HSBC & Ecofys: Energy efficiency market worth 365 billion

08 July 2014

The global market for energy efficiency products is currently worth $365 billion, concludes a new research report from HSBC in collaboration with consulting firm Ecofys.

As a result of the increasing focus on sustainable energy from both governments and private sector, over the past years the use of energy efficiency products – such as heat pumps or electric engines – has grown rapidly. To understand how the market for energy efficiency is developing, the ‘Global Climate Change & Clean Technology Team’ of HSBC partnered with Ecofys, a consulting firm based in the Netherlands specialized in sustainability topics, to conduct a market assessment. The researchers looked at all capital expenditures related to energy-efficient equipment made in the buildings, industry and transport sectors*.

The analysis reveals that the total market is worth a staggering $365 billion. An overview per segment:

Global Market size for energy efficiency products

With $271 billion, buildings (renovation and new) and appliances account for more than three-quarters of the investments. Investment in renovation is the largest category at $148 billion, with insulation the bulk segment. Transport accounts for $27 billion, to a large extent representing incremental improvement of passenger cars and $56 billion were invested in the manufacturing industry, with a high share related to electric motor systems.

Energy efficiency outlook

For the coming years, the experts from HSBC and Ecofys draw an optimistic outlook for the global energy efficiency products market. Key reasons include the impact of regulatory drivers – despite the fact that 2013 was a relatively slow year for new climate policies (30 new energy efficiency policies versus 34 in 2012) – health benefits measures and the incentives it offers to industrial competitiveness.

Boost to economy and climate

If energy efficiency indeed manages to follow the researchers’ forecast, this would mean good news for regional and local economies. Another recent study from Ecofys, launched last year in collaboration with multinational Philips, revealed that improved energy efficiency has the potential to create millions of new jobs, leading to a substantial boost to economic growth. According to the white paper ‘The Benefits of Energy Efficiency’ – which is based on calculations for the U.S. economy, the uptake of more energy efficiency could deliver 750,000 jobs to the U.S. economy by 2020 and 1,5 million by 2030.

Ecofys - Four Quick Fixes

Increased uptake of energy efficiency would in addition boost the probability of realizing the so-called 2 degrees Celsius target - limiting further global warming to just 2 degrees by 2050. The world is currently not on track to stay below this target and the researchers indicate that energy efficiency is the most important of the four key ‘quick-fix’ solutions to put the global energy framework back on track, representing roughly 49% of the total reduction targets**.

* The analysis includes expenditures made by both retail consumers and industrial entities.

** Based on the IEA special report ‘Redrawing the Energy Climate Map’.