Energy efficiency can make as meaningful a contribution to energy market supply as fuels such as oil and coal, according to the International Energy Agency’s first-ever Energy Efficiency Market Report , released today.

“We must change the way we think about energy efficiency. We need to start considering it a fuel, alongside oil, gas, coal or renewable energy,” said IEA Executive Director Maria van der Hoeven in the foreword to the report. “The reduced energy demand stemming from energy efficiency over the past decades is larger than any other single supply-side energy source for a significant share of IEA member countries.”

The report estimates that energy savings from efficiency made since 1974 in 11 IEA member countries – 1.52 billion tons of oil equivalent – exceeds the 2010 consumption of oil, electricity or natural gas in any one of these countries alone.

The benefits of energy efficiency are not limited to cutting demand. They include reducing stress on energy systems, improving resilience and security, freeing up energy-directed funds for other economic sectors, cutting public expenditures and greenhouse gas emissions, and reducing importers’ needs while freeing up more of producing countries’ resources for export.

But the IEA acknowledges limitations to accurate assessments of the efficiency market. The impact of efficiency measures can be difficult to quantify, and data for this market scarce relative to data for other markets, such as oil and coal. “The energy efficiency market is diffuse, varied and involves all energy-consuming sectors of the economy.”

Four Key Takeaways:

• Energy efficiency is a big market. Investments totaled up to $300 billion globally in 2011, “similar in magnitude to supply-side investment in renewable or fossil fuel electricity generation”.
• The potential for savings is massive. Investment in energy efficiency by 11 IEA member countries since 2005 has avoided 570 million tons of oil equivalent of energy consumption from 2005 to 2010, which is more than the 554 MM tons of oil used in the US transportation sector in 2010, and worth $420 billion at an oil price of $100 per barrel.
• Policy and prices are the main drivers of efficiency measures. “Over the past five years, investment in energy efficiency in most regions has largely been stimulated by policy interventions,” the IEA said. High prices have also encouraged conservation in some regions. “Energy prices are one of the key factors driving expansion of the energy efficiency market.”
• The US energy efficiency market has huge savings potential, but being largely driven by federal and state policies, it is “particularly vulnerable to political and economic developments”. The impact of the financial crisis complicates assessment of recent consumption trends. But vehicle fuel economy standards are expected to save roughly 1.5 MM bbl/d of oil – or almost 50% of 2012 oil imports – for light-duty vehicles built between 2012 and 2024 and heavy-duty model year 2014-18 vehicles. Appliance standards in place today can save more than 600 terawatt hours of electricity by 2020, and more stringent standards could save as much as 695 TWh by 2020.

US Energy Efficiency Policies and Results