Peak energy through efficiency gains
‘Peak energy’ will be a turning point, as energy efficiency gains outpace economic growth
In our forecast period, energy efficiency is a key driver of the transition.
One measure of this is the energy intensity of the global economy – expressed as units of energy per unit of GDP. For the last two decades, energy intensity has reduced by 1.6% annually, masking a faster drop in recent years mainly due to economic growth in China being offset by sharply declining energy use per unit output. Over the next 30 years, energy intensity improvements will accelerate to 2.5% per year world-wide, with the strongest improvement in the 2030s, coinciding with our forecast peak in global primary energy use.
The cumulative effect of this is significant: whereas, in 2017, it took 4.6 megajoules to produce a dollar of global GDP, in 2050 it will take just 1.9 megajoules.
The main driver of energy intensity improvements is the growing renewable share in electricity and electrification of the energy system, eliminating enormous heat losses. Efficiency comes not just from how energy is supplied, of course, but also how it is used. On the demand side, the biggest improvement is in road transport, with the twin effect of steadily improving efficiency for ICEs and introduction of much more efficient EVs.
As shown in the table above, there are many efficiencies at work in other demand sectors, not least from electricity replacing the extremely inefficient use of biomass and oil for heat and cooking. Consider that kerosene used for lighting is 50 times less efficient than a solar-powered LED light, a stark reminder that less affluent people spend disproportionately more for the energy they use. That is one reason SDG #7 ‘Clean Energy’ emphasizes the need to ‘double the rate of improvement in energy efficiency’. Our analysis shows that while this will not be met entirely, solid progress will be made towards 2030.
In the context of our full forecast period, the role played by energy efficiency is remarkable. Without efficiency improvements, final energy demand globally in 2050 would be some 70% higher than our forecast demand.