Global Energy & CO Status Report - iea.org · Global energy and CO 2 status report - 2017...

Global Energy & CO2 Status Report

2017

March 2018

©OECD/IEA 2018

GlobalenergyandCO2statusreport-2017

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Keyfindings

• Energy:Globalenergydemandincreasedby2.1%in2017,comparedwith0.9%thepreviousyearand 0.9%onaverageover theprevious fiveyears.More than40%of thegrowth in2017wasdrivenby ChinaandIndia;72%oftherisewasmetbyfossilfuels,aquarterbyrenewablesandtheremainderby nuclear.

• Carbondioxide(CO2):Globalenergy-relatedCO2emissionsgrewby1.4%in2017,reachingahistoric highof32.5gigatonnes(Gt),aresumptionofgrowthafterthreeyearsofglobalemissionsremaining flat.The increase inCO2emissions,however,wasnotuniversal.Whilemostmajoreconomiessawa rise, some others experienced declines, including the United States, United Kingdom, Mexico and Japan.ThebiggestdeclinedropcamefromtheUnitedStates,mainlybecauseofhigherdeploymentof renewables.

• Oil:Worldoildemandroseby1.6%(or1.5millionbarrelsaday)in2017,aratethatwasmuch higherthan theannualaverage of 1%seenoverthe lastdecade.An increasingshareofsport-utility

vehiclesand lighttrucksinmajoreconomiesanddemandfromthepetrochemicalssectorbolstered

thisgrowth.

• Naturalgas:Globalnaturalgasdemandgrewby3%,thanks in largeparttoabundantandrelatively low-costsupplies.Chinaaloneaccountedforalmost30%ofglobalgrowth.Inthepastdecade,halfof globalgasdemandgrowthcamefromthepowersector;lastyear,however,over80%oftherisecame fromindustryandbuildings.

• Coal:Globalcoaldemandroseabout1%in2017,reversingthedecliningtrendseenoverthelasttwo years.Thisgrowthwasmainlyduetodemand inAsia,almostentirelydrivenbyan increase incoal-

firedelectricitygeneration.

• Renewables: Renewables saw the highest growth rate of any energy source in 2017, meeting a quarterofglobalenergydemandgrowthlastyear.ChinaandtheUnitedStatesledthisunprecedented growth,contributingaround50%oftheincreaseinrenewables-basedelectricitygeneration,followed bytheEuropeanUnion,IndiaandJapan.Windpoweraccountedfor36%ofthegrowthinrenewables-

basedpoweroutput.

• Electricity:Worldelectricitydemandincreasedby3.1%,significantlyhigherthantheoverallincrease inenergydemand.Together,ChinaandIndiaaccountedfor70%ofthisgrowth.Outputfromnuclear plantsroseby26terawatthours(TWh)in2017,asasignificantamountofnewnuclearcapacitysaw itsfirstfullyearofoperation.

• Energy efficiency: Improvements in global energy efficiency slowed down dramatically in 2017, becauseofweakerimprovementinefficiencypolicycoverageandstringencyaswellaslowerenergy prices.Globalenergyintensityimprovedbyonly1.7%in2017,comparedwithanaverageof2.3%over thelastthreeyears.


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Overview:Globalenergydemand2017

Global energy demand grew by 2.1% in 2017, according to IEA preliminary estimates,more than twice the

growth rate in 2016. Global energy demand in 2017 reached an estimated 14 050 million tonnes of oil

equivalent(Mtoe),comparedwith10035Mtoein2000.

Fossil-fuelsmet 70%of the growth in energydemandaround theworld.Natural gas demand increased the

most, reaching a record share of 22% in total energy demand. Renewables also grew strongly, making up

around a quarter of global energy demand growth,while nuclear use accounted for 2%of the growth. The

overallshareoffossilfuelsinglobalenergydemandin2017remainedat81%,alevelthathasremainedstable

formorethanthreedecadesdespitestronggrowthinrenewables.

