Facing volatile energy prices, rising energy security risks and stricter regulations, all sectors are turning to energy efficiency technologies to reduce consumption and manage these growing challenges. At the same time, governments around the world committed at COP28 in Dubai in 2023 to work collectively to double the global average annual rate of energy efficiency improvements.

These dynamics have triggered a strong increase in demand for energy efficiency technologies. For example, the market for electric vehicles (EVs) and batteries has grown nearly six-fold from 2020 to 2023, while heat pump markets grew by 36% in the same timeframe. This momentum continued in 2024 with global electric car sales exceeding 17 million. In 2025, sales are expected to surpass 20 milion, accounting for more than one-quarter of cars sold worldwide. Correspondingly, the demand for EV batteries expanded to over 950 GWh in 2024.

This has led firms to react and to expand production capacity to meet the demand. Production capacity for battery cells increased more than four-fold from 2020 to 2024, while for heat pumps it increased by 35% until 2023. Committed projects – i.e. those that are either under construction or have reached a final investment decision – will double battery cell production capacity again by 2030. When considering all announcements on capacity additions, they are even expected to triple by that time.

Other energy efficiency technologies also show similar market expansion. Heat pump production capacity is expected to add another 32% by 2030 based on committed and preliminary forecasts. Meanwhile, building insulation has seen strong growth in recent years driven by stricter energy performance regulations and rising energy costs, and is expected to maintain this momentum. In the EU alone, driven by the Fit for 55 package and the Renovation Wave strategy, the insulation sector could reach around USD 175 billion by 2030, creating approximately 1.5 million jobs.

Similarly, electric motors, a component present in a large number of technologies, have also shown remarkable growth. The global electric motor market grew significantly between 2020 and 2024, reaching a value of USD 145 billion in 2024. While the overall sector expanded steadily, some companies more than doubled their revenue over the same period.

Strong market and production capacity growth has begun shifting the overall landscape of industrial production towards clean energy and energy efficiency technologies. The share of global investment in manufacturing capacity has remained relatively constant for traditional sectors such as pharmaceuticals, basic chemicals, steel and glass, but clean and energy efficiency technologies increased their overall share by 67% from 2022 to 2023 alone. On the demand side, for example, batteries have seen an increase of almost 50% in their relative share of capacity investments. This reflects the fact that clean and energy efficient technologies were responsible for over 9% of overall global manufacturing capacity investment growth in 2023, and batteries alone accounted for almost 5%.

The largest part of manufacturing capacity growth in clean and energy efficient technologies is happening in China. While Europe was the largest market for clean and energy efficient technologies in 2010, China has since surpassed it and now holds more than 50% of the global market at about USD 400 billion, ahead of Europe and the United States.

The sales development of EVs is a key example. In 2024, China sold over 11 million electric cars accounting for nearly  50% of all car sales in 2024. Despite some market headwinds, the EU maintained a strong position, with the sales share of EVs remaining around 20%. Globally, nearly 80% of EV battery cell production took place in China in 2024. Similarly, with rising natural gas prices at the onset of the energy crisis of 2022, leading heat pump manufacturers announced plans to invest more than USD 4 billion in Europe, while the three largest European producers of insulation material commited investments of about USD 1 billion over the last three years in Europe alone.

While major producers continue to strengthen their market positions, the number of registered energy efficiency startups has steadily increased since the early 2000s. Leading economies like China and the United States have reduced their share of registrations of energy efficiency startups since then, with the stongest increases recorded in European countries, such as France, the Netherlands and Sweden. Meanwhile, countries without a traditional automobile industry have founded EV manufacturers.

The trend is also clear in investor confidence data. The market capitalisation of the seven largest battery manufacturers increased from about USD 60 billion in 2019 to over USD 400 billion in 2023, while exclusive electric vehicle manufacturers grew their market capitalisation from about USD 60 billion to USD 740 billion.

In order to compete in the growing market for energy efficiency, market actors are reacting not only by increasing capacity, but also by innovating. Public and private actors invested over USD 600 billion in energy efficiency in 2023. This increase of almost 150% since 2015 is a clear signal that energy efficiency products are in growing demand.

Governments have also taken steps to support industries in their efforts to achieve a competitive position in the market for energy efficiency products. In 2023, governments spent more on research, development and demonstration (RD&D) for energy efficiency than on any other energy technology, ahead of nuclear and renewables. In 2015, public RD&D spending on energy efficiency in IEA Member countries was about USD 4 billion, but by 2024 it had increased by almost 70% to USD 7 billion. The United States spent by far the largest share of any IEA country on public RD&D on energy efficiency technologies, around 44% of the IEA total in 2023, followed by Canada, France and Japan. Around two-thirds of the spending in the United States was on efficient transportation, followed by industry and buildings.

In an IEA survey of 1 000 industrial firms, 63% indicated that they had increased their RD&D spending for energy efficiency products in recent years, and another 18% reported having plans to do so in the next three years. Most indicated that the purpose of these RD&D investments was to launch new product lines. Among the many public examples around the world, Salzgitter AG, a large German steel manufacturer, is investing USD 2.6 billion in the SALCOS direct reduction electric arc furnace steel production route, and Daikin, a major Japanese air conditioner and heat pump producer, more than doubled RD&D spending, from USD 350 million in 2015 to USD 800 million in 2024.

While a significant part of public and private RD&D spending is not publicly disclosed, the result of these efforts becomes visible when analysing patent filings in that timeframe. Between 2015 and 2023, the number of patents filed for technologies related to energy efficiency increased from about 150 000 to almost 270 000, an increase of more than 75%. The dynamics also show the high ambition of Chinese manufacurers towards global leadership in the energy efficiency sphere. While in 2015, just under 50% of patents were filed in China, this figure climbed to about 70% in 2023.

These trends are also reflected in policy discussions and frameworks around the world, with regions seeking to strengthen the competitive position of their industries in this growing market. For instance, the European Union’s Competitiveness Compass notes that many energy efficiency technologies are manufactured in Europe, which can support the region’s economic competitiveness.