SDG 7.3 - Energy efficiency

Is the world on track? 

Not yet, but we have the technologies and policies to get back on track. According to Tracking SDG7: The Energy Progress Report, in the decade from 2010-2020, global energy intensity saw an annual improvement of 1.8 percent. Yet, this falls short of the SDG 2.6 annual improvement initially proposed by the United Nations. Looking ahead, energy intensity must now improve by at least 3.8 percent annually from every year until 2030. Achieving the International Energy Agency’s (IEA’s) Net Zero Emissions by 2050 Scenario requires an even more ambitious improvement rate of 4.2 percent annually.

Relationship between economic growth and the rate of improvement in energy efficiency

This chart shows that not all countries are on the same path when it comes to energy efficiency improvement, however, it does show that there is a trend (yellow line) that if a country has higher economic growth, they are more likely to have a greater rate of energy intensity reduction – the SDG 7.3 indicator for progress on energy efficiency.  

What does a negative rate of improvement mean?

If the country has a positive GDP growth, a negative rate of improvement indicates that the primary energy use grew at a faster rate than GDP growth.

If the country has a negative GDP growth, a negative rate of improvement indicates that the primary energy shrunk at a slower pace than the GDP decrease. In both cases, this means that energy efficiency progress is going backwards.

In summary, a negative rate of change in energy intensity means that the country is using less energy to produce a unit of GDP. However, it is necessary to understand the underlying factors driving this change in energy consumption.  For instance, a decrease in energy intensity might result from an economy shifting from energy-intensive economic structure, such as manufacturing, to less energy-intensive sectors, like services.

What is the yellow line showing?

The yellow line is the trendline for all countries from 2016 to 2021 with the relationship between improvements in energy efficiency and GDP growth. This line does not show what is needed to achieve the SDG 7.3 target, but does show that there is a correlation between economic growth and efficient use of energy.

Why SDG7.3 is important?

Improving energy efficiency is key to achieving SDG7 and ensure universal access to affordable, reliable, sustainable and modern energy for all. By doubling the global rate of improvement in energy efficiency, we can significantly reduce energy consumption while maintaining the same level of energy services, making energy more affordable and accessible, bringing other benefits that extend across several SDGs. Improving energy efficiency lowers the demand for energy resources, decreases the environmental impact of energy production and consumption, and enhances energy security by making energy systems more resilient and less dependent on fossil fuels.

Doubling the annual average rate of energy efficiency improvements to 4%, as stated in the COP28 Global Renewable and Energy Efficiency Pledge, reflects the need for an integrated strategy and international cooperation to combine energy efficiency with renewable energy. Ramping up renewable energy capacity without enhancing energy efficiency on both the supply and demand sides could result in energy waste and continued reliance on fossil fuels. The combined approach of increasing renewable capacity and enhancing energy efficiency is crucial for phasing out fossil fuels and achieving a cost-effective transition to renewable energy. Improved efficiency lowers total energy demand, allowing renewables to constitute a larger share of the energy mix more rapidly. This strategy not only reduces energy intensity and costs but also delivers substantial environmental and social benefits.

Maximizing synergies between renewable energy and energy efficiency demands a deep understanding and political commitment to identify opportunities across countries and sectors, alongside strategic investment. This involves not only recognizing potential but also fostering collaboration among stakeholders to implement integrated solutions that optimize resource utilization and mitigate environmental impact.