Improvementsinglobalenergyefficiencysloweddown.Therateofdeclineinglobalenergyintensity,defined

astheenergyconsumedperunitofeconomicoutput,slowedtoonly1.7%1in2017,muchlowerthanthe2.0%

improvementseenin2016.

The growth in global energy demandwas concentrated in Asia,with China and India together representing

more than 40% of the increase. Energy demand in all advanced economies contributedmore than 20% of

globalenergydemandgrowth,althoughtheirshareintotalenergyusecontinuedtofall.Notablegrowthwas

alsoregistered inSoutheastAsia (whichaccountedfor8%ofglobalenergydemandgrowth)andAfrica (6%),

althoughpercapitaenergyuseintheseregionsstillremainswellbelowtheglobalaverage.

Averageannualgrowthinenergydemandbyfuel

1Corrected23March2018from1.6%to1.7%

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2006-2015 2016 2017

Mtoe Renewables

Nuclear

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Oil

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Netgrowthrate(rightaxis)


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CO2emissions

Globalenergy-relatedCO2emissionsroseby1.4%in2017,anincreaseof460milliontonnes(Mt),andreached

ahistorichighof32.5Gt.Lastyear’sgrowthcameafter threeyearsof flatemissionsandcontrastswith the

sharpreductionneededtomeetthegoalsoftheParisAgreementonclimatechange.

Theincreaseincarbonemissions,equivalenttotheemissionsof170millionadditionalcars,wastheresultof

robust global economic growth of 3.7%, lower fossil-fuel prices andweaker energy efficiency efforts. These

threefactorscontributedtopushingupglobalenergydemandby2.1%in2017.

Thetrendofgrowingemissions,however,wasnotuniversal.Whilemostmajoreconomiessawariseincarbon

emissions, some others experienced declines, such as the United States, the United Kingdom, Mexico and

Japan.

ThebiggestdeclinecamefromtheUnitedStates,whereemissionsdroppedby0.5%,or25Mt,to4810Mtof

CO2,markingthethirdconsecutiveyearofdecline.Whilecoal-to-gasswitchingplayedamajorroleinreducing

emissionsinpreviousyears,lastyearthedropwastheresultofhigherrenewables-basedelectricitygeneration

andadeclineinelectricitydemand.Theshareofrenewablesinelectricitygenerationreachedarecordlevelof

17%,whiletheshareofnuclearpowerheldsteadyat20%.

Globalenergy-relatedCO2emissions,2000-2017

IntheUnitedKingdom,emissionsdroppedby3.8%,or15Mt,to350MtofCO2,their lowest levelonrecord

backto1960.Acontinuedshiftawayfromcoaltowardsgasandrenewablesledtoa19%dropincoaldemand.

InMexico, emissions dropped by 4%, driven by a decline in oil and coal use, efficiency gains in the power

system, strong growth in renewables-basedelectricity generation anda slight increase inoverall gasuse. In

Japan, emissions fell by 0.5% as increased electricity generation from renewables and nuclear generation

displacedgenerationfromfossil-fuels,especiallyoil.

Overall,Asianeconomiesaccountedfortwo-thirdsoftheglobalincreaseincarbonemissions.China’seconomy

grewnearly 7% last year but emissions increased by just 1.7% (or 150Mt) thanks to continued renewables

deploymentandfastercoal-to-gasswitching.China’sCO2emissionsin2017reached9.1Gt,almost1%higher

thantheir2014level.WhileChina’scoaldemandpeakedin2013,energy-relatedemissionshavenonetheless

increasedbecauseofrisingoilandgasdemand.

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GtCO 2

CO2 emissionsIncrease2016-17


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GlobalGDP,energydemandandenergy-relatedcarbondioxideemissions,2000-2017

InIndia,economicgrowthbolsteredrisingenergydemandandcontinuedtodriveupemissions,butathalfthe

rateseenduringthepastdecade.India’sper-capitaemissionslastyearwere1.7tCO2,wellbelowtheglobalper

capitaaverageof4.3tCO2.EmissionsintheEuropeanUniongrewby1.5%,addingalmost50MtCO2,reversing

someoftheprogressmadeinrecentyearsmainlyduetorobustgrowthinoilandgasuse.Therateofenergy

intensity improvement slowed to0.5%,down from1.3% theprevious year. SoutheastAsianeconomies also

contributed to the rise in emissions,with Indonesia leading the growthwith an increaseof 4.5% relative to

2016.

