Louise Downing, Bloomberg | October 10, 2014 – Investments in measures to curb energy waste and boost efficiency are overtaking wind and solar spending and have reached at least $310 billion a year, the International Energy Agency said.

That’s almost $100 billion higher than investment in renewable energy in 2013, which amounted to $213 billion, according to estimates from Bloomberg New Energy Finance.

Demand dropped as much as 5 percent from 2001 to 2011, largely due to investments in efficiency, the Paris-based agency said today in a report, which studied countries including the U.K., U.S. and Japan. Savings in 11 nations in 2011 were equivalent to displacing a continent’s energy demand, it said.

“Energy efficiency is the invisible powerhouse in IEA countries and beyond, working behind the scenes to improve our energy security, lower our energy bills and move us closer to reaching our climate goals,” IEA Executive Director Maria van der Hoeven said in an e-mailed statement. Cumulative avoided energy consumption from 2001 to 2011 in IEA countries was larger than the energy demand of the U.S. and Germany combined in 2012.

Homes and businesses are installing energy-efficiency measures that include low-energy lighting and insulation to cut bills by avoiding waste and boosting productivity. Efficiency had the largest percentage improvement in the residential sector, where energy demand fell 5 percent from 2001 levels among the countries studied, the report said.

Cost Reductions
Energy-efficiency improvements in transport may cut fuel costs by as much as $189 billion a year by 2020. Spending on fuel is a “key driver” of transport efficiency investment with global expenditure expected to reach $2.8 trillion in 2020, the report said.

“Energy efficiency is moving from a niche interest to an established market segment, with increasing interest from institutional lenders and investors,” Van der Hoeven said. The financial market for energy efficiency is about $120 billion a year, the report said.

There is “huge” potential for energy efficiency in emerging markets, with Indonesia offering more than half of Southeast Asia’s investment potential, it said. In limiting the long-term increase in global temperatures to no more than 2 degrees Celsius (36 degrees Fahrenheit), the biggest share of emissions reductions, or as much as 40 percent, will come from energy efficiency, the report said.

Derick Lila
Derick is a Clark University graduate—and Fulbright alumni with a Master's Degree in Environmental Science, and Policy. He has over a decade of solar industry research, marketing, and content strategy experience.

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