Transforming energy demand: accelerating action through government leadership
Image: Mike Enerio/Unsplash
- Global warming is projected to reach 2.6°C, far exceeding the Paris Agreement's 1.5°C target.
- The International Business Council (IBC) has focused on action on energy demand, identifying cost-efficient, actionable strategies to achieve a 31% reduction in energy intensity.
- This can be achieved through greater government-private collaboration and strategies geared towards integrating energy demand into national planning, climate finance and action in industry, buildings and transport.
Progress towards the Paris Agreement goal of limiting warming to 1.5 °C is significantly off-track.
Recent estimates suggest our planet is likely to warm by 2.6 °C compared to pre-industrial levels. As the global energy system undergoes rapid transformation, leaders across sectors must collaborate to accelerate an energy transition, creating positive outcomes for people, society and the planet. The private sector can play a leading role in driving this transformation.
In 2023, the International Business Council (IBC) - a group that together represents 3% of global energy use - decided to focus on energy demand. This is an under-addressed area, action on which will allow increased economic output, while reducing greenhouse gas emissions (GHG) and driving up global access to energy.
Have you read?
Our White Paper, published in January 2024, revealed that there are many tangible actions that all businesses can take today to act on energy demand. The potential of this demand-side action is extraordinary, offering a short-term, cost-efficient 31% reduction in demand, shared across all economic sectors.
These gains are achievable today, offering a practical, scalable, and high-impact pathway to get the world on track to meet the targets set by the Paris Agreement. At the same time, it would support the delivery of the pledge by over 120 countries at COP28 to double the global average annual rate of energy efficiency improvement to over 4%.
However, progress is not occurring quickly enough. The annual rate of energy efficiency improvement only reached 1.3% in 2023. At the same time, energy efficiency is at risk of decreasing in prominence on the international stage, with limited coverage during COP29.
Policymakers can act to change this across all nations. Government leadership has the potential to empower the private sector to do far more if it can create an enabling environment for action on energy demand.
To support the creation of such an environment, the IBC has published two documents containing the most promising public sector approaches to drive action on energy demand, based on our consultations across the IBC and partner organizations.
These documents, the statement International Business Council Urgent Actions to Transform Energy Demand and Double Energy Efficiency Progress by 2030, and the policy brief Transforming Energy Demand: Accelerating Business Action through Government Leadership represent a call from the private sector for the public sector to help businesses overcome challenges to action on energy demand.
The key building blocks of this call are:
- Include energy demand in national planning through Nationally Determined Commitments (NDCs) and market-based approaches.
- Mobilize public and private finance.
- Improve energy productivity of industry.
- Enhance energy efficiency in the built environment.
- Support fuel-efficient transport.
In the above video, I speak alongside several IBC CEOs on the importance of these building blocks and how they can be delivered. By focusing on these areas, together, public and private actors can work to decarbonize economies, improve energy security, and enhance global competitiveness.
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