that an additional GBP 170 million (USD 222 million) was being spent on research and development. However, the shift to modular construction has so far been led by heating dominated regions, such as the Baltic Region, Europe, North America and Northern China. 

Global air conditioner efficiency continues to trail what is possible

Sales data indicate that on average, the seasonal energy efficiency ratio of air conditioners purchased in 2019 rose slightly in both the residential and non-residential sectors, to around 4 W/W (Watt of cooling output per Watt of electricity input). However, this is well below the best available technologies in most markets, which in developed economies such as Europe and the United States is 10 W/W to 12 W/W. In Africa, recent analysis suggests that 35% of air conditioners sold have a seasonal energy efficiency ratio of less than 3 W/W, raising fears that inefficient products are being dumped in the region.

The buildings sector is still the largest destination of efficiency spending. After faltering in 2018 in response to reduced government support in Europe, it grew 2% in 2019 to just over USD 150 billion, thanks mostly to increased investments in emerging economies. A two-speed market appears to be developing, with stronger activity in emerging economies where new construction is taking place, especially China, and weaker markets in Europe and North America, where a greater share of investment is driven by retrofits.

Slowing construction in 2019 curbed efficiency investment

Global construction– which includes construction of buildings that exceed minimum energy performance standards in building codes, increasing the proportion of more efficient building stock – was the primary driver of energy efficiency investment in most major economies. In 2019, construction investment was valued at around USD 5.9 trillion, a rise of 4.9% from 2018.

Although overall construction investment in 2019 was higher than in 2018, construction activity began to slow towards the end of 2019 in several key regions including China, the Middle East, the United States and Western Europe. There was also a considerable slowdown in Australia. This decline would have had a knock-on effect, reducing market-driven energy efficiency investment. It would also have increased the share of government programmes – primarily for building retrofits –in overall efficiency spending.

Energy efficiency activity in buildings was concentrated in fast-growing economies such as China, where investment increased by 10% to USD 30 billion (overall construction investment grew at 13%), or economies where energy efficiency policies began to have an impact. The latter included Canada, which allocated an additional CAD 600 million to buildings sector efficiency in the 2019 budget, 20% more than 2018.

In Europe, public investment in energy efficiency, which represented 40% of overall energy efficiency investment, outpaced construction activity, meaning that renovation, rather than new builds, was the major focus. In the United Kingdom, for example, public energy efficiency investment increased by 8% from 2018, while construction investment growth was minor. This trend of growth in publicly funded efficiency improvements outpacing construction was also shown in Italy and Switzerland. By comparison, in Germany public energy efficiency investment fell by 12% in real terms from 2018, but construction investment grew modestly. 

Few buildings sector policies appeared to be announced in 2019, but China made a major announcement that will have a significant impact for efficiency trends. A growing number of jurisdictions have also opted to adopt mandatory standards for existing buildings. Buildings sector policy updates in 2019 included:

• Australian energy ministers agreed the Trajectory for Low Energy Buildings, a new multi-year strategy for low-energy (and low-carbon) residential and commercial buildings for Australia. The strategy proposes a suite of initiatives to improve the energy efficiency of existing buildings in Australia including minimum energy performance standards for rental properties, improved heating, ventilation and air conditioning in government buildings, and new information and data collection tools.
• In August 2019, China updated its Assessment Standard for Green Buildings (GB/T 50378-2019). Under the standard, energy efficiency is one of the criteria used to specify if building materials are classified as being “green”.
• Korea introduced a subsidy scheme for efficient appliances. The government will provide a 10% rebate to reduce the cost of grade 1 efficient appliances across seven appliance types.
• Turkey introduced an innovative incentive system for residential building efficiency whereby homeowners can borrow against the value of their homes at differentiated levels based on the building’s energy efficiency rating. The policies include an obligation for public buildings to achieve energy savings of 15% from 2020 to 2023, alongside the mandatory use of solar energy for hot water in non-residential buildings with an area of greater than 2 000 m².
• In March, Estonia adopted new regulations requiring that 46% of the proceeds from auctioning greenhouse gas allowances are used for improving the energy efficiency and use of renewable energy in central government buildings.
• In 2019 Spain published a review of its minimum standards for energy efficiency and renewable energy for new and refurbished buildings. Buildings built to the new standards are estimated to save up to 40% of energy consumed compared with those built with the previous standards. Improvements include more ambitious requirements on thermal enclosures and more efficient technologies to ensure thermal comfort in buildings.

Growth is robust in efficient electric car markets but appetite for larger vehicles persists

Electric car sales reached 2.1 million in 2019, securing their highest ever share – 2.6% – of the global car sales market. The number of electric cars on the world’s roads exceeded 7 million in 2019. Fleets of electric buses and trucks are also being procured in more and more cities around the world.

