Global perspective

In 2018, global energy intensity improved by only 1.2%, the third consecutive annual decline from the 2.9% improvement in 2015 and the slowest rate since 2010. Recently, falling energy intensity was the main factor behind the flattening of global energy-related CO2 emissions from 2013‑2016, as it offset three-quarters of the impact of GDP growth. However, the significant growth in primary energy demand by 2.3% in 2018 led to the further slowdown of intensity improvements.

While technologies and processes are constantly becoming more efficient and technical efficiency improvements made since 2015 avoided about 4% more energy use in 2018, structural factors are blunting the impacts of efficiency on energy demand. The impact on intensity improvement from structural changes in industry away from energy-intensive production has gradually weakened since 2013.

In 2018, it actually added to energy demand, mostly due a production expansion of energy-intensive industries in China and the US. Sectoral analysis of energy efficiency shows that even though policy coverage has been expanding, the rate of this expansion gradually declined in the past years.

In transport, vehicle efficiency improved but consumers bought larger cars and vehicle occupancy rates fell. An increased use of electronic devices and a strong growth in average per capita residential floor area have outpaced recent efficiency gains in the buildings sector, adding to the growth in primary energy demand. In contrast, reaching the SDS requires that energy intensity reductions accelerate to 3.6% annually from today through to 2040, an unprecedented level.

This implies that total global primary energy demand cannot exceed current levels, despite continued economic growth. If current structural trends continue, technical efficiencies need to increase much more rapidly to achieve a level of energy intensity improvement that is consistent with the SDS pathway.

Regional perspective

As China, India, the US and EU account for more than 60% of global GDP, they had the strongest impact on the global energy intensity trend in recent years, but improvement rates varied across regions.

China improved its energy intensity at a rather high rate of 2.8% in 2018, though this is much lower than the 2016 rate. A key factor behind this development was the strong rebound of China’s energy-intensive steel production, with output growing more than 14% since 2017.

India improved at a similar rate of nearly 3% mostly based on energy efficiency increases in the industry and service sector. In 2017, these efficiency improvements avoided 6% more energy use, preventing nearly 145 Mt CO2 eq. in GHG emissions in India. In the US, primary energy intensity worsened for the first time in 25 years by 0.8% mainly due to the expansion of energy-intensive industrial production, such as petrochemicals, and extreme weather, which drove up energy use for both heating and cooling.

Only the EU accelerated energy intensity improvements from 1.4% in 2017 to 2% in 2018, which resulted from a mild winter that reduced heating demand. To achieve climate and other sustainability goals, all areas are required to increase primary energy intensity improvement rates. The EU and US have to accelerate intensity reduction to an annual average of slightly more than 3%, while China and India need to sustain a rate of 4.5% throughout to 2040.