In an article on the Sustainability Magazine website, Jasmin Jessen discusses the IEA’s Energy Efficiency 2025, its annual analysis of latest global trends in energy efficiency. The rate of global improvement in energy efficiency has been largely lacklustre since 2019, averaging around 1.3% per year. That’s down significantly from the average of around 2% per year between 2010 and 2019 and certainly less than the target set at COP28.
IEA: Energy Efficiency Falls Behind Sustainability Targets
The IEA’s Energy Efficiency 2025 report shows that progress is being made on energy efficiency but its speed is being hindered by a lack of skills
Global energy efficiency improvements are projected to reach 1.8% in 2025, rising from approximately 1% in 2024, according to the IEA’s Energy Efficiency 2025 report.
The average annual rate of progress has declined to 1.3% since 2019, however.
This falls short of the COP28 target, which calls for a 4% annual improvement by 2030.
“The acceleration in global progress on energy efficiency that we’re seeing in 2025 is encouraging, including positive signs in some major emerging economies,” says Fatih Birol, Executive Director of the IEA.
“But our analysis shows that governments need to work even harder to ensure efficiency’s full range of benefits are enjoyed by as many people as possible
“Energy efficiency has the power to enhance people’s lives and livelihoods through greater energy security, more affordable bills, improved economic competitiveness and lower emissions.”
Cost benefits of energy efficiency
The IEA’s report says that sustainable technology is becoming the more affordablechoice, challenging perceptions that it carries a premium price tag.
Whilst more efficient technologies can require higher upfront investment, they are often priced comparably and the cost savings from reduced energy consumption over their operational lifespans outweigh less efficient alternatives.
According to a 2025 IEA survey on industrial competitiveness, a majority of firms identified energy efficiency as their primary defence against price volatility.
Consumers who purchased efficient air conditioners are estimated to have saved up to 30% in energy costs in 2025, whilst paying similar initial costs.
The IEA says that this principle extends to retrofits that enhance energy efficiency.
Since 2019, combined expenditure on building retrofits and envelopes in China, the US and the European Union increased by more than 20% to approximately US$120bn in 2024.
A typical dwelling in the Netherlands could save US$300 to 500 per square metre in energy costs over a 20-year period, compared to upfront costs of around US$40,000 for insulation and high-performance heat pumps.
Growing demand for cooling
The report found that energy for space cooling has experienced the fastest growth of any end-use in buildings since 2000, expanding by more than 4% annually.
This energy demand has been driven by increased access to air conditioners and rising living standards.
The IEA says that this demand has been met with equipment that is not highly efficient.
If every air conditioner purchased since 2019 had been the most efficient model available, the world could have avoided electricity demand growth equivalent to the demand growth from data centres over the same period.
The IEA expects data centre electricity demand, fuelled by the AI boom, will likely grow even faster, doubling between 2025 and 2030 to approximately 945 TWh.
AI’s role in energy efficiency
Data centres’ expected electricity demand is equivalent to the entire country of Japan in 2024.
Whilst AI is contributing to this growth in demand, the IEA predicts this technology could unlock 8 EJ of energy savings by 2035.
This is roughly equivalent to the entire industrial demand of the European Union today, far exceeding predicted data centre demand.
AI algorithms can detect inefficiencies or improve physical models of processes without requiring significant additional effort or investment.
It can also be applied for demand prediction, inventory management and route optimisation, potentially accelerating the deployment of hub-and-spoke distribution models.
The green skills gap
The IEA says that digital infrastructure, access to a skilled workforce and a culture of trust can create barriers for some companies to unlock AI energy optimisation, particularly for SMEs.
Beyond AI, specific skills are needed to implement energy efficiency measures.
The report notes nearly 18 million people were employed in energy efficiency in 2024 around the world.
Among energy efficiency employers, 72% report a shortage of workers.
Around 60% of these employers expect shortages to have a moderate to significant impact in five to ten years and approximately 50% are already struggling to replace retiring workers.
Energy efficiency is not the only area in sustainability facing a skills shortage.
According to LinkedIn’s 2025 Green Skills Report, the demand for hiring sustainability experts is expanding almost twice as fast as the development of green skills among workers.
External link
Energy in Demand - Sustainable Energy - Rod Janssen 
What does the author mean when she states that “the IEA predicts this technology (AI) could unlock 8 EJ of energy savings by 2035?” Sadly the link provides no such evidence. Where and what are these so called EJ savings?