Energy Efficiency

How energy efficiency contributes to supporting growth and fighting climate change
Energy efficiency, often described as the “first fuel” of the clean energy transition, is a transformative, low-cost solution that can accelerate access to affordable, secure energy while lowering energy bills, improving industrial competitiveness, and freeing up public resources for other development priorities. Yet nearly two-thirds of the world’s energy is still wasted across buildings, industry, and public facilities. With global energy demand projected to rise by 30% over the next decade, improving energy efficiency is essential to curb costs, avoid unnecessary investments in new infrastructure and fuel imports, and strengthen energy security.

What are the biggest obstacles to saving energy?
Challenges that have slowed progress on energy efficiency include: 

• Distorted price signals, such as low energy prices and fossil fuel subsidies, reduce the economic case for efficiency.

• Upfront costs are high and payback periods are long or uncertain, and banks have generally little familiarity with energy efficiency projects

• Split incentives can pit stakeholder interests against each other (e.g., landlords vs. tenants)

• Limited awareness of credible savings opportunities 

   

What are the solutions to accelerate energy efficiency?
Accelerating energy efficiency requires stronger minimum performance standards for appliances, buildings, and industry, alongside clear labeling to guide markets. Governments should align utility incentives and reform tariffs to reward efficiency rather than electricity sales. Expanding affordable financing through credit lines, guarantees, and blended finance is essential, as is scaling energy service companies. Public procurement of efficient technologies, improved data systems, and institutional capacity building further enable faster deployment and sustained impact.