IEA defines energy intensity as the amount of primary energy used to produce a given amount of economic output. It is the key global indicator to track energy efficiency- which is technically the rate of change in primary energy intensity.

At COP28, at least 200 countries pledged to double energy efficiency improvements by 2030. This is because this factor drives the world’s climate goals. Recently, IEA has rolled out its 2024 Energy Efficiency Report which has decoded the significance of energy efficiency with rising energy demands.

Let’s deep dive into this…

Energy Demand Surges with Electrification

A transition to electrification has gained ample significance with electricity’s share in total energy demand rising faster than in previous years. Electrification means shifting from fossil-fuel-powered systems to efficient electric alternatives. And this stands out as a positive force in an otherwise slow year for global energy efficiency.

The demand is further spurred by increased EV sales, industrial growth, and cooling needs, particularly in warmer regions. On the contrary, the demand for gasoline is slowing down in many regions due to the same reasons.

In 2024, the share of electricity in overall energy demand is expected to grow by nearly 2%, double the 1% average growth seen from 2010 to 2019.

Talking about EVs, the market continues to expand. IEA predicts, in 2024 EV sales can reach 17 million if one in five cars is sold worldwide. China remains a dominant player, accounting for about 60% of global EV sales last year. Overall, the EV boom is an example of electrification’s role in improving energy intensity even if overall efficiency progress remains modest.

However, reaching the net zero target by 2050 will require faster and sustained progress.

The Missing Piece in Achieving Net Zero Emissions

Energy efficiency is essential for reducing fossil fuel reliance and cutting emissions. In the IEA’s net zero pathway, ramping up energy efficiency could account for over 70% of the anticipated drop in oil demand and 50% of the reduction in gas demand by 2030. Thus, this energy efficiency is like the missing block that needs to be placed to bridge the net zero pathway.

However, the global efforts to reduce energy intensity are yet to reach targeted levels. In 2024, global energy efficiency progress is projected to improve by just 1%, the same rate as 2023, despite energy demand expected to rise by 2%.

Despite the historic pledge, a significant increase in policy action is necessary to accelerate the process of energy efficiency.

Energy Efficiency: Advanced Economies Slow in, Emerging Markets Pick Up

Last year advanced economies like the European Union and the United States showed strong improvements in energy intensity. In contrast, China, a long-time leader in energy efficiency gains, saw its energy intensity sharply decline from its decade-long average of 3.8% annual improvements. India’s progress also slowed, posting just 1.5% improvement.

However, in 2024, the momentum has shifted. Advanced economies are seeing slower energy efficiency progress, with the EU expected to improve by only 0.5% and the U.S. by 2.5%.

Meanwhile, emerging markets and developing economies (EMDEs) are starting to pick up the pace. China’s energy intensity is projected to improve by 1.5%, bouncing back from 2023’s decline, while India’s progress has accelerated to around 2.5%. Similar gains are anticipated in Southeast Asia, where energy efficiency initiatives are gaining traction.

As energy demand rises, maintaining efficiency improvements is becoming more challenging. Advanced economies are slowing, while EMDEs are showing modest progress. This shift highlights the need for tailored policies to drive efficiency across diverse regions and economic stages, especially when the world has already set an ambitious energy target.

Flexibility: Eases Grid Strain and Boosts Affordability

Another system-wide theme highlighted by IEA is flexibility across the grid. As renewable energy grows globally, the need for flexibility to balance grids is rising. Traditionally, grids relied on thermal and hydropower for flexibility. But now, demand-side management—such as smart appliances and battery storage, is emerging to provide this flexibility.

Following record growth in renewables in 2023, when nearly 565 GW was added, scaling up flexible, efficient solutions is crucial to manage demand and stabilize prices.

Government Strategies

Governments worldwide are responding. For example, the UK plans to release its Flexibility Markets Strategy by the end of 2024. It will focus on building a flexible market that contracted 4 GW last year. Australia’s New South Wales initiative is adding 1 GW of grid stability projects, and the Netherlands is committing $108 million to support battery storage integration.

Consumer Level Shift

The shift is not just confined to government policies but is also happening at the consumer level. In the UK, the Demand Flexibility Service trial involved 2.6 million households and 8,000 businesses, shifting demand and saving over 3.7 GWh during winter 2023-2024.

In the US and California, several federal initiatives are directed at improving grid flexibility and the growth of EVs. They are looking ahead to achieve this with support for smart heat pumps, dynamic-rate pilot programs, and funding for community-based grid innovation.

