January 8, 2024
A set of business actions aimed at reducing the intensity of energy demand could unlock annual savings of at least $2 trillion for the global economy if measures are taken by the end of this decade. This would boost growth, save companies cash and deliver competitive advantage while also reducing emissions. These are the findings of the World Economic Forum’s Transforming Energy Demand initiative – and a new report – launched in collaboration with PwC and supported by over 120 global CEOs who are members of the International Business Council (IBC), a group representing 3 percent of global energy use.
The report comes as energy demand is ramping up the international agenda. In one of the most widely supported initiatives at COP28, governments pledged to triple the world’s renewable energy capacity by 2030 and double the rate of energy efficiency improvement over the same period. Countries need to cut their energy intensity at least twice as fast between 2023 and 2030 as they did in previous years, which calls for substantial changes from the private sector.
The report highlights practical actions that businesses can take today to act on energy demand. These would be driven by energy-intensity reductions in buildings, industry and transport. Examples include energy-saving measures such as using artificial intelligence to optimise factory line design, energy efficiency, value chain collaboration, industrial clustering to share clean energy initiatives, retrofitting buildings and electrification of transport.
The report says that “the potential of this demand-side action is extraordinary” and offers a short-term, cost-efficient 31 percent reduction of demand, shared across all economic sectors. These gains are deliverable now, at attractive returns, needing no new technology and could avoid the construction of 3,000 extra power stations, according to estimates from the report. Such concerted action would unlock growth and productivity. At the same time, it would drive the required change in rate of energy efficiency improvement set by countries at COP28, supporting the world to get back on track to meet the targets set by the Paris Agreement.
“Policy-makers and business leaders need to collaborate to accelerate an energy transition that creates positive outcomes for people, society and the planet. The private sector can play a leading role in this transformation, which is why the International Business Council decided to focus on their businesses’ energy consumption with practical actions each organization can take today both individually and through their value chains,” said Olivier Schwab, Managing Director, World Economic Forum.
The focus on energy demand came after members of the IBC met one year ago at the Annual Meeting 2023 and saw the need for the private sector to play a leading role in driving demand-side energy transformation. Much of the debate on the energy transition and climate has focused on the supply side but demand-side actions are “doable today, at attractive returns with no need for new technology”, the report notes.
Energy-intensity reduction examples taken together represent an under-addressed area and awareness of its potential for business improvement and greenhouse gas reduction is low. Regulation and policies will also be required to drive progress coupled with public-awareness campaigns to highlight the importance of increasing energy efficiency. Some 47 percent of IBC CEOs surveyed in the report say there is a lack of supportive regulation for businesses to act on reducing energy demand, suggesting the need for private and public sectors to work together to drive change.