In 2023, under the bright lights of the Expo City Dubai, almost 200 nations adopted an agreement to dramatically alter the world’s relationship with energy.
The deal at the COP28 climate summit promised to triple the amount of renewable electricity capacity to at least 11,000 gigawatts (GW) by 2030, and double the rate of energy efficiency improvements from 2% to 4%. Taken together, these two commitments have the potential to usher in a new global economy that is cleaner and smarter.
Research suggests the world is on course to meet the renewable energy target, with an annual growth rate of nearly 30% between 2023 and 2025. The same cannot be said of energy efficiency, where growth fell to 1% in 2024, but has since climbed to 1.8%, according to estimates from the International Energy Agency (IEA).
The IEA attributes this poor performance to a number of factors: strong growth in industrial energy demand, policy gaps, greater access to inefficient air conditioners, and an overall growth in energy demand which renewables have not been able to meet.
Global electricity demand is predicted to grow by 3.8% in 2027, up from 3% in 2025. According to researchers, this demand is primarily being driven by heavy industries - steel, chemicals, cement - which overwhelmingly still use fossil fuels to power their energy-intensive factories.
In addition, the explosive growth of AI has led to the development of new data centres which require huge amounts of electricity. Under conservative scenarios, data centres could double their electricity consumption by 2030, and those dedicated to servicing AI needs could see a 30% annual increase over the same period. The more these trends continue, the greater the cost of transitioning to cleaner, more efficient technologies.
Taking the right policy direction
While both old and new technologies put added pressure on the electricity system, the targets set in recent years remain the same. This presents policymakers with a challenge and an opportunity.
Policy is often designed to be responsive to the world around it. When the EU’s Energy Efficiency Directive was first adopted in 2012, the world was a very different place. That is why it has since been updated, twice, in 2018 and 2023.
Mario Giordano, global head of public and government affairs at lighting multinational Signify, calls this piece of legislation “market transformational” as it created “long-term certainty through binding targets, energy saving obligations, and renovation requirements”. This, in turn, allowed businesses to plan investments and start to innovate with the stability the directive created.
The legislation has been credited with improving efficiency rates across the bloc. According to Eurostat, the EU used a record low amount of energy in 2024, 20% less than in 2006, an historic high point.
One of the next steps on that journey for Europe is the Energy Performance of Buildings Directive which seeks to upgrade old buildings and introduces a zero-emissions standard for new public ones.
“It is a huge opportunity to renovate the continent’s building stock, and lighting is everywhere,” said Giordano. “There will need to be a massive overhaul from conventional lighting to LEDs, targeting the worst-performing buildings,” he added. This bold legislative approach could provide a template for other countries to develop energy policies with maximum impact on efficiency rates.
How to get to 4%
Jérôme Bilodeau, energy efficiency programme manager at the IEA, told Climate Home News “the world is not currently on track” to meet the COP28 efficiency goal but agreed it was achievable with the right policies in place.
“Nine out of 10 countries have achieved a rate of improvement of 4% at least one year over the past decade,” he said.
“There are many examples of effective energy efficiency policies across the world, and governments are introducing new ones regularly,” he added, pointing out that countries representing 85% of global energy demand had announced hundreds of new or updated policies in 2025 alone.
Signify: “We believe resilience is becoming more important to businesses right now”
In addition, the global energy crisis caused by the closure of the Strait of Hormuz has turbocharged the policy environment with a suite of new policies from dozens of countries now in place to reduce energy demand.
The IEA recommends closing policy gaps and raising the ambition of existing ones to help achieve the 4% energy efficiency improvement target. These policy gaps can be quite straightforward to address - for example, creating efficiency standards for new buildings, something the IEA says is lacking in almost half of all countries. And as technologies improve, policies need to
Read More
