This document shows that increased industrial energy efficiency is one of the most promising routes to sustainable industrial development worldwide, particularly in developing countries. Industry remains among the most energy-intensive sectors: its contribution to global GDP is lower than its global share of energy consumption. Industrial processes have an estimated technical efficiency potential of 25–30 per cent. That means that adopting best available technologies and related business and engineering practices could eventually enable industry to lower emissions of greenhouse gases and combat climate change and also reduce other pollutants. The energy savings could be redirected to meeting social needs for access to energy, particularly acute in developing countries, and could help companies everywhere to improve their bottom line.
The report provides further evidence that improvements in industrial energy efficiency continue apace. During the past 20 years, developed countries, which are the largest energy users, have lowered their energy intensity. Large developing countries have also realised the importance of boosting efficiency early in their industrialisation processes and have begun to adopt the technologies and other measures that have led to unprecedented gains in energy efficiency. Low- and middle-income developing countries, which are gradually taking over manufacturing production, are also contemplating ways of becoming more energy efficient.
The report argues that the key to sustaining these gains continues to be industrial technological change and the related economic and policy incentive system. Yet markets do not always work as expected, nor are individual and corporate behaviour as rational as predicted by orthodox economic theory. Multiple barriers block the path to full energy-efficiency levels.
The report suggests that overcoming barriers to industrial energy efficiency will require public policy measures, including a sectorally coordinated energy strategy; formal and informal mechanisms, targets, benchmarks and standards; and policy designs grounded in the specific context at the country level. Policy interventions involve choosing the right policy mix, continuously assessing effectiveness and focusing on small and medium-size enterprises. Policy measures include official support for developing more efficient industrial technologies, disseminating best available technologies, introducing fiscal incentives for innovation and diffusion of industrial energy efficiency, and establishing financial mechanisms to fund improvements.
The report recommends decisive international collective action, including reducing industrial energy intensity by 3.4 per cent a year through 2030. It calls for international collaborative research and development and the establishment of information clearinghouses and information exchanges to identify best practices and compare the performance of different technologies under varying conditions. Since the adoption of energy-efficient technologies involves the acquisition of increasingly sophisticated technological capabilities, the report points at ways in which the international community can assist in capacity development. It also discusses the need for a well-developed framework for international financing of industrial energy efficiency.