Global Energy Efficiency Accelerating, But Well Below COP28 Goals

Global improvement in energy efficiency is accelerating — but still far from the pace needed to meet 2030 targets.

According to a new report by the International Energy Agency (IEA), global primary energy intensity — the amount of energy required per unit of economic output — is expected to improve by roughly 1.8 per cent in 2025, up from about 1 per cent in 2024. The jump suggests policymakers and industry are beginning to make headway. Still, the IEA warns that this rate remains well below the roughly 4 per cent annual improvement required to double energy-efficiency progress by 2030, a goal set at COP28.

The report notes that although more than 250 new policy measures were introduced in 2025 alone, sluggish progress in sectors such as industry and buildings threatens to drag down the overall outcome. The industrial sector’s energy-intensity improvement rate has reportedly fallen to under 0.5 per cent per year, compared with nearly 2 per cent in the previous decade.

Meanwhile, the International Renewable Energy Agency (IRENA) highlights a parallel challenge: despite setting new records for renewable-energy capacity additions in 2024 — 582 GW globally — the world remains off-track to hit the target of tripling renewable capacity to 11.2 TW by 2030. Equally concerning, efficiency gains remain modest: global energy intensity improved by just 1 per cent in 2024, far behind the 4 per cent-year-on-year improvement required.

Why improvement matters

Energy efficiency is a vital lever: it lowers consumption, reduces emissions, and improves energy affordability. If economies can use less energy to generate the same output, the benefits ripple across security, competitiveness and climate goals. The IEA underscores that “the power to enhance people’s lives and livelihoods through greater energy security, more affordable bills, improved economic competitiveness and lower emissions” lies in boosting efficiency.

In practice, though, rising energy demand is working against efficiency gains. IEA data show that global energy demand grew by 2.2 per cent in 2024 — faster than both the longer-term average (~1.3 per cent) and the rate of efficiency improvement. As a result, the system still becomes more energy-intensive overall.

Where progress is uneven

Some policy progress is visible. The IEA tracked over 250 new policy actions in 2025 aimed at boosting efficiency. Efficiency in emerging economies such as China and India also shows modest upticks as they invest in efficiency standards and technologies.

But headwinds remain:

• In the industrial sector — responsible for roughly two-thirds of global final energy-demand growth since 2019 — energy-intensity improvements have fallen sharply.

• Buildings and cooling represent major gaps. Many new air-conditioning units sold globally are far less efficient than best-available models, undermining broader gains. The IEA notes that many countries — especially in fast-growing regions — still lack binding efficiency standards for new buildings.

• The IRENA report also highlights that investment, grid infrastructure and supply-chain constraints are limiting how quickly renewables and efficiency measures can scale.

The implications for policy and business

For policymakers, the message is clear: the current pace, while improving, remains insufficient. Achieving the doubling of global energy-efficiency improvement by 2030 will require a material increase in ambition, enhanced enforcement, and faster diffusion of best-available technologies. The IEA’s “Energy Efficiency Policy Toolkit 2025” provides a menu of measures for industry, buildings and transport that countries can adopt.

For industry and business, especially in energy-intensive sectors, the opportunity is still large. With many systems still operating at less than half of today’s best-available efficiencies, retrofits, new high-efficiency equipment and smarter operations remain low-hanging fruit. But success will depend on regulation, capital deployment and the ability to implement change at scale.

The broader energy-transition backdrop

Efficiency gains must be made alongside the rapid deployment of renewables and rising electricity demand. The IRENA report emphasises that even as renewables grew by a record 582 GW in 2024, the world must now add more than 1,122 GW per year through the remainder of the decade to meet the tripling target. That puts enormous pressure on investment and supply chains.

At the same time, the IEA’s recent “Global Energy Review 2025” shows that growth in electricity demand — driven by cooling, digitalisation and electrification — outpaced overall energy demand growth. Unless efficiency improvements accelerate, energy use will continue to rise even with increased renewables entering the system.

What comes next

The next five years will likely determine whether the world stays on track for its dual targets: doubling energy-efficiency improvement rates and tripling renewable-energy capacity by 2030. Achieving those will require:

• Sharper regulation and standards: mandating minimum performance levels for equipment, buildings, and industrial processes.

• Scaling investment: The IRENA-led report states that to stay on track, annual investment in renewables must reach at least USD 1.4 trillion per year through 2025-30 — more than double the USD 624 billion invested in 2024.

• Faster technology deployment: Speeding up adoption of high-efficiency equipment, industrial optimisation, grid flexibility and smart controls.

• Targeting hard-to-abate sectors and regions: Industry, buildings in emerging economies, and regions with very low efficiency baselines will demand particular attention.

• Bridging infrastructure and supply-chain gaps: Many of the bottlenecks highlighted by IRENA relate to grids, storage and component manufacturing.

Bottom line

The global trajectory of energy efficiency is improving — but not fast enough. At roughly 1.8 per cent improvement in 2025, the world remains well short of the pace required to hit the 4 per cent-plus annual gains needed to meet 2030 targets. In tandem with renewable-capacity scaling and rising demand, efficiency will remain one of the most important yet most challenging pieces of the energy-transition puzzle.