Energy productivity vital to avoid worst effects of climate change: new report

Ilario D'Amato
Reading time: 4 minutes
25 April 2017

LONDON: Affordable clean energy can be provided for all while limiting global warming to well below 2 degrees Celsius – the limit to avoid catastrophic effects of climate change – a new report from the Energy Transitions Commission indicates.

The “Better Energy, Greater Prosperity” report demonstrates how the world can halve carbon emissions by 2040, if we act today. “This ambitious target is definitely within our reach, if we consider the dramatic reduction in cost of wind and solar generation we have seen in the last few years, along with the declining cost of batteries,” says Jenny Chu, Head of Energy Productivity Initiatives, The Climate Group.

“In particular, the report points to the untapped potential to improve energy productivity, which is about getting more economic output from each unit of energy – essentially doing more with less. Globally, we can achieve an average growth of 3% per annum in energy productivity, if we put in place the right enabling policies.”

Currently, 10 leading corporates are committed to doubling their energy productivity through EP100, an initiative led by The Climate Group in partnership with the Alliance to Save Energy. In addition to reaping energy cost-savings, these companies also stand to improve their energy security while lowering their greenhouse gas emissions.

Image courtesy of The Energy Transitions Commission, from the report "Better Energy, Greater Prosperity"


Since 2009, the levelized cost of wind energy has decreased by 65% - with an even more impressive 85% reduction for utility-scale photovoltaic generation. However, it is the price of batteries that is reaching a tipping point – declining by a staggering 326% since 2013. This means that renewable energy systems, when combined with increasingly cheaper batteries, could be cost-competitive with gas-powered generation as early as 2035.

At the same time, there are already quick wins available in the transport and building sector, with clean electrification having the potential to reduce fossil fuel use by up to 20% by 2040, while increasing electricity requirements by over 25% by the same year. Clean electrification alone could deliver half of the carbon emissions reductions required by 2040.

Low carbon technologies can help in bridging this gap if they are supported by ambitious industrial policies. In particular, research and development can support technologies at an early stage, pushing them to maturity; industry can then support their deployment through subsidies, market design, risk-sharing financing models and procurement practices.


The report warns that “energy productivity is required” urgently, having increased by 1.4% between 1990 and 2005 – and 1.7% from 2005 to 2015 – but still below the 2.9% required if we want to keep the world below the 2 degrees Celsius threshold.

“Keeping the global energy demand 60% lower than expected by 2050 is technically possible,” the report highlights, but to achieve that “multiple sources of energy productivity need to be leveraged simultaneously,” such as a focus on energy efficiency and on the circular/sharing economy.

To achieve these necessary goals, the investment sector must fund the energy transition, overcoming financial challenges – such as the high investment needs in emerging economies.

The report also indicates that a significant shift in the mix of investment is needed, lowering fossil fuels investment by US3.7 trillion over 2015-2030, while ramping up investment in renewables and energy efficient equipment by US$6 trillion and US$9 trillion respectively. This would mean an extra US$300-600 billion in annual investment.

Therefore, governments, investors and businesses must act now to seize the economic, social and environmental opportunities offered by the energy transition, concludes the report. A coherent, predictable and bold policy framework is therefore necessary to drive progress on climate action.

“This is not just another plan; it’s a better plan,” says Ajay Mathur, co-Chair, Energy Transitions Commission. “We show how the world can remove barriers to transform challenges into opportunities, not only in advanced economies, but also in emerging countries.”

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