The global appetite for larger vehicles like SUVs continued, however. This trend is common to all vehicle markets and has led to a slackening – or in some cases even reversal – of national rates of fuel consumption improvements, as reported in Energy Efficiency 2019.

China led the rapid roll-out of high speed rail

Globally, high-speed rail continues to grow strongly. Almost two out of three high-speed rail lines are in China: starting from virtually none only a decade ago, the country now has over 24 000 km. In 2019 alone, China National Railways opened two more high-speed rail corridors totalling 750 km of lines, and added more than 3 000 km of new lines. The rapidity of this rollout makes it one of the largest infrastructure projects in recent history. Total high-speed rail activity in China is catching up with domestic passenger aviation. This is significantly boosting transport energy efficiency, because rail is more energy efficient than road and air travel.

Transport efficiency investment fell slightly in 2019 (by nearly 4%), as global car sales fell and sales of the most efficient cars trailed the wider market. Spending on more efficient road freight vehicles stabilised despite a drop in the overall market – including a decline in total sales in China – as fuel economy standards began to make an impact. Freight vehicles generally have higher upfront costs, making purchases hard to justify for smaller enterprises, despite lower lifetime fuel costs.

Investments in electric vehicles increased by less in 2019, but their share of the global car fleet rose

Global spending on electric cars grew 13% from 2018 to reach USD 90 billion in 2019. Of this, USD 60 billion was on battery-electric cars and the remainder on plug-in hybrids. The rise in spending was lower than in 2018, when around USD 35 billion was added to the global electric car market in just one year, but higher than the growth in numbers of cars sold.

Electric car sales grew by 100 000 in in 2019 while passenger car sales growth as a whole contracted by around 4 million sales worldwide, or 5%. 

• In October 2019, Australia introduced new fuel quality standards for cars and vans. The new petrol standard will improve petrol quality by setting a lower pool average for aromatics from 2022 and lowering sulphur limits from 2027. This will support the introduction of more fuel-efficient light vehicles to the Australian market.
• In June 2019, Japan launched new fuel economy standards for cars, which will apply from 2030. The standards represent a 32% improvement over the fleet average fuel economy for fiscal year 2016. They followed updates to heavy-duty vehicle standards in March 2019, which will come into force in 2025.
• In August, Europe introduced its first CO₂ emissions standards for heavy‑duty vehicles, requiring vehicle manufacturers to reduce the average CO₂ emissions intensity of the heavy-duty vehicle fleet by an average of 15% (after 2025) and 30% (after 2030) compared with a reference period of 1 July 2019 to 30 June 2030.
• Italy introduced a new “bonus malus” programme to encourage the rollout of electric vehicles. The “bonus” is a subsidy of up to EUR 6 000 for the purchase of vehicles that emit 90 grammes of CO₂ or less per kilometre. The “malus” is a tax on vehicles that emit more than 160 grammes of CO₂ or more per kilometre, starting at EUR 1 100 and rising to more than EUR 2 500 for high emitting vehicles.
• Spain developed a EUR 50 million programme to support electric vehicle research and innovation, the purchase of electric vehicles, the installation of charging points, deployment of electric bicycle hire schemes and the implementation of business transport plans.

As rapid urbanisation continued, demand for construction materials such as steel and cement remained strong in 2019. These two sectors alone represented almost 30% of industrial energy use and more than 41% of industrial sector greenhouse gas emissions.

In these and other energy-intensive industrial sub-sectors, energy efficiency technologies are not being deployed at levels modelled in the IEA Sustainable
Development Scenario. In 2019 there were no major technological changes in the status of clean energy technology progress within major energy-consuming industries. 

Metals production energy efficiency stayed flat, with some improvements in China

The use of scrap steel in either electric arc furnaces or induction furnaces is one of the most effective ways of reducing the energy intensity of steel production. To meet the Sustainable Development Scenario, scrap inputs should account for over 40% of total crude steel production by 2030. In 2018, the rate of scrap-based production was only about 20%. It is unlikely that scrap use increased in 2019, as the share of crude steel produced by electric arc furnaces (which use scrap as a primary feedstock) declined from 28.8% in 2018 to 27.7% in 2019.

Energy efficiency improvements in global aluminium production differed by region and stage in the production process. Globally, the energy intensity of aluminium smelting stayed almost flat, at just over 14 000 kWh per tonne of aluminium. In contrast, global alumina refining (the process of refining bauxite ore into alumina) was over 5% less energy intensive, mainly due to Chinese producers adopting best available technologies.

