Executive summary Rising energy demand poses challenges to a smooth energy transition: Global economic growth, combined with the growth of energy-intensive technologies (such as artificial intelligence and other energy intensive sectors), is expected to cause an increase in global energy demand of up to 33% by 2050.1 This will put additional strain on existing power networks and offset the growth in renewable energy supply, slowing down the decarbonization of the entire system and delaying the energy transition. Improving energy efficiency is critical for countries to achieve economic growth, development goals and climate targets. Under the UAE Consensus at the 28th United Nations Climate Change Conference (COP28) in Dubai in 2023, countries agreed to collectively double the global average annual rate of energy efficiency improvements from around 2% to over 4% every year until 2030. Reaching this goal would increase the energy efficiency of economic growth, which is important for developing and developed countries alike, as this boosts growth by enabling previously wasted or over-utilized energy to be redirected to more productive activities. As countries prepare transition plans, actions on energy demand and efficiency can be a core part and are among the most cost efficient and growth enhancing. This is particularly important following COP29, where there was a significantly reduced focus on demand in both discussions and the agreed outcome text. The goal to double energy efficiency can be met, but only through effective public- and private-sector partnership, alongside government leadership. Businesses are working to incorporate demand- side action into their activities, as evidenced by the practical examples of private sector action.2 However, to reach these goals and unlock investment, policy-makers need to support businesses in acting further and faster in this vital area. A report published by the International Business Council (IBC), whose members represent 3% of global energy demand, shows that $2 trillion of savings can be achieved on an annual basis. What can governments do to accelerate business investment in energy demand? In the menu of policy options for governments to support the doubling of energy efficiency, based on the IBC consultative process, the most promising approaches that can best promote business investment are: –Acting on five key building blocks of public- private collaboration: At the IEA 9th Annual Global Conference on Energy Efficiency in June 2024, business leaders, supported by the IBC, proposed the Nairobi Business Leaders Action Plan3 for public-private collaboration to double energy efficiency by 2030. Further consultation has built on the five points outlined in the action plan, to suggest five key building blocks: 1. Include energy demand in national planning through Nationally Determined Commitments (NDCs) and market-based approaches. 2. Mobilize public and private finance. 3. Improve energy productivity of industry. 4. Enhance energy efficiency in the built environment. 5. Support fuel-efficient transport. –Focusing on standards and incentives: Across the five areas, IBC members have highlighted the primary importance of setting standards – aligned with regional or global approaches – to provide clarity to businesses on what type of investments they need to make. In parallel, providing appropriate incentives will accelerate investments by improving the business case for key interventions. –Supporting emerging markets and developing economics (EMDEs) and small and medium enterprises (SMEs): For EMDEs with fiscal constraints, multilateral development banks (MDBs), development finance institutions (DFIs) and other climate-related funds can play a key role in supporting the implementation of appropriate policies and in providing finance. Governments can also put in place enabling measures for SMEs, which may face higher barriers to financing or technical capacity than larger companies. Over the course of 2025, the IBC will engage with key policy-makers around the world to create better understanding of these enablers of accelerated action. Private-sector companies are invited to replicate these actions based on their contexts in the buildings, industrial and transportation sectors through various initiatives such as the First Movers Coalition, Transitioning Industrial Clusters and Mission Efficiency to advance voluntary action. Transforming Energy Demand: Accelerating Business Action through Government Leadership 4

Transforming Energy Demand 2025