 is right in the middle of that policy triangle. And ever since the IEA was founded in 1974, just about 40 years ago, there have been two central themes that the IEA has stood for, and one was energy security and dealing with disruptions and other perturbations to supply of particularly oil, but all of energy. And then energy efficiency right from the beginning was always one of the principles the IEA was founded on. There were 10 principles that were agreed on by the governing board in one of the first meetings, like 1975, I believe. And energy efficiency was certainly right at the top of that list, and there has been a concerted effort on the part of the IEA to promote energy efficiency. And I think what you are going to hear from Phil today is that it has been pretty successful, and obviously there is always room for improvement. I think he is going to also talk about that. When I visited the IEA two weeks ago, I got to meet Phil for the first time, I wasn't sure. I saw Philippe Benoit as the name that I was supposed to meet because he was coming to make this presentation. I wanted to get to know him. And so I walk in to his office and I say, Hi, Philippe, and he goes, call me Phil, I am from Queens. So Phil, we are really pleased that you came. And given the preeminent position of energy efficiency and what I call the sweet spot of energy policy, we might even start calling you Phil Sweet Spot Benoit. But we are looking forward to your presentation, which is, as some of you know, the IEA has been doing medium-term outlooks for oil, gas, and coal, and even renewables in recent years. So this is the first time they are publishing a report on energy efficiency in the same, giving it that same level of prominence, which I think is definitely deserving, as I mentioned. And Phil is the head of that division within the IEA. So we are really pleased that you could be here. And I am looking forward to, and I am going to actually sit down here so I can see the slides. Thank you, Phil. Please join me in welcoming Phil. Thanks. Well, thank you, Guy, for those very kind words. And it is a real pleasure to be here. I regret that you blew my cover. I normally try to impress people with my very excellent American accent, not just by the fact I am from abroad, but since I am from Queens, you now know why I have a New York accent. Anyhow, a beautiful building. I know you have recently inaugurated it. So it is a real pleasure to be here and also to share with you, as Guy mentioned, our inaugural energy efficiency market report. I will say before I start, it is interesting, it sits in the middle. I think that is where it deserves to sit. But I think the fact of the matter is one of the challenges that we face in terms of energy efficiency is as much as it provides a variety of benefits, we really don't see it getting the type of attention that it merits. And that is going to be a theme I am going to come back to in terms of this presentation. So the IEA analysis consistently identifies energy efficiency as the major contributor to potential cuts to carbon emissions, reductions in local pollution, and cost-effective energy security. Simply put, the cleanest megawatt hour will be the one we never use, the most secure barrel of oil, the one we never burn. It is also often the cheapest and the easiest to achieve in difficult conditions. But energy efficiency opportunities really make up an interlinked constellation between transport, industry, buildings, and the like. And understanding that constellation as a market is a relatively new undertaking for us. For many years, commentators, including the IEA, have struggled to clearly grasp what energy efficiency is. We are not the only ones to call it the hidden fuel. We are taking today a new perspective to energy efficiency with this report, treating it as we would any other energy resource. Indeed, it joins our market report series alongside more traditional conceptions of fuel sources, oil, gas, coal, and renewables. So in that vein, we are asking the important questions. How big is energy efficiency? And what does it contribute to the global energy system? And what scale of investment drives energy efficiency? And what return do we get on that investment? What do practical investments in energy efficiency look like? What services and products are delivered by energy efficiency market players? Energy efficiency markets deliver goods and services that reduce the energy required to fuel our economies. That provides a fundamental conception and definition of efficiency markets to drive our analysis. Like many markets, the market for energy efficiency is as diffuse as consumption patterns themselves. And there is clearly a demand side and a supply side. Some actors demand more efficient provision of energy services, and suppliers provide the necessary goods and how to deliver it. Consumers cover a wide spectrum from individuals to businesses to governments, and market activities cover all energy consuming sectors of the economy. Now, I realize that's a slide actually I wanted to be on. And I'm going to have a slight technical challenge, so I'm going to be turning a certain amount because there's actually a fair amount of animation in this. So starting over here, excuse me while I just shift. This inaugural energy efficiency market report summarizes the trends and prospects for investment and energy cost savings in the medium term up to 2020 by looking at energy efficiency through three lenses. First, by treating