Government intervention can help enhance industrial energy efficiency through effective policy packages. To create effective drivers and preconditions for increasing energy efficiency in the industry sector, policy packages combine three main mechanisms, regulation, information and incentives:

• Regulation is essential to exclude the worst performing equipment and practices from the market, driving greater energy efficiency at both firm and national level.
• Information improves firms’ awareness and knowledge of their energy efficiency options, highlighting benefits and enabling more efficient choices in energy-related purchases and use. Increased capacity building and training can create the skilled workforce required to deliver energy efficient soluions.
• Incentives make efficient options more attractive to firms and can be targeted to expedite upgrade and replacement technologies, encourage use of new technologies and practices, and accelerate uptake of energy saving measures.

Although the ultimate goal is a policy package framework that includes multiple instruments, in the short term, it can be useful to prioritise and target competitiveness. Some policy instruments can be quicker to implement or have greater impact, depending on national circumstances, such as the existing policy mix, the structure and size of the economy, the available fiscal space and the structure of the country’s institutions. Additionally, the policy package approach must be accompanied by the right support for implementation. This means ensuring that resources are in place to put policies into action, regularly assessing policies and programmes and addressing vital elements, such as capacity building, enforcement and monitoring.

For the industry sector, a key challenge for policy makers can be to assess and clearly communicate the value of energy efficiency policies. This is primarily due to the lack of robust practices for collecting data on results achieved, including the wider benefits beyond energy savings or reduction of greenhouse gas emissions. An IEA survey of 1 000 industrial firms, conducted in 2025, indicates that more than half of the companies have experienced a broad range of benefits from energy efficiency and 88% can quantify or estimate the monetary value of these benefits.

While energy efficiency policies and programmes targeting industry have been shown to be cost-effective, collection and analysis of more granular data in co‑operation with the industry sector can improve the design, adaptation and targeting of policy packages.

In terms of competitiveness, there is a strong case for increased focus on energy efficiency programmes and policies for less energy-intensive industry and for SMEs. For SMEs, this is due to both the high level of savings currently achievable (up to 30%) and to their contribution to job creation and global economic development.

There are many ways in which governments can support industry to reduce energy use and increase competitiveness. An analysis of top performing IEA countries on how they achieve and maintain low levels of industrial energy intensity while continuing to grow identifies five key common shared industrial policy mechanisms:

1.    Comprehensive energy management policies

Policies that stimulate the adoption of various actions related to energy management (such as audits, energy management systems and appointment of an energy manager) are generally associated with improved and sustained energy efficiency regardless of industry location, sector or size.

2.    Support and interaction with industrial networks

Initiating, supporting and engaging with industrial networks has resulted in an increase in energy efficiency at firm level and an increase in the uptake of industrial policies at government level. Networks have been identified as crucial in building trust between governments and industry, and in developing and delivering industrial energy efficiency policies.

3.    Targeted fiscal supports and financing mechanisms

Targeting fiscal supports is a key lever to overcome barriers to the uptake of energy efficiency in the industrial sector. Supports can be related to an action (audit or capital project) or to specific performance (a targeted level of saving). Supports can also be leveraged to address particular sectors or groups that are of strategic or economic significance. Financing mechanisms can be designed to work with the industrial sector, encouraging greater investment in energy efficiency.  

4.    Investment in research and innovation

Policies that stimulate development and commercialisation of new energy efficiency technologies and techniques are instrumental in advancing progress on industrial energy efficiency. Over the long term, pursuing policies that favour the development of technologies can create new and competitive capabilities, helping position countries that have invested in RD&D as technology producers and even innovation leaders.

5.    Strong support of Minimum Energy Performance Standards (MEPS) for motors and other industrial equipment

Policies to improve the minimum energy performance standards of motors and motor systems have been proven to lead to an overall improvement in the energy performance of the motor stock, leading as well to improved performance, reduced energy load and reduced energy consumption. MEPS can also be used for other industrial technologies, such as compressors, refrigeration systems and air conditioners.