Introduction
Using energy more efficiently has proven to be an extremely successful and costeffective way to reduce energy demand. Highly developed and well proven policy instruments already exist to deliver increased energy efficiency, such as Ecodesign in Europe and Japan’s Top Runner. These policy tools can also support fuel switching and better demand management, helping to integrate higher volumes of variable electricity supply. Japan’s Ministry of Economy, Trade and Industry, as part of Japan’s Presidency of the G7, asked the International Energy Agency (IEA) to examine the evolution of energy efficiency policy in the context of clean energy transitions. The aim is to support discussions among G7 countries to provide insights and direction for the G7 energy and climate agenda. This brochure outlines how traditional energy efficiency policy is evolving to address system-wide energy efficiency aspects such as grid flexibility and decarbonisation.

The changing energy system Over the past few years, the global energy system has seen dramatic changes as it responds to the rebound from Covid-19 and increased supply pressures following Russia’s invasion of Ukraine. At the same time, energy systems are undertaking substantial transformations to fulfil government and society Net Zero climate ambitions. Under the IEA’s Net Zero Emissions by 2050 Scenario – which provides a realistic yet challenging pathway to climate goals – increasing the energy efficiency of enduses is a key component. In this scenario, energy efficiency efforts are front loaded, as they are based on proven technologies ready to be implemented at low cost.

Demand side measures play a significant role in the IEA Net Zero Scenario, 2021-2050

Demand response requirements in buildings and equipment Regulators in a growing number of countries are contending with how best to include demand response functional requirements into policies for products and buildings. Flexible demand, where customer end-uses are controllable and shiftable over time, makes the grid more secure and improves system-wide energy efficiency. To unlock this potential from flexible demand, appliances and buildings need to enable demand response. Whether automated or remotely controlled, open communication protocols are necessary to allow different actors (such as distribution operators, suppliers, and energy service companies) to exchange information. While some simple approaches, such as radio teleswitches to control water heaters, have been common for some time, improved communication protocols and processes are now creating significant new opportunities at ever lower costs. Utilities or aggregators can communicate in real time with appliances, through an intermediate control device such as home energy management systems or smart meters, either directly modifying its operation, or sending information (price signal, power carbon intensity) to prompt an action by the appliance.

Industry reporting systems The industrial sector is challenging to decarbonise, with processes as diverse as the economy itself and each company guarding its proprietary methods. Solutions for energy efficiency and decarbonisation are subsequently highly individual. The challenge for policymakers is therefore to incentivise industrial decisions that set a path towards higher energy efficiency and decarbonisation without hurting competitiveness and innovation. A core requirement for any successful policy decision-making is reliable information. As large industries are among the biggest energy consumers in most economies, the influence and impact of industrial policy decisions is significant. For several decades, G7 countries have been using reporting systems where industries above a certain threshold must regularly report their energy consumption to a government body. This information helps ensure consistency, accuracy, and reliability of national energy balances, and is used by governments to make informed decisions on policy. In the context of increasingly stringent measures to mitigate climate change, industry reporting has put a stronger focus on GHG emissions accounting to monitor improvement over time. Furthermore, progressively more governments are putting in place public disclosure obligations that can increase transparency in company activities.

Finally, the data collected can be used in a wider scope of policy design and decision making. For example, in the areas of energy security and climate impact where energy demand management and efficient use of energy, enabled through data led decisions, play a crucial role. Industrial reporting polices can include measures for capacity building in energy and emissions reporting, along with the reporting framework itself. This can help increase the reliability of the data collection and reporting, benefiting both the organisation, at site performance level, and the overall industrial sector, in terms of assessment, benchmarking and competitiveness. Japan is in the process of developing an updated industrial reporting scheme that features demand response provisions, explicitly addressing the challenges of peak electricity demand in industrial energy consumption. The following table provides an overview of major industrial reporting schemes in G7 countries and beyond.

Source:http://IEA