If last year's COP28 climate talks signaled the beginning of the end for the production and use of fossil fuels, they also marked a coming of age for energy efficiency, hailed as the "first fuel" in the transition to a greener future.

As well as committing to triple installed renewable energy generation capacity, nearly 200 countries pledged to double the global average annual rate of energy efficiency improvements by 2030. That would raise it from around 2% now to over 4%.

Cutting back energy use is the cheapest, most effective way to save on bills, while also reducing carbon emissions to slow the pace of global warming, according to energy experts.

"As the Americans say, it's a 'no brainer'," Fatih Birol, executive director of the International Energy Agency (IEA), said during a discussion at the World Economic Forum in Davos.

Campaigners, however, say red tape, knowledge gaps and limited financing are holding up the energy efficiency revolution.

Here's why energy efficiency is important and how energy is being saved.

What role can energy efficiency play in reaching net zero?

While renewables are a key part of the transition to net zero, the IEA calls energy efficiency the "first fuel" of the green transition as it offers a quick and cost-effective solution to reducing planet-heating emissions.

Ramping up renewables, like solar and wind power, improving energy efficiency, cutting methane emissions and increasing electrification would deliver more than 80% of the emissions reductions needed by 2030, according to the IEA's Net Zero Roadmap report, first published in 2021 and most recently updated last September. 

 Increasing electrification would deliver more than 80% of the emissions reductions needed by 2030. (Credit: NetZero.vn) 

Energy efficiency measures include using appliances, technology or electronics that are designed to consume less energy, such as heat pumps or LED lighting. Energy use can also be saved by designing buildings with better insulation and eliminating leaks from industrial or urban properties.

Some of these measures can be introduced quickly and relatively cheaply, meaning there would be less demand for fossil fuels as they gradually make way for renewables. 

What cost savings can be made?

In a new white paper, Transforming Energy Demand, the World Economic Forum (WEF) estimates that energy demand could be cut by 31% across all sectors, saving $2 trillion a year, if businesses take action to curb demand by 2030.

The paper calls on companies to reduce the amount of energy they use in current and future operations, noting that affordable technologies already exist, including heat recovery and reuse and behaviour change. 

A global energy efficiency effort could reduce oil consumption by almost 30 million barrels per day - about triple Russia's production in 2021 - and lower household energy bills by $650 billion a year by the end of the decade, recent IEA analysis shows. 

The WEF's report says reducing energy demand would help companies boost growth, save cash and maintain their competitive advantage while reducing emissions.

"Actions are doable today, at attractive returns with existing technology, and so it is believed this establishes a compelling case to act as much on energy demand as supply in the journey to net zero," the report said.

Industries worldwide could save $437 billion per year by 2030 through improved energy efficiency, according to an October report by the Energy Efficiency Movement, an industry collective.

According to context.news