Digitization

Digitization plays a vital role in unlocking flexibility. New data-sharing platforms and dynamic tariffs, like Octopus Energy’s real-time rate and EDF’s EV charging scheme, incentivize users to adapt their energy consumption to grid needs. This will ease pressure on the grid and improve affordability. These efforts also highlight the growing integration of renewables, flexibility, and consumer-driven innovations.

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Oklo, the California-based nuclear technology company recently announced that it has received clearance from the U.S. Department of Energy (DOE) and Idaho National Laboratory (INL) to proceed with site characterization for its first commercial fission power plant in Idaho.

The completion of the environmental compliance process is a significant milestone for Oklo as it can now initiate work for its fission power plant.

Jacob DeWitte, CEO and Co-Founder of Oklo noted,

“These approvals represent pivotal steps forward as we advance toward deploying the first commercial advanced fission plant. With this process complete, we can begin site characterization. Our unique business model of selling power directly to customers rather than power plants, combined with our early mover advantage, positions us to respond to a growing order book effectively and meet diverse energy needs across data centers, industrial processes, defense, and off-grid communities.”

Oklo Signed MOA with DOE for its Advanced Fission Power Plant

Oklo is dedicated to delivering clean, reliable, and affordable energy at a large scale. The company secured a site use permit in September through a Memorandum of Agreement with the DOE. This paved the way for its first commercial advanced fission power plant in Idaho, U.S. Interestingly, it’s the only advanced commercial fission company in the U.S. with a DOE site use permit.

The MOA will enable Oklo to conduct key site evaluations, including geotechnical studies, environmental surveys, and infrastructure planning. Additionally, it will also help maintain a schedule, manage costs, and support timely deployment.

On October 15, the company’s press release explained that they had also received DOE approval for its Conceptual Safety Design Report for the Aurora Fuel Fabrication Facility, which will recycle nuclear fuel material at Idaho National Laboratory (INL).

Subsequently, the Aurora Fuel Fabrication Facility will produce fuel for Oklo’s Aurora power plant at the Idaho National Laboratory (INL). It will essentially deploy high assay low enriched uranium recovered from spent Experimental Breeder Reactor-II fuel.

With a secured fuel supply, site use permit, and strong regulatory progress, Oklo is ready to launch its Aurora reactor. Its developed supply chain will further support the first deployment.

Now that the final clearance is approved by both the DOE and INL, CEO Jacob DeWitte is confident in the collaboration. He expects to bring Oklo’s first commercial nuclear fission plant online within the next few years.

• MUST READ: What Does the U.S. Need to Triple Its Nuclear Capacity by 2050? DOE Explains…

From Waste to Power: Oklo’s Aurora Reactor Sets New Standards in Clean Energy

We discovered from World Nuclear News some unique features of the Aurora powerhouse, which are illustrated below:

• It is a fast neutron reactor that generates electricity by moving heat from its core to a supercritical carbon dioxide power conversion system.
• Designed to run on either fresh HALEU or recycled nuclear fuel, Oklo’s reactors can transform used nuclear fuel into clean energy.
• It can generate 15 MWe, scale up to 50 MWe, and operate for over a decade before needing refueling.

The fission pioneer also explained that they use advanced recycling techniques to keep transuranic materials together as fuel. This avoids the need to create pure material streams, which is a unique feature of fast reactors.

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Uranium Royalty Corp.: Powering Decarbonization with Nuclear Efficiency

The only pure-play uranium royalty company is focused on capturing value from uranium price shifts through strategic investments. These include royalties, streams, debt, equity in uranium companies, and even physical uranium holdings. Notably, the company is growing with the rising demand for uranium.

• IEA revealed that in the U.S. alone, nuclear energy supplied roughly 19% of total electricity in 2022 and accounted for 55% of the nation’s carbon-free electricity.
• This nuclear output mitigated around 482 MMT of CO₂ emissions, which is equivalent to taking 107 million gasoline-powered vehicles off the roads.

More Power per Punch: Nuclear Energy Outshines Fossil Fuels

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Why Oklo’s Advanced Nuclear Fission is Just One of A Kind

Oklo’s advanced fission powerhouse has unique advantages over traditional power generation technologies. In short clean, resilient, reliable, and affordable are the four features that truly make it one of a kind.  

The reactors produce zero carbon emissions which makes them an environmentally friendly option. Oklo has stressed the fact that the energy density of nuclear fuel is a million times more than fossil fuels, hence it requires less land for mining. This attribute is significant for environmental preservation.

