It’s an anomaly, a good one. Energy use is down, even where economic activity is up.
That’s the word from the latest report on energy efficiency markets from the International Energy Agency.
Energy consumption has dropped to levels not seen since the 1980s in the 29 IEA countries, which include the United States. At the same time, per capita income has never been higher, according to IEA’s “Energy Efficiency Market Report 2015,” released last week.
This defies conventional economics. Business and industry typically must consume more energy when they provide more services and produce more goods. The shift signals that we’re figuring out how to do more work with less energy.
That means spending less on energy to get the same result. In all, consumers in the IEA have saved $5.7 trillion over the last 25 years through lower energy consumption, says the report.
Last year was a particularly good year for energy efficiency. The IEA countries avoided 10 percent of energy use because of efficiency – the fastest rate in almost a decade.
But what’s next for energy efficiency? Will we continue to save energy and money, especially with oil and natural gas prices so low? The IEA thinks so.
“The energy efficiency market can be expected to grow in size, visibility and importance over the next several years,” says the report. “As governments continue to prioritize economic growth, energy security and a healthier environment, energy efficiency improvements will remain an important and cost-effective means to achieve national, regional and international goals.”
Energy efficiency will keep growing because of several factors, the report says, among them:
- Tighter regulations on new buildings, products and vehicles
- Utility energy efficiency goals and programs
- Recent government policy announcements, including the EU Energy Efficiency Directive and the US Clean Power Plan, and the Intended Nationally Determined Contributions (INDCs) submitted to the UN Framework Convention on Climate Change (UNFCCC) over 2014
In some instances, falling oil prices may have actually _ helped _ energy efficiency’s market position . Several countries took the opportunity to reduce fossil fuel subsidies, among them Egypt, India, Indonesia, Malaysia, Mexico, Thailand and the United Arab Emirates, according to the report.
Cities and states — not necessarily national governments — are increasingly emerging as leaders in energy efficiency. The report highlighted Paris, Seoul, Tokyo and Massachusetts.
The report takes a close look at Massachusetts, which by all rights should be a big energy consumer. Its populace has the fourth highest per capita income and the state’s population density is the third highest in the U.S. Yet it ranks 43rd out of 50 U.S. states for energy use.
Several factors contribute to the state’s lower than expected energy use, including high energy prices that deter consumption and an economy dominated by the service sector. But the state’s aggressive energy efficiency campaign also plays a big role.
Massachusetts ranks as the top U.S. state for energy efficiency policy in a scorecard by the American Council for an Energy-Efficiency Economy. Particularly of note, state rules require that utilities invest in all cost-effective energy efficiency before building new power plants. Massachusetts invested $1 billion in energy efficiency in 2013, with an expected return of $2.8 billion.
So right now, the decoupling of energy use and economic activity may seem an anomaly. But if more places mimic Massachusetts, it may seem an oddity no more.
The IEA report can be downloaded at no charge here.
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