System-level Effects of Increased Energy Efficiency in Global Low-carbon Scenarios: a Model Comparison

Supporting investments in energy efficiency is considered a key strategy to achieve a successful transition to low-carbon energy systems in line with the Paris Agreement. Increased energy efficiency levels are expected to reduce the need for investments in controversial technologies, such as carbon dioxide capture and storage (CCS) and nuclear energy, and to induce a downward push on carbon prices, which may facilitate the political and societal acceptance of climate policies, without adversely affecting living comfort and sustainable development. In order to fully reap these potential benefits, economies need to design policy packages that balance emission reduction incentives on both the demand and the supply side. This short article presents a model-comparison exercise, using two well-established global integrated assessment models, PROMETHEUS and TIAM-ECN, to quantitatively analyze the global system-level effects of increased energy efficiency in the context of deep decarbonization scenarios. Our results confirm the expected benefits induced by higher energy efficiency levels, as in 2050 global carbon prices decline by 10%-50% and CO₂ storage from CCS plants is 13%-90% lower relative to the “default” mitigation scenarios. Additional annual energy system costs to achieve Paris goals are estimated to be about 2 trillion US$ – or 1% of global GDP – and can be reduced by 6-30% with the adoption of higher energy efficiency standards. While the two models project broadly consistent future trends for the energy mix, the effects may differ in magnitude due to intrinsic differences in how the models are set up and how sensitive they are to changes in energy efficiency and emission reduction targets.

We develop five scenarios based on specific assumptions with regard to (i) climate change mitigation targets, (ii) energy efficiency improvements, and (iii) carbon price developments. These scenarios are implemented in PROMETHEUS and TIAM-ECN.