Transforming Energy Demand 2025

Introduction The case for demand-side action This document complements the International Business Council (IBC) “Statement of Urgent Actions to Transform Energy Demand and Double Energy Efficiency Progress by 2030”. It provides more detail on the recommendations for governments that will accelerate investment and actions to transform energy demand and double energy efficiency. The recommendations are based on consultations and surveys with members of the IBC, which is a group of nearly 120 multinational companies that represent about 3% of global energy demand from their direct operations. The findings also build on the “Transforming Energy Demand” white paper,4 which pointed out that future global demand could be reduced by over 30% with no loss of output, using current technology. If achieved by 2030, this could unlock savings of up to $2 trillion annually for the global economy. The energy transition poses a challenge for governments: How to manage the tension between the imperatives of energy security and affordability while delivering sustainability goals as well as economic growth. Currently, businesses, and the world, are lagging behind on decarbonization goals to the extent that the 1.5 degree scenario seems increasingly out of reach. Most of the debate and action is on energy supply, with effort focused on developing a new, low-carbon energy system while phasing out higher-carbon sources of supply. This supply focus has reduced the attention given to energy demand and efficiency, while failing to deliver change fast enough to meet the trajectory required for the energy transition. It also means that the burden has been on the supply side, that is, public and private energy companies, to deliver the energy transition, without enough emphasis on what the wider economy – that is, the consumption side of the equation – can do. Accountability for delivering net-zero goals needs to shift from the supply side to an interconnected network on the supply as well as demand sides, including through action on the existing grid network. While the IBC acknowledges that the energy transition requires equal efforts on energy supply and demand, along with grid infrastructure, this primer will focus on demand-side action. Demand-side action represents a significant opportunity for the global community and individual countries. By promoting increased efficiency and optimization of energy use, for example by directing previously wasted energy to more productive activities, reducing energy intensity can boost economic growth and help meet development goals in all economies. Energy efficiency should be “the first fuel” – it is very often the most cost-effective means to reduce greenhouse gas (GHG) emissions, and to meet energy needs with less impact on nature and local communities compared to the buildout of new energy supply infrastructure. Moreover, it can improve countries’ energy security, reduce their energy import bills and save centralized energy costs for companies and individual consumers. Energy efficiency projects also directly support renewable energy goals by managing load sharing and facilitating on-site renewable energy generation, reducing the required investment in new energy infrastructure. At COP28, over 120 countries recognized this and pledged to double the pace of energy efficiency improvement.5 Governments now need to develop policies to deliver these goals, and to seek ways of unlocking private-sector action to accelerate the changes required. The benefits for governments of acting now are clear. Businesses account for more than half of global final energy consumption. They deliver energy services and supply energy-consuming products to consumers. Businesses thereby represent a key vector for change. All companies can tap into existing affordable technologies to reduce their own energy intensity and that of their products, helping to reduce energy bills, improve resilience and achieve net-zero goals – and, in the process, improve their competitiveness in the marketplace. The 2024 IBC report on transforming energy demand shows that it represents a $2 trillion annual savings opportunity.6 Barriers preventing further investment Transforming Energy Demand: Accelerating Business Action through Government Leadership 5