Moreover, unlike coal and gas plants that require frequent refueling, Oklo’s reactors can run for decades on a single load. This is how the nuclear company ensures long-term fuel reliability and independence.

Check out the landscape view of Oklo’s preferred site in Idaho

Image Source: Oklo Inc

Talking about the cost-effective factor, the immense energy density of its fuel makes it an economical alternative to fossil fuels. Also, nuclear fuel has fewer resource requirements and lower operational costs.

Most importantly Oklo’s reactors deliver consistent, clean energy, and heat with minimal refueling—sometimes as infrequently as every 20 years. This long-term reliability supports steady power output that’s ideal for critical energy needs.

Thus, starting with Aurora, Oklo is developing unique kinds of next-generation reactors. Furthermore, with the collaboration with DOE and INL, the company is just on the right path to establishing nuclear fission as an abundant, affordable, and clean energy source across the world.

• CHECK OUT: The Atomic Awakening: Unplugging the Energy Crisis, Fueled by Uranium

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As the world gears up for the upcoming UN climate summit, COP29, in Baku, Azerbaijan, the G-20 governments face the challenge of crafting more ambitious climate plans. These plans must balance bold climate commitments with economic realities like budget constraints, a cost-of-living crisis, and the push for energy independence. The situation is further complicated by recent election outcomes.

However, not all G-20 countries are moving at the same pace. The latest Climate Policy Factbook by BloombergNEF, commissioned by Bloomberg Philanthropies, evaluates G-20 progress in three crucial policy areas:

• Fossil-fuel subsidies,
• Carbon pricing, and
• Climate-risk policies.

Here’s our key takeaways from the report. 

Fossil-Fuel Subsidies Surge Despite Climate Goals

In 2022, G-20 countries provided a staggering $1.1 trillion in fossil-fuel support, the highest in over a decade. This spike was driven by the global energy crisis, as governments aimed to shield consumers from soaring energy costs. 

However, $500 billion of this went to producers and utilities, some of which reported record profits.

Despite global climate goals, the G-20 is expanding its coal power capacity. From 2019 to 2023, coal-fired capacity grew by 3%, adding up to 2 terawatts (TW) of operational capacity, with another 0.6 TW in development. Coal remains the largest contributor to climate change. 

The distribution of fossil-fuel support by type has remained largely unchanged in recent years. Although coal represents a small portion, its share is significant due to the high overall fossil-fuel support in 2022. G-20 governments allocated $49 billion to coal, the most emissions-intensive fuel.

Remarkably, OECD members reduced coal capacity by 22% since 2019. Conversely, non-OECD economies increased their coal capacity by 6%.

Country Progress

Australia is showing improvement by reducing coal-fired capacity and lowering fossil-fuel support in 2022. Meanwhile, China and Japan are labeled as making insufficient progress while Canada and the UK were downgraded to “mixed progress.”

Preliminary 2023 data suggests fossil-fuel subsidies fell to $945 billion, a 19% decrease from 2022 but still above pre-crisis levels. Reforming these subsidies is politically sensitive, as it could raise consumer prices. 

Canada offers a potential pathway by defining and eliminating inefficient fossil-fuel subsidies.

Carbon Pricing Gains Traction, But Is It Enough?

Carbon pricing is becoming more widespread across the bloc. It now account for about 25% of global greenhouse gas emissions and 29% of G-20 emissions through taxes or trading schemes, per BNEF analysis. This share is expected to grow as more programs roll out.

Currently, 14 G-20 economies, including the EU, have economy-wide carbon pricing mechanisms. Russia and the US have subnational schemes, while South Africa remains the only African Union member with a carbon tax in place.

While some G-20 countries, like Australia, China, and South Africa, have seen rising carbon prices, others, particularly in Europe, experienced declines. Only the EU’s Emission Trading Scheme (ETS) currently operates within the price range necessary to limit global warming to 2°C by 2030.

Expanding Carbon Markets

Canada, France, Germany, and Mexico lead the pack with multiple national-level carbon taxes or markets. 

Brazil, India, and Turkey are designing compliance carbon markets while Indonesia and Japan are considering additional carbon pricing programs. And all EU members will see another carbon market with the 2027 launch of the road transport and buildings ETS.

Notably, China’s carbon market, the largest globally by covered emissions, is set to expand to aluminum, steel, and cement sectors. The EU ETS leads in traded value, driven by higher prices and trading volumes, whereas Canada and California are on track to meet their targets by the end of the decade.

