Transforming energy demand

While much of the discussion centers on increasing energy supply, working on energy demand is a crucial under-addressed area. It will allow us to increase economic output, while reducing greenhouse gas emissions (GHG) and driving up global access to energy.

In collaboration with the World Economic Forum’s International Business Council (a group whose members together represent 3% of global energy use), our new research shows that there are many tangible actions that all businesses can take today to act on energy demand. The potential of this demand-side energy action is extraordinary, offering a short-term, cost-efficient 31% reduction of demand without loss of output, shared across all economic sectors. These gains are deliverable now, at attractive returns, needing no new technology. Such concerted action would unlock growth and productivity while getting the world back on track to meet the targets set by the Paris Agreement. At the same time, it would support delivery of the pledge by over 120 countries at COP28 to double the global average annual rate of energy efficiency improvement.

If measures were to be taken by the end of this decade, up to a 31% reduction in energy intensity and US$2 trillion in annual savings (at today’s energy prices) is possible. 

Reducing energy intensity – energy used per unit of gross domestic product (GDP) – would boost growth by enabling previously wasted or over-utilized energy to be redirected to more productive activities. It would also help companies save cash and maintain competitive advantage while reducing emissions. The full report outlines the value of actions on energy demand from the private and public sectors and how to deliver them. Actions are doable today, at attractive returns with existing technology, and so it is believed this establishes a compelling case to act as much on energy demand as supply in the journey to net zero. 

Reducing demand growth while supporting economic output is critical

By 2050, the world’s population will grow by two billion, and GDP is forecast to double. Emerging markets and developing economies need abundant and low-cost energy to enable growth and meet development goals. Simultaneously, the world is targeting supply decarbonization. Acting on demand and supply simultaneously is the best way to achieve these changes.

Acting on energy consumption is doable, affordable and profitable

This research shows that all companies and countries can use existing levers to reduce energy intensity. Across buildings, industry and transport (BIT), International Business Council (IBC) examples illustrate that these actions, where supported by appropriate public policy, can enable the world to reduce its energy needs by approximately a third while freeing further economic output. Affordability is also clear, with interventions potentially fully paid back globally within a decade, driving estimated annual savings in the range of up to US$2 trillion (at current energy prices).

Three levers can deliver this change

• Energy savings - operational improvement interventions funded through operating expenditure (OpEx). Results are typically immediate but often overlooked as they require coordinating many interventions across an organisation and constant energy cost improvement. 

• Energy efficiency - measures under direct company control that require capital expenditure (CapEx). Together, savings and efficiencies offer businesses the lower-hanging fruit and at least half of the improvements in energy intensity that this research has identified. 

• Value chain collaboration - working directly with suppliers and business partners offers companies agency over energy impact, reducing cost and getting ahead of the race to net zero.

Each sector needs a “roadmap” to guide company and government action

Company and national energy transition plans are needed to capture the benefits of managing energy consumption while integrating supply-side actions. Businesses across the energy demand and supply spectrum will need to work together with government to develop these plans and increase awareness of the routes and results available to address barriers to action. 

Developing these plans is the essential next step in raising awareness and getting behind action on energy demand.

Transforming energy demand needs to be as much a focus of global effort as transforming energy supply to accelerate the energy transition and deliver commercial benefit. To realise the promise of such efforts, businesses should:

1. Baseline energy use, ensure direct central accountability and develop a programme to increase efficiency across the three levels: energy saving, energy efficiency and value chain collaboration.
2. Embed this exercise and target setting into a full energy transition plan covering self-help and collaboration with the supply chain.
3. Examine energy costs and the opportunities to drive change.
4. Commit to energy intensity targets (e.g. doubling the rate of energy intensity improvement).
5. Engage with policy-makers to develop detailed policy frameworks and energy transition plans, in particular, to remove current blockers to action (e.g. access to financing).

Want to find out more? 

The PwC Energy Demand Experience, which builds on the findings of this paper, will be showcased at Davos 2024. This interactive digital experience, developed in collaboration with Microsoft, shows participants how their simulated business decisions concerning energy demand in buildings, industry and transportation affect a company’s overall growth, environmental impact and carbon footprint. Find out more here.