The Importance of Accelerating Energy Efficiency
Key takeaways from Berlin Energy Transition Dialogue: Energy Efficiency Day
Energy efficiency is crucial for the energy transition: it eases energy security concerns, reduces costs, increases economic competitiveness and the affordability of electricity, and reduces the need for grid investments.
Ahead of the 2025 Berlin Energy Transition Dialogue, the German Ministry for Economic Affairs and Climate Action hosted an Energy Efficiency Day for the first time, where experts from around the world spoke on the tremendous opportunities and current challenges of energy efficiency globally. Looking ahead to the climate conference in Brazil (COP30) at the end of the year, participants discussed the prerequisites and actions needed to double the annual rate of energy efficiency improvements by 2030 as agreed to at COP28 in 2023 in Dubai.
This conversation on energy efficiency came at a moment where we stand at the intersection of continuing our efforts toward a just transition to a net-zero world economy or regressing again to an economy intertwined with high greenhouse gas emissions. The conference showed that following the first path will enable us not only to reach our climate targets but also to integrate energy security, energy affordability, and economic opportunities. It became clear that energy efficiency remains one of our most powerful and successful, yet underutilized, tools to address all of these themes.
Here we summarize key takeaways raised by global experts.
Exhibit 1. At the closing session of the Energy Efficiency Day, we asked session attendees “What is the most important lever to accelerate energy efficiency in 2025?” Their answers are summarized below.
Key Takeaways from the Energy Efficiency Day
1. On-the-ground deployment of energy efficiency measures globally is slowing down, but knowledge of the measures and their benefits is increasing.
At the 2023 COP climate talks in Dubai, nations committed to boost yearly improvements in efficiency from about 2 percent to more than 4 percent every year through 2030. But new data and analysis show the rate of energy efficiency improvements dropped to close to 1 percent in 2024 instead of doubling to 4 percent.
At the same time, there are signs of momentum and progress, with several countries (especially in the Global South) deploying policies and initiatives to increase efficiency improvements. Companies are also working on innovation to reduce consumption of key applications like cooling equipment.
Grid operators around the world are bracing for an increase in electricity demand as building and vehicle electrification grows; consumption from data centers, AI, and cryptocurrency sectors is set to double by 2026; and energy use of air conditioners and cooling is set to more than triple by 2050 — consuming as much electricity as all of China and India together today.
To avoid costly grid expansion and upgrades, utilities need to double down on doing more with less; energy efficiency will help provide essential services to more people and ensure minimal energy is wasted. Many energy efficiency solutions — such as new efficient motors, drives, and heat pumps — have incredibly fast pay-back periods.
2. Although energy efficiency measures increase energy affordability and guarantee returns on investment, a reliable policy framework is key.
Buildings already consume 32 percent of the world’s energy and are a prime candidate for retrofits, including more efficient design and shifts to more efficient technologies. The technologies and measures are available and cost-effective, but financing these retrofits is often a barrier to progress as efficiency measures do not qualify as a capital expense.
From the 2024 Buildings Global Status Report, we learned that the buildings sector urgently needs to double annual energy efficiency investments and close a $1.1 trillion funding gap to meet global climate targets. In addition, building owners are often hesitant to invest in energy efficiency when the policy environment is stop-and-go since the sector views investments with a mid- and long-term perspective. Thus, a stable and reliable policy framework is key to unlocking finance for efficiency measures.
In Industry, energy efficiency networks — which involve connecting businesses to jointly work on efficiency challenges — are increasing in popularity, enabling innovations such as leveraging excess heat from one building to another close by. These networks are not just to exchange best practices and knowledge but an implementation tool, where companies jointly improve energy efficiency by implementing concrete measures on the ground, thus reducing costs for companies and consumers, and overall improving energy affordability and economic competitiveness.
3. Energy efficiency, electrification, renewable energy, and resource efficiency are symbiotic, and best deployed as integrated solutions.
Clean energy measures often focus on the supply side (scaling renewable power generation) or the demand side (energy efficiency measures) — but these are best deployed and perceived as an integrated strategy. For example, renewable energy and electrification together provide energy services far more efficiently than fossil-fuel counterparts. Including end-use efficiency measures — focusing on efficient provision of energy services — can reduce energy and resource use, often at a fraction of the costs, while improving the amount and quality of services provided.
For example, by deploying energy efficient technologies in the design of buildings, the amount of solar panels and battery storage required to provide electricity can be radically reduced, reducing costs, materials, space, and infrastructure. As one session attendee noted, “It is impossible for the world to reach net zero without more energy efficiency.”
4. Participants highlighted three opportunities to accelerate progress on energy efficiency: 1) broaden the energy efficiency message, 2) improve collaboration and invest in networks, and 3) create strong stable policy frameworks.
- Amplifying an integrated message including energy efficiency, electrification, renewables, and resource efficiency: There is a fragmented landscape of organizations around the world across the public sector, businesses, and civil society — all collecting case studies, deployment techniques, and business cases. Working together, these organizations can not only share data but can also develop a holistic message globally that combines energy efficiency with renewable energy, electrification, and resource efficiency, as a pragmatic roadmap to net zero and a winning combination for more energy security.
- Unlocking the power of collaboration and knowledge-sharing: Energy efficiency networks are one of the most successful voluntary business initiatives to support energy efficiency improvements in all sectors of the economy. They can help companies lower energy consumption and costs, reduce carbon emissions, meet standards, and improve their competitiveness. Businesses and governments should continue leveraging these opportunities for peer learning and collaboration.
- Developing strategic plans and stable policy frameworks: Policymakers can support energy efficiency measures through stable policy frameworks and transparent strategic planning that can derisk projects and build confidence in investors and consumers. Building new large loads, like data centers, near renewable energy sources was also identified as an effective measure to reduce grid constraints.
Get involved — learn how you can do more with less energy
Find out more about how your company or community can increase energy efficiency at the following energy efficiency initiatives:
Amplify the energy efficiency message at one of the following events
- 10th Annual Global Conference on Energy Efficiency – Event – IEA
- Summit on the Future of Energy Security – Event – IEA
- UNFCCC Subsidiary Bodies
- NDC Conference
- New York Climate Week
- COP30