• RELATED: Canada Carbon Rebate to Offset Carbon Pricing Costs For Millions of Canadians

Carbon Market Valuations

The combined value of G-20 compliance carbon markets exceeded $800 billion in 2023, BNEF Factbook shows. Price increases across these markets stemmed from policy reforms aligning with climate goals, though trading volumes dipped in some due to economic impacts from Russia’s invasion of Ukraine.

As G-20 members strengthen their carbon markets, they create powerful incentives for emission reductions and sector-specific adaptation. As such, they can contribute significantly to the transition toward a low-carbon global economy.

Climate-Risk Policy: Who’s Leading and Who’s Lagging

G-20 members are at varying stages of implementing climate-risk regulations. Some, like the EU, Brazil, and the UK, lead the charge with comprehensive frameworks. 

However, others, including Argentina, Saudi Arabia, and Russia, lag behind, lacking even basic regulations. Other remarkable recent developments in this area include:

• Turkey and the US made notable strides in climate-risk policy.
• Nine G-20 countries have adopted or are developing regulations aligned with the International Sustainability Standards Board (ISSB).

The ISSB framework promotes consistency in climate-risk reporting. However, its effectiveness could be undermined by local variations and relatively low stringency.

What COP29 Means for G-20 Climate Action 

The G-20’s progress is uneven, with some countries advancing robust policies while others remain stuck in outdated systems. COP29 presents a crucial opportunity for world leaders to reassess their commitments and bridge these gaps.

Based on BNEF’s Climate Policy Factbook data, to accelerate the transition to a low-carbon economy, countries must:

• Phase out fossil-fuel subsidies, starting with inefficient ones.
• Strengthen carbon pricing mechanisms to provide real incentives.
• Implement stringent climate-risk policies to build a more resilient economy.

Ultimately, meaningful climate action requires global cooperation and bold leadership, particularly from the G-20, which holds the key to the planet’s future.

• MUST READ: What is COP29 and Why Is It Hailed as The “Finance COP”?

The post The G-20’s $1.1 Trillion Fossil-Fuel Subsidy and Carbon Pricing Initiatives appeared first on Carbon Credits.

Most industrial greenhouse gas (GHG) emissions come from energy use. By improving energy efficiency, the world can cut energy consumption, lower emissions, and save on costs. It’s a smart and cost-effective first step toward decarbonization and businesses are continuing to pour funds into energy efficiency initiatives and technologies worldwide as the International Energy Agency (IEA) reported. 

The IEA’s Energy Efficiency 2024 highlights key trends in energy intensity, demand, prices, and policies. It also offers insights into system-wide themes including investment, which this article will delve into in detail.

Driving Change: What Leads the Energy Revolution?

The report shows that energy efficiency investments could remain resilient in 2024, with total spending projected to reach around $660 billion. This level matches the record set in 2022 and highlights the steady commitment to sustainable energy use. These investments span sectors like transport, buildings, and industry, driven by the need to reduce emissions and enhance energy efficiency amid fluctuating economic conditions.

Since 2019, global energy efficiency investments have surged by 45%, fueled by the energy crisis and significant government spending post-Covid-19. The transport sector has seen the highest growth, with a 77% rise, followed by buildings at 34% and industry at 13%. 

However, from 2022 to 2024, the trend shifted. Investments in buildings dropped by 7%, while transport saw a 14% rise, and industry remained steady.

A key driver for the trend is the push for efficient electrification, especially in the electric vehicle (EV) sector across China, Europe, and North America. EV sales, particularly in emerging markets, have supported this trend. 

However, as energy prices stabilize and government stimulus wanes, overall global investment has plateaued. Rising inflation and interest rates also pose challenges for financing efficiency upgrades.

Emerging Markets Take the Spotlight in Efficiency Investments

The growth of efficiency-related investments in 2024 is uneven across regions. Emerging markets and developing economies (EMDEs) are expected to lead. 

Africa is projected to see a 60% rise, the Middle East 40%, and Central and South America over 20%. China will also witness nearly 10% growth.

Conversely, advanced economies are stabilizing after years of crisis-driven spending. Europe is set for a slight decline, while North America will see a modest 5% increase. 

Despite slower growth in these regions, they still account for the bulk of global energy efficiency investments—95% of total spending occurs in Europe, Asia Pacific, and North America, regions responsible for about 75% of global energy demand.

Transport Electrification: A Surge in EV Sales

Globally, the electrification of transport has gained momentum. By 2024, around one in five new cars sold will be electric. 

