Energy efficiency delivers more than energy savings and emission reductions – it can also improve the competitiveness of countries and firms. From increased profitability to job creation, energy efficiency helps firms compete amid high costs, growing demand, and rising trade pressures. In today’s global context, energy efficiency is not only a matter of energy policy, but also of economic policy.

Today the world’s industries can produce nearly 20% more value for a given amount of energy than they could two decades ago. This progress has yielded significant benefits at the country level. G20 countries have doubled their economic output from industry and services since 2000 while only using 60% more energy, with efficiency gains resulting in cumulative savings equivalent to India’s entire primary energy consumption.

However, the recent global slowdown in industrial efficiency progress risks weakening firms’ competitiveness. The industrial sector is responsible for around 80% of the growth in global energy demand since 2019, yet its energy intensity has remained largely unchanged over the same period.

There is significant untapped potential at the firm level, and not only in heavy or large industries. The energy consumption of facilities making the same or similar products varies widely. In IEA countries, if all firms matched the energy consumption of the least energy-intensive peers in their subsectors, energy costs could be reduced by up to an estimated USD 600 billion. This opportunity is not only present in heavy industries, but also in the lighter industries that form the backbone of many economies, collectively accounting for half of global industrial value added and two-thirds of jobs.

Meanwhile, the manufacturing of energy efficiency technologies represents a new opportunity. Global investment in energy efficiency continues to accelerate, increasing by 150% since 2015. Rising indicators, from manufacturing capacity to RD&D investments, signal ongoing market growth. Firms that position themselves as producers, as well as users, of energy efficiency technologies stand to gain market share at a pivotal time.

While industry leaders recognise the competitiveness benefits of energy efficiency, they need help to overcome barriers to action. In an IEA survey of 1 000 firms around the world, around 80% of industry leaders report that efficiency is key to their competitiveness. However, respondents indicate that they face barriers to implementing more significant measures, including significant upfront costs and insufficient workforce capacity.

A renewed policy approach can position energy efficiency as a pillar of industrial strategy. With an expanded focus on SMEs and light industry in addition to heavy industry, policymakers have an opportunity to leverage best-in-class efficiency policies to not only save energy, but to also achieve broader economic objectives, such as improving productivity, growing local economies, and creating and safeguarding jobs.