Thegrowthinenergy-relatedcarbondioxideemissionsin2017isastrongwarningforglobaleffortstocombat

climate change, and demonstrates that current efforts are insufficient to meet the objectives of the Paris

Agreement.

Changeinenergy-relatedcarbondioxideemissionsbyselectedregion,2017

The IEA’sSustainableDevelopmentScenario charts apath towardsmeeting long-termclimategoals.Under

thisscenario,globalemissionsneedtopeaksoonanddeclinesteeplyto2020;thisdeclinewillnowneedtobe

evengreatergiventheincreaseinemissionsin2017.Theshareoflow-carbonenergysourcesmustincreaseby

1.1 percentagepoints every year,more than five-times the growth registered in 2017. In thepower sector,

specifically, generation from renewable sources must increase by an average 700 TWh annually in that

scenario,an80%increasecomparedtothe380TWhincreaseregisteredin2017.CarbonCapture,Usageand

Storage(CCUS)playsanimportantroleforreducingemissionsintheindustryandpowersectors.


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Oil

Globaloildemandroseby1.5millionbarrelsaday(mb/d)in2017,continuingatrendofstronggrowthsince

prices fell in2014.Therateofgrowthof1.6%wasmuch higher than theaverageannualgrowthrate of 1%

seenoverthepastdecade.

Oneofthemaindriversofgrowthwasthetransportsector.Vehicleownershiplevelsincreasedin2017,asdid

the shareof SportUtilityVehicles (SUVs)andother largevehicles. Thiswasparticularly visible in theUnited

States,wheretheshareofSUVsand lighttrucks increasedfrom47%in2011toaround60%oftotalsales in

2017,bringinguptheshareofthesevehiclesinthetotalpassengercarfleettoalmosthalf.Itisalsoafactorin

theEuropeanUnion,whereoildemandincreasedby2%,thehighestrateofgrowthsince2001.

Averageannualgrowthinoildemand

The trend towards larger vehicles has also slowed the pace of decline in average vehicle fuel use, partly

offsettingenergyefficiencypolicyefforts.Electriccarsaremakingrapidinroadsinmanymarkets,particularlyin

China,whichisleadingglobalsales.Fornow,however,thestronggrowthinelectric-carsalesremainstoosmall

tomakeadentinoildemandgrowth.(AnupdatedanalysiswillbeincludedintheIEA’snextGlobalEVOutlook,

tobereleasedinMay).

Another reasonbehind robustdemandgrowth isoilusedasapetrochemicals feedstock.Petrochemicalsare

thefastest-growingsourceofoildemand,notablyintheUnitedStates,wheretheshalerevolutionhascreated

verycost-competitivedomesticsupplies,aswellasinChinaandinotheremergingeconomies,wheredemand

forplasticsandotherpetrochemicalproductsisgrowingrapidly.Itshouldbenoted,however,thattheoiluse

in the petrochemicals sector only has a very small impact on emissions trends as most of the oil is not

combustedbuttransformedintootherproducts,suchasplastics.

Around60%ofthegrowthinoildemandcamefromAsia.AlthoughChinaistheleadingglobalmarketforthe

salesofelectriccars, itwasalsothetopcontributortooildemandgrowth,followedbyIndia.Meanwhile,oil

demand in theMiddle East, a recent source of demand growth, was flat due to oil-to-gas switching in the

powersectorandeffortstoreformoilproductpricesandphaseoutsubsidies.

Whileaslowdowninoildemandgrowthmaybelikelyincomingyears,therearenosignsofapeakindemand

anytimesoon.AsnotedintheIEA’srecentWorldEnergyOutlookandOil2018reports,itistoosoontowrite

theobituaryforoil.