EV sales reached 14 million in 2023, making up 18% of total car sales, and this figure is expected to grow to 17 million in 2024. The bulk of these sales occurred in China, Europe, and North America, which accounted for 95% of global EV sales.

In EMDEs, the focus remains on two- and three-wheelers. These vehicles dominate markets in regions like Southeast Asia and Latin America. China leads in two-wheeler sales, though global sales in this category dropped 18% in 2023 due to supply chain disruptions. 

India, however, saw a 40% increase in electric two-wheeler sales and continued growth in three-wheelers, spurred by government initiatives like the Electric Mobility Promotion Scheme.

• RELATED: Is the EV Market’s Momentum Slowing?

According to S&P Global data represented by the chart below, global passenger plug-in EV sales could reach over 33 million units by 2028. That’s almost a 104% increase in EV units sold. China is set to take the biggest growth in sales.

The number of people projected to use EVs for the same period (penetration rate) will also double by 2028 compared to 2024.

Source: S&P Global

Building Smarter: A Post-Crisis Slowdown

Investment in energy-efficient buildings boomed during the energy crisis, driven by technologies like heat pumps. In 2022, heat pump sales peaked, particularly in Europe, where they are central to long-term climate goals. 

However, this momentum slowed in 2023 due to high electricity prices and reduced government support. For instance, Italy’s Superbonus program, which heavily subsidized energy-saving renovations, was phased out in 2024. This program alone accounted for more than half of Italy’s building sector investments in 2023. 

Meanwhile, heat pump deployment in China has seen modest growth. These trends highlight the critical role of government policies in sustaining investment in building efficiency.

ESCOs and the Power Players Behind the Efficiency Boom

The energy service company (ESCO) market experienced a slight decline in 2023, dropping by 2.2%. Despite this, the market size remains robust at over $35 billion, supported by strong policies in regions like the U.S. 

Federal programs, such as the Federal Energy Management Program, have bolstered ESCO activities, which grew by 54% between 2021 and 2023 in the U.S.

China leads the global ESCO market, with investments exceeding $20 billion in 2023, accounting for half the global total. The majority of ESCO investments target the buildings sector, followed by industrial applications and energy storage.

Among the major players in the ESCO market, some of the interesting companies making waves in the sector include:

• Johnson Controls is a global leader in smart building solutions, offering advanced technologies and services to enhance building performance and sustainability. In energy efficiency, Johnson Controls has made significant progress by implementing high-capacity heat pumps and optimizing energy use in various industries. They have contributed to over $6 billion in customer projects worldwide, driving sustainability and reducing carbon footprints​.

• Ameresco is a leading cleantech integrator that specializes in energy efficiency, renewable energy, and infrastructure modernization. In 2023, its renewable energy projects and assets helped avoid around 16 million metric tons of CO₂ emissions, contributing to over 110 million metric tons of cumulative carbon reductions since 2010. Ameresco has received numerous awards for its sustainability efforts and continues to drive innovation in clean energy​.

• Trane Technologies, through its flagship brand Trane, provides innovative HVAC solutions designed for energy efficiency and sustainability. The company delivers services such as Energy Savings Performance Contracting (ESPC) to optimize energy consumption and reduce operational costs for buildings. Trane emphasizes sustainability, helping clients meet carbon reduction goals through electrification, energy monitoring, and renewable energy integration​.

• NORESCO is specializing in energy and infrastructure solutions for government, institutional, and commercial clients. The company has a strong track record in improving energy efficiency, managing over $2.75 billion in federal energy projects. It helps clients achieve sustainability goals through advanced technologies like microgrids, battery storage, and renewable energy systems. 

Scaling Up: What’s Needed for 2030?

To meet net-zero targets, energy efficiency investments must triple by 2030, reaching $1.9 trillion annually, per the report. The IEA’s NZE Scenario underscores the importance of a comprehensive strategy tailored to each country’s needs.

In emerging economies, efforts focus on improving building performance and electrifying transport. In sub-Saharan Africa, the transition to clean cooking fuels is a top priority. Advanced economies, meanwhile, focus on retrofitting older infrastructure, deploying heat pumps, and scaling up EV infrastructure.

Ultimately, energy efficiency investment is vital for meeting global climate goals and expanding investment to underrepresented regions will be key to accelerating progress.

• READ MORE: IEA’s 2023 Net Zero Roadmap: Tripling Renewables and Electrifying the Energy Transition

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