A new report from the International Energy Agency (IEA) sees energy efficiency as a market worth at least US$310 billion a year and growing.
Among 18 countries evaluated in the report, total final energy consumption was down 5% between 2001 and 2011 primarily as a result of investments in energy efficiency. Cumulative avoided energy consumption over the decade from energy efficiency in IEA countries was 1732 million tonnes of oil equivalent – larger than the energy demand of the US and Germany combined in 2012, the report finds. Furthermore, over the last four decades, energy efficiency investments over the past have avoided more energy consumption than the total final consumption of the EU in 2011.
According to the IEA, some 40% of the global energy efficiency market is financed with debt and equity, meaning that the financial market for energy efficiency is in the range of $76,120 billion per year. The number of products and the volume of finance have greatly expanded in recent years, with green bonds, corporate green bonds, energy performance contracts, private commitments, carbon and climate finance, and multilateral development banks and bilateral banks all offering expanded sources of finance for energy efficiency improvements. Bilateral and multilateral lending alone amounted to more than $22 billion in 2012.
With energy efficiency finance becoming an established market segment in its own right, the analysis confirms innovative new products and standards are helping to overcome risks and bringing stability and confidence to the market.
‘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 explained.
‘Energy efficiency is moving from a niche interest to an established market segment with increasing interest from institutional lenders and investors,’ she continued, adding: ‘As energy efficiency is essential to meeting our climate goals while supporting economic growth, the increasing use of finance is a welcome development. To fully expand this market, initiatives to continue to reduce barriers will need to strengthen.’
The report also reveals that huge potential for energy efficiency exists in emerging economies outside the OECD.