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Naturalgas

Naturalgasdemandgrewby3% in2017thankstoabundantandrelatively low-costsupplies,aswellas fuel

switchinginkeyeconomies,significantlyabovetheaveragegrowthof1.5%ofthelastfiveyears.Chinaalone

accounted fornearly30%of global growth–withmore than30bcmoutof a totalofnearly 120bcm.This

signals a structural shift in the Chinese economy away from energy-intensive industrial sectors aswell as a

movetowardscleanerenergysources,withbothtrendsbenefitingnaturalgas.

Aspartoftheofficialpolicydriveto“makeChina’sskiesblueagain,”therehasbeenastrongpushtophaseout

thepracticeofburningcoalinindustrialboilers(especiallythoseinandaroundmajorcities)aswellasreduce

coaluseforresidentialheating.China’ssurginggasdemandmeansthatitabsorbedmuchoftheslackinLNG

markets,pushingupinternationalspotpricesforgasinthelatterpartoftheyear.

Averageannualgrowthinglobalgasdemand

The EuropeanUnion also saw strong growth in gas demand,with consumption up around 16 bcm in 2017,

albeit less than in 2016. Some of this increase was weather-related, for instance due to a poor year for

hydropower.Demandfromindustryalsoreportedlypickeduponthebackofstrongereconomicactivity.Gas

consumptionintheEuropeanUnionisstillmorethan10%belowthepeakseenin2010.Gasimportswerenear

historicalhighsasdomesticproductiontaperedoff,forexampleintheNetherlands.

IntheUnitedStates,gas-firedgenerationin2017fellby8%,or110TWh,offsettinghalfoftheincreaseingas

demandforelectricitygenerationelsewhere.ThecaseoftheUnitedStateslastyearhighlightstheimportance

ofrelativepricesindeterminingemissionsintensitytrendsinthepowersector:aslightriseinthenaturalgas

pricein2017sawgas-firedgenerationsqueezedbybothrenewablesandcoal.

Thecompositionofgasdemandgrowthischanging.Inthepastdecade,halfofglobalgasdemandgrowthcame

fromthepowersector.In2017,over80%ofthegrowthcameinsteadfromindustryandbuildings.Thepower

sectorremainsthelargestsinglecomponentofglobaldemand,butthisshareislikelytodeclinegradually.

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buildings,transport,oilandgasownuse

Powergeneration48%

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Coal

Globalcoaldemandrose in2017by1%to3790Mtoeaftertwoyearsofdecline, themainchange inglobal

energydemandtrendslastyear.

Coaldemanddecreasedby2.3% in2015and2.1% in2016, ledby lowerdemand in thepowersector inkey

marketssuchasChinaandtheUnitedStates.Thereboundincoaldemandin2017wasdrivenentirelybyan

increaseincoal-firedelectricitygeneration,whichdroveupcoaldemandforpowerbynearly3.5%compared

tothepreviousyear,whiledecliningglobalcoaluseinindustryandbuildingsoffsethalfofthegrowthincoal

useinelectricitygeneration.

Averageannualgrowthinglobalcoaldemand

Asia accounted for the largest increase in coal demand, up 35 Mtoe relative to 2016. China coal-fired

electricity generation increased tomeeta6%growth inelectricitydemand,evenas theeconomy ismoving

towardsalessenergy-intensivemodel,asdiscussedintheWorldEnergyOutlook2017.

Around15%ofthe increase inChina’selectricitydemandwasduetohigherdemandforcooling,drivenbya

particularlyhotsummer.(ThistopicwillbethefocusofaforthcomingIEAreportonhowtheprojectedgrowth

inairconditioningusagearoundtheworldwillaffectglobalelectricitydemand).Despitecontinuedreductions

ofcoaluseinbuildingsandindustry,thegrowthinthepowersectorpushedupcoaldemandinChinaby0.3%,

afterthreeyearsofdecliningdemand.Despitethisrebound,coaluseinChinaremainsbelowits2013peak.

