Impact of economic growth on performance of energy industry
Answers
For emerging economies that are growing rapidly, new construction and infrastructure offer a significant opening for energy efficiency efforts. By contrast, locations with low growth rates and a well-established built environment present fewer opportunities to add efficiency; changes are not impossible, but they can be expensive.
If efficiencies can be designed into new buildings and other types of infrastructure, expensive energy consumption and waste can be avoided from the beginning, as can the need for costly retrofits in the future. The greatest opportunity to maximize energy efficiency is during design, when daylighting, space configurations, and material choices are made. Many of these decisions cannot be undone by a retrofit, so choices made today may have a dramatic impact on energy demand tomorrow. Each new home, office building, and factory is an opportunity to invest long term in energy efficiency and to realize energy and cost savings.
Looking at national economies, the International Energy Agency (link is external) (IEA) has estimated that since 2010, countries around the world have used less energy to produce more value. In other words, energy consumption is lower due to efficiency, while gross domestic product (GDP) has risen. The resulting good news for emerging economies that are growing is that energy efficiency is not an added expense, but instead is a tool to create a more productive marketplace.
As an example of energy policies in a high-growth economy, Indonesia used its 2014 National Energy Policy and 2017 National Energy Plan to put in place broad cross-sector energy reductions. The IEA has estimated that if Indonesia reaches its 2025 goal of 17 percent average energy savings in the industrial, transport, residential, and service sectors, it will have avoided constructing the equivalent of 20 coal-fired power stations, or an investment cost of US$10 billion.