energy efficiency as we might treat a supply option. In other words, we ask, how much energy efficiency is consumed? What does it cost? What do we get out of it? Second, we draw on bottom-up analysis of investments and outcomes for energy efficiency, rather than top-down modeling or scenarios. And third, we work with a short-term focus to see what is driving the current market, what is happening now, and what the prospects look like in the near term. So what you have here to begin with is an illustration, our assessment of the size of the energy efficient investment markets, which we've estimated at about $300 billion based on using a methodology in which we basically look at the experience of public sector funding in particular and the type of leverage that they get from investments. And this, as you can see, is commensurate with the type of investments we see in fossil fuels and coal-renewables power generation. And it represents about two-thirds of fossil fuel subsidies. Now, when we look at energy efficiency outputs, in other words, savings from reduced efficiency, excuse me a second. Our sense is actually that energy efficiency is arguably the largest source of energy resources. Now, this is based on an analysis from 11 IEA member countries. And just as a reminder, the IEA as described was set up in 1974 in response to the oil embargo, includes a subset OECD members, and this represents 11 of those IEA countries. Why are we limited to 11 countries? Because basically, in order to do this analysis, you need a lot of data. And this is a point I'm going to come back to. But based on this analysis of 11 countries, we find that energy efficiency produced more in savings than any single source of fuel. And if we just look, for example, at 2010, what you have here are the figures for 2010. Oil, electricity, gas, coal, other sources, and energy efficiency. So basically, looking at this set of 11 IEA countries, what we find is, if we look at the result of investments in energy efficiency over the last 25 years or so, just come around to it probably with a lifetime production of some fossil fuel resources, we see that energy efficiency generated more in savings in 2010 than we would have spent in those 11 countries on oil imports or gas imports or the like. Now obviously, these figures would look different if we looked at the rest of the world in particular emerging economies, because obviously their growth profile on the energy side is different. But we still feel that this is a very important and potentially telling piece of information, and that's what's reflected in the title of the slide, moving from a hidden fuel to potentially the first fuel in certain circumstances. And if we look at what has happened in terms of energy demand over the last 10 years, last 20 years, going back to 1990, what you have here in the blue bars is what's happening in terms of total final consumption. You would expect from the next bar over increases in total final consumption related to activity issues such as increased population, increased use of roads and the like. But what we see is we see that the actual amount of total final consumption, which we feel is a more relevant measure when we're thinking of energy efficiency than total primary energy supply, but total final consumption has not increased as much as one would have expected given the change in activity. And that is the result of two fundamental factors. The first, the next column over, the third bar, is the result of structural changes in the economy. So for example, if you move from an energy intensive, or if you move from an economy that relies on a heavy industry, which is energy intensive, and you move to an economy that relies more on services, what that means is you actually need one less barrel of oil for every dollar of GDP because services require less energy input. So there are some changes in the structure of the economy that will tend to mitigate against the change in activity that's represented by the third bars over. And the remaining bar is the impact of energy efficiency. And so what we see is that when we look over the last 20 years, and this is at a set of 15 IA countries for which we had adequate data, we see that energy efficiency has had a major impact in constraining or limiting the growth in demand for energy. Now, another interesting point that comes out as well from the piece of the following. A lot of the time we talk about energy intensity. We talk about how many units of energy are required for each unit of GDP. And what we see, not surprising, is that the IA and IA countries require less than the world. But what we feel is in some ways this is a negative type of message. We're talking about intensity. We think it's more relevant and potentially more useful to talk about energy productivity. In other words, how many units of GDP can we get for every unit of energy that we consume? And let me just say I think this is particularly pertinent as we start thinking about emerging economies. Because in emerging economies, as distinguished from, for example, in many OECD economies, the focus is very much on the issue of growth. How can they power their growth? And what we're saying here is we think potentially more useful tool is to look at how many units of GDP can they get for each unit of energy. And this then leads into another interesting more diagram. I'm not sure what the conclusions are. But looking at IA countries, we see an interesting pattern. On the horizontal