In India,coaldemandroseataslowerratethan in2016,while inothereconomies inAsia–suchasKorea–

coalusageincreasedinthepowersector.Demandfellby1.6%intheUnitedStates,and0.5%intheEuropean

Union,afterdroppingbyaround10%in2016,ascoaldemandforelectricitygenerationstabilised.Thedecline

wasinsufficienttooffsetgrowthinotherregions.Despitelastyear’suptick,globalcoaldemandremainswell

belowitspeakof3927Mtoein2014.

The compatibility of coal use with stringent climate goals hinges critically on the development of Carbon

Capture,UsageandStorage(CCUS),asshownintheIEA’sSustainableDevelopmentScenario.Someprojects

arealreadyunderway.TheBoundaryDampowerstationinSaskatchewan,Canada,startedoperationsin2014.

In addition, the Petra Nova Carbon Capture project in Houston, Texas was commissioned in 2017. CCUS

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deploymentstartedinChinawiththeconstructionoftheYanchangCCUSProject.Chinaaccountsforabouthalf

ofallCCUSprojectsunderseriousconsiderationorplanning, includingfourprojectswhichwillapplyCCUSto

coal-firedpowergeneration.

Inaddition,intheUnitedStates,the2018BudgetBillandtheextensionandexpansionofthe“45Q”taxcredits

is expected toprovidea significantboost forCCUS investment. This could lead to capital investmenton the

orderofUSD1billionoverthenextsixyears,potentiallyadding10to30milliontonnesormoreofadditional

CO2capture capacity. This would increase total global carbon capture capacity by around two-thirds from

today’slevels.


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Renewables

Renewablessawthehighestrateofgrowthofanyenergysourcein2017andmetaroundaquarterofglobal

energydemandgrowthlastyear.Thepowersectorplayedthemostimportantroleinthegrowthoflow-carbon

energy,withrenewables-basedelectricitygenerationincreasingby6.3%(380TWh)in2017.Renewablesnow

accountfor25%ofglobalelectricitygeneration.

China and the United States together accounted for half of the increase in renewables-based electricity

generation, followedby theEuropeanUnion (8%), Japanand India (with6%ofgrowtheach).Thegrowthof

windpowerandsolarPVin2017wasunprecedented;windpoweraccountedforthe largestshareofoverall

renewablesgrowth,at36%,followedbysolarPV(27%),hydropower(22%)andbioenergy(12%).

Chinaaccountedfor40%ofthecombinedgrowthinwindandsolarPV,withnewrecordcapacityadditionsand

a reduction in the rate of curtailment.Nearly 40%of the increase in hydropowerwas in theUnited States,

while climatic conditions in the European Union reduced hydro output by nearly one-tenth. The European

Union,ChinaandJapanaccountedfor82%ofglobalbioenergygrowthinpower.

Averageannualglobalgrowthinrenewables-basedgenerationbytechnology,historicallyandintheSustainableDevelopmentScenario

Note:SDS=SustainableDevelopmentScenario.

China overtook the United States to become the world leader for non-hydro renewables-based electricity

generation.GlobalsolarPVcapacityapproached400GWbytheendof2017.Itwasanextraordinaryyearfor

solarPVadditions inChina,withover50GWofnewcapacity,exceeding thecombinedcapacityadditionsof

coal,gasandnuclear,andupfrom35GWin2016.ThenewsolarPVcapacityaddedinChinain2017aloneis

equivalenttothetotalsolarPVcapacityofFranceandGermanycombined.

IntheUnitedStates,10GWofsolarPVwasaddedin2017,down30%relativeto2016,butstill thesecond-

highestyearonrecord.InIndia,arecord8GWofsolarPVcapacitywasaddedin2017,doubletheadditions

seenin2016.IntheEuropeanUnionwindsawarecordyearwith15.6GWofcapacityadditions,ofwhich3.1

GWwasoffshore,alsoarecord.Withcontinuedgrowthinonshorewindpower,globalwindcapacity(onshore

andoffshore)reachedabout510GW.

0% 25% 50% 75% 100% 125% 150% 175%

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SolarPV Wind Hydro Other Shareofnetgrowth(topaxis)


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Outsideof thepower sector, only amodest increaseof biofuels outputof 2% (50 thousandbarrels perday

[kb/d]) was observed in 2017, slightly lower than the previous year’s growth, reflecting a longer-term

downward trend innewproduction capacity investment. Increasedethanol output in theUnited States and

Europe was partially offset by lower production in Brazil, while biodiesel output remained broadly stable.

