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What is holding back energy efficiency financing in G20 countries?

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In 2015 E3G launched an initiative linked to the G20 that had two aims. First, to reach out to energy efficiency campaigners and experts in each of the G20 countries plus Central and Eastern parts of the European Union in order to understand the current state of play on energy efficiency and the political barriers to increasing levels of energy efficiency investment. Second, to seek support for a statement calling on G20 countries to make energy efficiency an infrastructure priority as a means of ‘getting to scale’ on financing. The summary findings are shared here.

Executive summary

Energy efficiency has been a long-term area of work for E3G. Through this project we wanted to expand our traditional focus on Europe to look more widely at global energy efficiency financing challenges. By consulting with experts in G20 countries we aimed to better understand how energy efficiency is seen by both energy policy and wider political decision makers. We focused on the potential size of the market, the targets and ambitions of each country in this area. We also looked to better understand the opportunities to make a stronger political case for energy efficiency to be treated on an equal basis as other forms of energy infrastructure. Finally, we focused on the political barriers and gaps we would need to address to move forward with scaled ambition on financing and policy asks.

We were able to talk to experts from 15 of the G20 countries. We gained a great deal of valuable information directly from experts – and from wider research in cases where we were not able to make direct contact. We found that overall there has been a significant increase in both funding and policy support to energy efficiency in G20 countries over the last decade. This has been driven mainly by energy security concerns. The emphasis now placed on energy efficiency is seen by the experts E3G consulted as unprecedented in scale particularly when compared to where it was in, for example, the 1990s. However this is mainly because in the 1990s support was almost completely absent in many countries. For example, in the two countries likely to dominate the future shape of the world’s energy demand – China and India – energy efficiency targets have increased and so too has the amount of publicly sourced funding to support investment in this sector. The multiple benefits of energy efficiency are acknowledged in many places. For example in the UK there is an acknowledged benefit from energy efficiency to improving fuel poverty. In China it is expected that energy efficiency will play a key role in controlling both future demand and urban air quality – and so it has been featured in two of the last Five Year Plans. Despite this progress, according to all experts consulted, the levels of energy efficiency financing – and in particular public financing – are still far below the critical mass of capital needed to unlock the full potential of energy efficiency in G20 economies.

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