Energy productivity increasing efficiency in an expanded,electrified energy system

The growth of energy supply has been essential to the growth in human welfare. Since 1900, total global primary energy demand has increased 15 times, enabling a 34 times increase in global gross domestic product (GDP) and a seven-fold increase in GDP per capita.1 Humanity’s increasing ability to produce and use fossil fuels has driven this increase. Today, 80% of primary energy demand comes from coal, oil or gas.2 But the inevitable consequence has been rising CO2 emissions and global warming which poses a huge threat to human welfare.
It is therefore essential to shift the vast majority of humanity’s energy sources from fossil fuels to various forms of zero-emissions technology. This will primarily be driven through massive clean electrification electrifying as much of the economy as possible and decarbonising sources of electricity supply. In addition, bioenergy and the use of carbon capture and storage (CCS) must be used to eliminate emissions in those sectors where carbon-based molecules will continue to be needed to provide energy, or as a feedstock in material production.3 Much of the Energy Transitions Commission (ETC)’s work has been focused on how to achieve these different forms of decarbonisation and on the optimal balance between them.
But there is also a huge opportunity to improve “energy productivity” using less energy inputs to achieve any given level of human welfare. Energy productivity improvements can be achieved through several measures – technical energy efficiency, service efficiency, and materials efficiency. Achieving that improvement can accelerate the pace of emissions reductions in the period before decarbonisation of energy supply has been achieved; and even if we could ultimately derive all energy from zero-emissions sources, maximising energy productivity should be a priority since it will reduce the costs of the energy system, reduce the need to devote land, water and other materials to producing energy, and increase countries’ energy security by reducing the need for fossil fuel imports.
The potential for and importance of energy productivity improvement has therefore been noted for several decades, for instance in reports by the International Energy Agency (IEA). These reports have also highlighted the slow pace of energy productivity improvement relative to potential. At COP28 in Dubai, 133 countries therefore committed to doubling the pace of energy efficiency improvement from around 2% per annum in recent years to 4% by 2030.
However, the precise meaning of that commitment is in some respects unclear; for instance, whether it relates to primary energy or final energy.6 Many countries, however, do not have clear policies to deliver this commitment, or a clear understanding of the highest potential sectors and technologies, both in the short- and long-term. Meanwhile, the growth of artificial intelligence (AI) based demand for electricity, which challenges past assumptions that servicebased economies are likely to use less energy, may make the agreed target more difficult to achieve.

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