axis, you have increasing productivity of energy. On the vertical axis, you have consumption per capita. And what you tend to see interestingly enough when you look at all of these various IA countries is you have a general shift, increasing productivity over time. But at the same time, a convergence to some extent around three or so tons of oil equivalent per capita. So, some ways this is an interesting trend. What does it mean for the rest of the world? Unclear. But here's a diagram of what it looks like for a variety of critical brick countries. Now, obviously what you see is many of them are starting with consumption per capita levels far below the IA. But the question is, over time, as these economies mature, are we going to see the same type of shift that we're seeing in many IA countries? Now, in terms of the report itself, which looks like this, and is available on our website, I must admit, unfortunately, for a charge of 100 euros or so. But let me just say one reason we're required to charge it is because the IA very much wants to treat this the same way it treats the other fuels. So, they charge 100 euros for the oil and the gas report. So, they told us we need to charge 100 euros for energy efficiency. The document is really structured in three basic parts. The first is an overview of some of the analytics, some of the points I've just described. The second are case studies where we look at a variety of countries. Now, one of the things that we find in terms of energy efficiency and was a challenge for us is that if you think about it compared to an oil market, there is no integrated global market for energy efficiency. Now, renewables obviously in many ways doesn't have the same integrated global market as oil, but it's much easier to sort of think about what is the market for renewables. For energy efficiency, we recognize there was going to be a challenge. It's a very diffuse product of many different markets. And so what we decided to do as an approach was to say we recognize that diversity. And what we're going to do is we're going to pick a variety of illustrations from different countries, some IA countries, some non-OECD countries, from different sectors that highlight different aspects of what's going on in terms of the market. So for example, we have a detailed discussion of what's going on in the United States, where some of the drivers are very much market drivers. We have a discussion of China, where one of the big drivers for energy efficiency is the 12th fifth year plan, which is very much of a top-down approach. We have a discussion of what's going on in the European Union with the directive. We look at the appliance sector. We look at the building sector and the like. But the idea is through these various snapshots, kind of to constitute a quilt, to give one a sense as to some of the various different elements that make up the energy efficiency market. The other related point as we look forward, and I'll come back to this a little later, is we want to improve the quality of our data. We want to improve the methodology so that we end up with a more robust report going forward. So in terms of the case studies section, we decided, first of all, to pick on a technology. And in this case, we picked on ICT in particular in the context of appliances. Now, this is an interesting market in the following sense. On the one hand, as you're all aware, many of the appliances as they're getting smarter are becoming more interconnected. And that obviously gives us the opportunity to improve the energy management of those products. So in many ways, the movement forward on ICT, the improvements, present a real opportunity to improve how efficient we are in their energy use. But it also presents some challenges and often hidden challenges. I'm sure you're all familiar with, in one way or another, the one-watt standby issue. You all have TVs or stereos or the like. And starting about, I always remember, 10 or 15 years ago, there was no longer an on-off switch. It was either on or in standby. And under the one-watt standard, the notion was that if it's not on, even if at a certain point it needs to draw a certain amount of electricity and never really shut off completely, there's no reason why it should be drawing as much electricity as when it's on. So the idea was that when it went into standby, it would go into sort of a sleep mode and it would draw less electricity. One-watt and that produced important energy savings. Now, that whole movement has actually, to some extent, been undermined by improvements in technology. And I'll give you an illustration. How many people here, I admit to it, if you're the case, have a cable box with their TV? Okay, so half of you and the other half don't watch TV. For those who don't have a cable box with your TV, one of the wonderful new amenities of cable boxes or satellite boxes with your TVs is it gives you real-time TV guides. And what's happening is that basically those boxes are connected to the internet and they are continuously drawing information from the internet to update your TV guide so that when you turn on, you see the up-to-the-minute TV guide. The problem is that requires a lot of electricity. So what's happening because it's always drawing from the internet. So what is going on is that the one-watt standby that we have for your TV, and to some extent is being undermined by the fact that the cable box is continuously drawing information through its connection to the