G20 china_web

Energy markets and access
G20 members account for 75 per cent
of global energy demand
90%
Fall in cost of LED
lighting since 2009
Fatih Birol
XENOTAR/ISTOCK PHOTO
It is vital that governments take
advantage of this trend and make smart
choices. Tens of trillions of dollars are
invested each year in energy demand and
each time such an investment is made –
whether by public institutions, private
corporations or individuals – future energy
demand is shaped. Making smart, longterm
choices with appropriate technologies
and policies can minimise future energy
demand and lead to more energy efficient
and sustainable outcomes.
These choices can have a big impact.
One regrettable result of lower fuel prices
has been a global slowing of the trend
towards more fuel-efficient vehicles.
Following a decade in which the average
fuel economy of new vehicles in the
United States improved every year, in 2015
it stayed flat – a slowdown in efficiency
improvement that will lock in thousands of
additional barrels of oil per day in demand.
In India, sales of new vehicles have
picked up after a two-year decline, yet the
dominant trend there is also towards larger
vehicles, resulting in lower average fuel
economy and higher demand for oil.
While choices made on consumer goods
can lock in demand for years, choices made
on infrastructure and buildings can have
effects that are felt for decades. Robust
building codes in developing countries,
for example, are of vital importance
for the achievement of climate targets.
Opportunities for savings are well within
reach. As costs of more efficient goods have
fallen through resulting mass production –
LED lighting costs, for example, have fallen
90 per cent since 2009 – more ambitious
standards have become easier to introduce.
It is critical to meet such standards early.
If not, inefficient technologies could be
deployed for millions of people without
access to modern energy infrastructure
and appliances.
Governments have ways to encourage
smart investment choices. One driver
is direct government spending through
grants, tax credits, public procurements
and loans. Policymakers should not forget
about effective measures such as energy
performance requirements, which can
accelerate the deployment of efficient
technological improvements. A market for
energy-efficiency investments financed
on the basis of avoided future costs is
emerging, but growth depends on making
efficiency investments similar to other,
more familiar, financial products.
Collective action
Energy demand creates the fulcrum
on which energy investments pivot, as
investments in energy supply seek to
balance investments in energy demand.
The outlook for energy demand drives
investments in energy supply.
G20 members account for 75 per cent
of global energy demand. The choices
made in the years to come will ensure that
meeting this demand does not come at the
expense of sustainability. The G20’s efforts
to collectively act on energy efficiency and
renewable energy are to be applauded.
It has been my great pleasure to work
directly with G20 energy ministers both
this year under the Chinese G20 presidency
and in years past. I look forward to greater
engagement with the G20 process as the
International Energy Agency continues
to provide recommendations to underpin
these important discussions. G20
Executive Director
International
Energy Agency
Fatih Birol became Executive
Director on 1 September 2015.
Previously he was the IEA’s
Chief Economist and Director of
Global Energy Economics, with
responsibilities that included
directing the IEA’s flagship World
Energy Outlook, recognised as
the most authoritative source of
strategic analysis on global energy
markets. He is also the founder and
chair of the IEA Energy Business
Council, which provides a forum
to enhance cooperation between
the energy industry and energy
policymakers.
@IEABirol
www.iea.org
G7G20.com September 2016 • G20 China: The Hangzhou Summit 209