Renewableheathasbeengrowingmodestlyoverthelastyears.

InDecember2017,China,theworld’slargestheatconsumer,announcedafive-yearcleanheatingplanfocused

on northern cities. This policy change could significantly cut the use of coal for heating and replace itwith

cleanersourcesincludingrenewables(biomass,geothermalandsolarheat).Althoughrenewablesgrewrapidly

in 2017, the pace of deployment falls short of that needed to meet the global climate goals in the IEA’s

Sustainable Development Scenario. Carbon emissions intensity in 2017 improved by less than one-third of

whatwouldbeneededtofulfiltheglobaltransitiontowardsclimategoals.


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Electricity

Electricitygenerationincreasedby3.1%,or780TWh,worldwidein2017aselectricitydemandrosefasterthan

overallglobalenergydemandgrowth.

Electricitydemandgrowthinemergingeconomiesremainsstronglylinkedtorisingeconomicoutput.InChina,

robusteconomicgrowthofnearly7%andawarmsummerdroveelectricitydemandupby6%(or360TWh).In

India,demandgrowthofover12%(or180TWh)outpacedthe7%growthineconomicactivity.Together,China

and Indiaaccountedfor70%ofglobalelectricitydemandgrowthworldwide,withanother10%comingfrom

otheremergingeconomiesinAsia.Indiahasmadesignificantstridesinimprovingaccesstoelectricity,withhalf

a billion people having gained electricity since 2000 and a near-doubling of the access rate, to 82% of the

populationnow,upfrom43%in2000.

Advancedeconomiesaccountedfor10%ofelectricitydemandgrowth,withaveragedemandrisingbylessthan

1%. In the United States, electricity demand fell by almost 80 TWh compared with 2016. In the European

Union, electricity demand growth of 2.3% (or 75 TWh) matched the estimated 2.3% growth in economic

output.ElectricitydemandinJapanalsoincreasedbyaround15TWh.

Renewables accounted for nearly half of the global additional generation (at 380 TWh) required to meet

increasing demand, bringing their share in global generation to a record high of 25%. Generation from

renewables was second only to coal in 2017, and ahead of gas for the third year in a row. Despite strong

increasesinwindandsolarPVgeneration,hydropowerremainsthelargestsourcebyfarofrenewables-based

electricitygeneration,withamajorshareof65%inoverallrenewablesoutput.Astrongyearforhydropowerin

theUnitedStatesandCanadamorethanoffsetadropinhydropowergenerationintheEuropeanUnion.

Among other low-carbon technologies, nuclear generation increased by 26 TWh in 2017, as a significant

amountofthenewnuclearcapacitycommissionedin2016sawitsfirstfullyearofoperationlastyear.Nuclear

generation accounts for 10% of global power generation and grew by 3%, relative to 2016, with Japan

contributing to 40% of this growth. Nonetheless nuclear capacity additions globally only just exceeded

retirementsin2017.

Coalgenerationincreasedby3%(280TWh)in2017ataglobalscale,accountingforathirdofthetotalgrowth

andmorethancancellinga250TWhdeclineseenin2016.Thegrowthofcoal-firedgenerationwasmostlyin

Asia, with an increase of 365 TWh. Although China and India dominated the increase, Korea, Japan and

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Changeinelectricity generationbysource2016-2017

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Indonesia also contributed significantly. Growth in Asia was only partially offset by declining coal use for

electricitygenerationintheUnitedStates,theEuropeanUnion,Russia,BrazilandSouthAfrica.

Gas-firedgeneration increasedby1.6%(95TWh)accountingforalmost15%ofthetotalgrowth.Thisresults

fromadeclineof7.6%(110TWh) intheUnitedStatesandagrowthof4.6%(or205TWh) intherestofthe

world,withthemostimportantcontributionscomingfromtheEuropeanUnion,ChinaandSoutheastAsia.