Energy management systems growth down in Europe, up in Asia

Energy management systems are among the most cost effective ways to promote energy efficiency across industrial sub-sectors. Each year, the number of industrial facilities certified by the International Organization for Standardization (ISO) as complying with the international standard for energy management (ISO 50001) provides an indicator of the prevalence of such systems globally. Key drivers have been government incentives or regulations, changing values and sustainability goals of companies and non-energy benefits, which can be crucial for small and medium-sized enterprises. However, barriers to wider uptake still exist, such as firms lacking a culture of energy management, a fear of extra administrative complexity, and skills shortages.

The number of ISO 50001 certifications decreased in Germany in 2019 and stayed almost flat in France, Italy, Spain and the United Kingdom. The number of certifications and certified sites increased in emerging economies such as China and India, but the total number of certifications in these regions is still less than half that of Europe. The net result is that globally, the number of ISO 50001 certifications has stagnated in the last two years.

Certificates in Africa are dominated by Egypt (with almost two-thirds of certifications, mostly in light industry). In the Americas, Brazil and Mexico represent almost half of certifications, while China and India represent almost 90% of certificates in Asia.

In Europe, the trend is a preference for multi-site certifications, with on average almost three sites per certification in Germany and four in France, Italy, Spain and the United Kingdom. The trend does not appear to be growing China and India, however. Opting for multi-site certifications may be a way to reduce the administrative burden2 while still complying with regulations and accessing incentives.

Among industrial sectors, the largest growth in certifications was in facilities producing basic metals, where certifications doubled between 2018 and 2019, adding 700 certifications. Certifications of food products, beverage and tobacco facilities increased from over 500 to almost 900. Finally, chemicals, chemical products and fibres, and rubber and plastic products increased by 50%, to reach 1 500 certifications in 2019. However, compared with older standards such as ISO 9001 (launched in 1987) and ISO 14001 (launched in 1996) the number of ISO 50001 certifications in these sectors remains very low, indicating a large potential for development. For instance, in 2019 there were almost 27 000 ISO 14001 certifications in the basic metals sector but just 1 000 for ISO 50001.

Industry investments in energy efficiency are estimated to have remained roughly at business-as-usual levels, at around USD 35 billion in 2019.

Global industry investment in energy efficiency is primarily driven by:

• policies, in particular those implemented by large industrial producers, such as China, Europe, India and the United States
• payback periods, energy efficiency investment competing with other investments.

There have been no major policy changes in recent years and energy prices reached record lows in 2019, lowering financial benefits. These two elements have combined to maintain investment levels at around the same level for the last few years, with a slight decrease in 2019.

• The Netherlands introduced an energy efficiency reporting obligation that requires industrial facilities consuming over 50 000 kWh of electricity or 25 000 m³ of gas to report energy efficiency actions taken.
• Poland introduced Energy Plus, an incentive programme combining loans and grants for industry that will run from 2019 to 2025. The programme aims to reduce the wastage of primary raw materials through improved production processes that minimise or utilise downstream waste and waste heat.
• Brazil commenced the third cycle of its Strategic Alliance Program for Energy Efficiency, in which the government will fund up to 40% of the cost of energy efficiency consulting services for industrial plants. The programme will target measures to decrease electricity consumption.
• The Philippines set in place a comprehensive Energy Efficiency and Conservation law in April 2019. The new law includes obligations for commercial, industrial and transport large energy users and incentives for energy efficiency investments. It also strengthens the government’s energy management programme and expands minimum energy performance ratings to more appliances and vehicles.
• In Spain, the Program of Energy Efficiency Actions in SMEs and large companies in the industrial sector was approved with a contribution of EUR 307 million. The objective is to encourage energy efficiency actions in the industrial sector that reduce CO₂ emissions and final energy consumption, to help achieve energy savings targets established by EU Directive 2012/27/EU.

Policies for motors began to strengthen

Improving electric motors is the first step to increasing the efficiency of wider electric motor-driven systems such as compressors, pumps and fans. In 2019 stronger minimum energy performance standards for motors were implemented and updates were proposed in several key regions. Policy changes expected to significantly improve the energy efficiency of motors in coming years included:

• Brazil implemented new minimum energy performance standards for motors. The standard, legislated in 2017, came into force in August 2019 and requires motors between 0.2 kW and 370 kW to reach IE3 levels (the International Electrotechnical Commission classifies motor efficiency from IE1 to IE4).
• The European Union expanded the coverage of its regulation on electric motors and variable speed drives on October 2019 through Regulation (EU) 2019/1781, requiring IE3 levels for motors with output power between 0.75 kW and 1 000 kW by July 2021, and IE4 levels for motors between 75 kW and 200 kW by July 2023.
• China presented a draft update to its standard for motors (GB 18613), which sets IE3 requirements for motors between 0.12 kW and 1 000 kW.