The hidden fuel: energy efficiency lessons from the UAE

Energy efficiency is a critical component in sustainable development – not only because it helps reduce environmental impacts, but also because it offers significant economic benefits. As nations strive towards lower carbon footprints, the importance of energy management strategies cannot be understated.

Recognizing this, the UAE has integrated energy efficiency into its broader sustainability goals and launched its National Demand Side Management (DSM) Programme. Here are some key findings from this initiative that may benefit the world, as nations try to harness the power of the “hidden fuel” that is energy efficiency in order to reach their energy and climate targets.

Energy efficiency is central to the UAE’s sustainability strategy, driving both resource optimization and long-term economic growth. By incorporating energy efficiency into its national framework, the UAE is reducing consumption and environmental impact, while positioning itself as a leader in the global energy transition.

The DSM Programme targets key sectors such as the built environment, agriculture, industry and transport. It is not just about conserving energy, but also about ensuring a sustainable future. The programme’s goals align closely with the UAE’s net-zero strategy, supporting its NDC commitments to reduce greenhouse gas emissions. Success lies in combining a multisectoral approach with a variety of strategic levers: leveraging advanced technology, fostering private sector collaboration, promoting behavioural changes, and maintaining clear policy direction with long-term planning.

The built environment is one of the largest energy consumers in the UAE, making it a key focus area for achieving maximum impact in energy efficiency. Recognizing this, the DSM programme strategically targets this sector by applying green building codes and retrofitting existing structures to significantly reduce energy and water consumption. These measures align with the country’s goal of optimizing urban infrastructure for sustainability. For instance, retrofitting 423 federal buildings as part of the Government Buildings Retrofit Project, financed entirely through private sector investments, highlights the strength of public-private collaboration.

A key takeaway from the DSM Programme is the importance of carefully selecting high-impact sectors, like the built environment, and structuring contracts to incentivize private sector participation. The Government Buildings Retrofit Project showcases how governments can create investment opportunities that attract private sector engagement. This model – where the private sector finances energy-efficiency projects, while governments provide regulatory support – can be replicated in other emerging markets and developing economies (EMDEs). Governments must ensure that policies, financial frameworks and incentives are in place to encourage private sector investment in energy-saving initiatives.

The National DSM Programme has achieved significant progress, with initial reductions of 11.2 million tonnes of CO2 by 2023. But challenges remain in fully scaling energy-efficient technologies in sectors like transport where high costs, limited infrastructure and regulatory gaps have slowed adoption. In agriculture, alternative water resource management has been slower to scale due to water scarcity and subsidized costs for underground water. Overcoming these barriers is crucial for the programme's continued success.

Focused on energy efficiency through 2050, the programme aims for significant reductions in electricity and water use, while aligning with the UAE Net Zero Strategy to reach net-zero emissions by 2050. However, to create a more cohesive national strategy, the programme should also play a role in meeting the UAE’s near-term climate targets, including the 31% reduction in greenhouse gas emissions by 2030. By further integrating with these short-term goals and enhancing financial mechanisms to support decarbonization across all sectors, the DSM programme can ensure a unified approach to achieving both immediate and long-term climate objectives.

Bridging these critical gaps would also offer valuable lessons for other countries, especially EMDEs, where similar challenges are prevalent. In many such economies, the transport and agriculture sectors are also significant energy consumers, and the obstacles to implementing energy-efficient technologies are comparable (i.e. high capital costs and lack of infrastructure are common challenges in expanding EV adoption, while inefficient water usage in agriculture remains a global concern). The UAE’s experiences in overcoming these challenges – by promoting public-private partnerships, creating customized financing options, and implementing policy reforms – can serve as a blueprint for other EMDEs.

1. Leveraging technology for efficiency

Technology has been crucial to the DSM Programme’s success. Tools like smart meters and AI-driven energy management systems help optimize energy use (though the widespread use of AI, particularly in data centres, has led to increased energy demand).

2. Collaboration with the private sector

Public-private partnerships have played a major role in the DSM Programme’s success, especially in projects like the Government Buildings Retrofit, which is entirely financed by private sector investments. Future initiatives will benefit from developing customized financing options for energy efficiency projects through partnerships with banks and financial institutions.

3. Behavioural change

The UAE has focused on promoting energy-saving behaviours through educational campaigns targeting families, students and employees, aiming to foster a culture of energy efficiency.

4. Policy and governance

A strong governance framework has been critical to the DSM Programme's success, with clear policies and a robust monitoring system in place to track progress and ensure the UAE meets its long-term energy sustainability goals.

5. Integrated planning for maximum impact

Integrated planning has been crucial in aligning the DSM Programme with the UAE’s Net Zero Strategy, ensuring confidence in meeting near-term targets and 2050 goals. It helps involve the right decision-makers and coordinates efforts across sectors, enhancing the successful delivery of energy efficiency initiatives.

Looking ahead, energy efficiency will remain a central pillar of the UAE's sustainability strategy. The DSM Programme, with its comprehensive approach, serves as a model for other nations aiming to achieve similar goals. The UAE’s commitment to doubling energy efficiency by 2030, as announced during COP28, reinforces its leadership in this field. It underscores the country’s dedication to global climate action and provides inspiration for other countries, showcasing just how well-planned initiatives can contribute to global sustainability efforts.