Global investment in energy efficiency jumped to $560 billion in 2022 – IEA
The International Energy Agency (IEA) has said that global investment in energy efficiency jumped to $560 billion in 2022.
This is according to the agency’s Energy Efficiency report released on December 1, 2022. The report says strong consumer spending on new fuel-efficient and electric cars is expected to help overall energy efficiency-related investment rise by 16% in 2022, to just over $560 billion. The IEA report says:
- “This figure will increase a further 50% to almost $840 billion per year from 2026 to 2030. However, these levels are still only about half of the energy efficiency-related investment levels needed in the second half of this decade to align with the net zero scenarios.”
However, in developing and emerging economies like Nigeria, vulnerable groups have made a significant shift back towards using cheaper traditional biomass such as wood and charcoal for heating and cooking. The report states:
- “Around 75 million people who have recently gained access to electricity are estimated to have lost the ability to pay for it and 100 million people may need to switch back to using traditional stoves for cooking from liquefied petroleum gas (LPG). Household air pollution from cooking is estimated to have contributed to 2.5 million premature deaths in 2022.”
Energy efficiency opportunities: Despite current challenges, the IEA report says that the largest energy efficiency opportunities of the future will be found in emerging markets and developing economies (EMDEs) like Nigeria. In EMDEs, an average person currently uses three times less energy in their home and four times less energy for transport, compared with an average person in an advanced economy.
However, for EMDEs to strengthen energy efficiency, the IEA report suggests the following steps:
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- Policy design and implementation are the bedrock of adopting energy efficiency on both local and national levels.
- Regulation is needed in order to drive energy efficiency levels upwards.
- Information is important so that people can be aware of the right kind of choices to make when it comes to how they use energy and the kind of devices they purchase.
- Incentives make it easy for people to make use of new technologies that increase energy efficiency levels.
The IEA report notes that the energy intensity of the global economy is expected to improve by almost 2% in 2022. The report points out the fact that surging energy costs, supply disruptions, and looming shortages have sharpened the focus on improving efficiency, with consumers and governments around the world urgently implementing measures and adopting new policies to conserve and better manage energy consumption.
The Nigerian context: The Nigerian National Energy Efficiency Action Plan (2015 to 2030) sets the following general targets across the power sector, industries and buildings. The Plan states that by 2030, the Plan implementation will:
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- Enhance efficient lighting by almost 100% of households
- Ensure energy efficiency increases by at least 50% for high-energy consuming sectors (transport, power, and industrial sectors)
- Curb firewood demand below supply capacity
- Improve on distribution loss reduction target in bio-energy to less than 10%
For the record: The Nigerian National Energy Efficiency Action Plan also sets incentives targets for energy efficiency as follows:
- The establishment of fiscal instruments (including incentives such as import duties, value-added tax (VAT), and reduced taxes to lower prices of on-grid and off-grid efficient lighting products in consultations with policymakers.
- Adoption of incentive schemes (including tax holidays) to support local manufacturing of on-grid and off-grid equipment.