Global efficiency savings could hit $1.6tn by 2035

Rising efficiency and falling demand could save up to $1.6 trillion (£1.28tn) on energy by 2035. The figure, which is equivalent to the GDP of Canada, is according to new research […]

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By Jonny Bairstow

Rising efficiency and falling demand could save up to $1.6 trillion (£1.28tn) on energy by 2035.

The figure, which is equivalent to the GDP of Canada, is according to new research from the McKinsey Global Institute (MGI), which highlights a range of dramatic changes likely to be brought on by new technologies.

The report predicts energy consumption will fall as inventions like smart thermostats and automatic systems optimise efficiency in homes, offices and factories across the world.

It suggests one of the biggest changes will be in transportation, the most oil-intensive sector, as engines become more fuel efficient and use of electric vehicles becomes widespread – this could contribute to demand for oil and coal peaking before 2035.

Oil demand from light vehicles is expected to decline from 2015 levels, which could save up to $280 billion (£224bn) by 2035.

Renewable energy sources such as solar and wind are forecast to become cheaper and more competitive with fossil fuels and play a substantially larger role in the global economy’s energy mix.

They could reportedly grow from 4% of power generation today to as much as 36% of global electricity supply by 2035, which would likely limit the growth of natural gas.

Resource producers are expected to be able to extend mines and wells to once inaccessible areas and use smart data management to improve the efficiency of their extraction techniques.

The International Energy Agency recently said an extra $23 trillion (£19.8tn) of global investment in energy efficiency is needed to meet the climate goals set in Paris.