2018istheyearofelectricityattheIEA,inrecognitionoftherapidgrowthofelectricitydemandandtheglobal

transformation of electricity systems. For the first time, electricitywill be the focus fuel of the forthcoming

WorldEnergyOutlook,sheddinglightonthekeyuncertaintiesoftheongoingtransition–includingtheimpact

of digitalization and the integration of renewables – and analysing the implications for energy security,

investmentandenvironmentalconcerns.


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Energyefficiency

Improvements inglobalenergyefficiency sloweddowndramatically in2017,broadly causedbyanapparent

weakeningofefficiencypolicycoverageandstringency,andbylowerenergyprices.

Globalenergyintensity,definedastheenergyconsumedperunitofeconomicoutput,hasbeendecreasingfor

two decades. But the rate of decrease slowed in 2017.Globally, energy intensity in 2017 fell by only 1.7%,

muchlessthanthe2.3%registeredonaverageoverthelastthreeyears,andhalfofwhatisrequiredtoremain

ontrackwiththeParisAgreement.

Energyintensityisoneofthetwodriversofcarbonemissions,theotherbeingcarbonintensity(definedasCO2

emittedperunitofenergyconsumed).Whileglobalcarbon intensitydeclined less in2017 than in2016, the

rateremainssimilartotheaveragerateofimprovementin2014-16–partlydrivenbytheincreasingexpansion

ofrenewables.However,theslowerimprovementintheenergyintensityofenergydemandin2017wasnot

sufficienttocounteracttheeffectofhighereconomicgrowth,leadingtotheincreaseinglobalenergyrelated

carbonemissions in2017.Understandingthereasons for thisslowdown inenergy intensity improvements is

thereforecrucialforunderstandingthefuturedirectionofglobalcarbonemissions.

Averageannualchangeinglobalenergyintensity

Note:Energyintensityisperunitofeconomicoutputinpurchasingpowerparityterms.

SDS=SustainableDevelopmentScenario.

Coverageofpoliciestargetingenergyefficiencyhasbeensteadilyincreasinginrecentyears,and31.5%offinal

energyconsumptionwassubjecttomandatoryenergypolicyin2016,upfromonly14%in2000.However,the

rateofincreaseofcoverageslowedin2016andearlyindicationsarethatitslowedagainin2017.Further,the

increasedcoveragein2017appearstohavecomemostlyfromextensionstoexistingpolicies,ratherthannew

policiesinpreviouslyuncoveredsectorsandcountries.

Anotherimportantelementisthestringencyofthesepolicies.Theincreaseinpolicystringencyalsoslowedin

2016with an increase of just 0.3%. Governments need to redouble efforts to take a strategic approach to

energy efficiency, anchoring it as the basis of long-term energy transition plans and pursuing a balanced

approachofregulations,standardsandmarket-basedpolicies.

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2014 2015 2016 2017 SDS2017-40


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Changeinglobalenergy-relatedCO2emissionsbydriver

Note:Calculationsarebasedoneconomicoutputinpurchasingpowerparityterms.

The slowing in energy intensity improvement is also a symptom of the sustained low fossil-fuel price

environmentofrecentyears.Forexample,lowfuelpriceshavebeenpotentiallysupportedashiftinconsumer

preferences towards larger vehicles such as Sport Utility Vehicles (SUVs). However, as global fossil-fuel

consumption subsidies remain high, reaching $260 billion in 2016, the low price environment can be an

opportunity for governments to reform their subsidy policies, effectively counteracting price drops and

bolstering intensity improvements. There are some indications of those reforms having rapid impacts. For

example,followingenergysubsidyreformsinseveralMiddleEasterncountriesinrecentyears,demandforoil

intheMiddleEastdidnotincreasein2017.

Thisanalysisusesthelatestmonthlyandannualdataavailablefromnationalstatisticaloffices,energyministriesandinternational

organisationstobuildfullenergybalancesbyregion.Wherecomplete2017dataisunavailable,thisreportusesmarketdataandanalysis

byfuelandsector.Forquestionandcomments,[email protected].

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