network. Now, this may seem like a trivial issue, but we have, on the one hand, an expected explosion in the amount of smart appliances. And people estimate that by 2020, with the expected increase in the amount of interconnected appliances, we might be looking at a situation with the amount of wasted energy. In other words, wasted in the sense that those appliances could go into standby mode at lower energy consumption, but aren't, would be equivalent to 550 terawatt hours per year. And that's more than the consumption of Canada. So what we've seen in many ways, in particular in the Technology Fund, is as much as we have improvements from technology, it also raises issues. And this always for us is one of the challenges when you think about energy efficiency, is that it never stays still. And we have to continuously adapt our understanding of what's going on in the markets, as well as our policy tools to keep up with this ever-changing landscape. Then we, as I mentioned, we had a variety of case studies that dealt with countries. We looked at basically about 15 different countries, including regions and the like, recognizing that each one presented its own specificities, different policy traditions, and the like. But at the same time, one could draw various common themes from them. So just to give you a sense of some of the country case studies and some of the highlights, I'll focus a little more on the United States. We covered, we didn't cover everything, we would cover certain specific issues in the countries. So for example, something that we see in the United States and we anticipate will continue is an increasing market for ESCOs. This graph describes what we hope will be some of the impacts of a variety of energy efficiency activities in the United States on the demand for power. So you have sort of a business as usual line, the dotted line, rising up from 2010 to 2035. Then you have the impact of a couple of interventions that would tend to damping the demand producing the blue line. And the other thing that we did obviously was we drew from a lot of different sources. So in this case, we drew from the Institute for Electric Efficiency. And thank you to them. A big issue in the United States is what's going on with the CAFE standards. So what you have here is a reflection of what's happening in a variety of countries around the world. And what you'll note is that the United States tends to be below the level and that's the solid lines. And then going forward, you have targets and expectations with the United States rising up in level to a level that's more commensurate with other countries. And I'm going to come back to this point because it's a significant issue from our perspective. You may recall from last year's wheel, 2012, one of the big conclusions that the press reported on and many people were interested in was the projection that the United States would end up becoming a net oil exporter. And what you have here is a description of that impact. Here you see the import side dropping substantially from 2011 into 2020 and beyond into 2025. And from the green line, you see the impact of energy efficiency operations activities on the import requirements of the United States, most notably relating to the change in cafe standards. And when we look at the United States, we feel there are a variety of factors that would tend to push a greater expansion of the energy efficiency market, which we call tailwinds, and a variety of factors that might dampen that. So, for example, increasing consensus on the importance of this issue, the fact that technologies are improving, improve coordination, that's often a critical issue when it comes to energy efficiency, in particular across different governmental levels. But headwinds might be, for example, a low natural gas prices and the like, because what we tend to see is the level of energy prices themselves will have an impact on the interest of notably consumers and others to move forward with the energy efficiency investments. As I mentioned, we looked at a variety of countries from each of the countries we tried to draw different important illustrations. So we looked at Japan, and one of the key programs in Japan is their top runner program in energy efficiency that applies to a variety of appliances. And what's notable about this program is this notion of a drive toward the top, where basically the highest standards tend to set the standards going forward. So you see some important appliances and obviously you see certain cultural dimensions here. So you have television, personal computers, and warming toilet seats as well. But I think one thing that's notable here is how many people here, you don't have to raise your hand for this, but own a product that was made by a Japanese company. Many of you do. So what's interesting is when Japan actually adopts this top runner program, it has an impact on all their appliances and all their products, and then that has a global impact on consumers. So what happens in a particular country like Japan, on the energy efficiency side, has a beneficial spillover globally. Korea is another country that is being very aggressive coming to the party probably a little later than Japan, but in promoting and pushing energy efficiency, it's got an aggressive program to support ESCOs. And what you see here at the bottom is also a burgeoning program to promote more efficient vehicles. The EU is interesting as well because what you see here in the top right-hand side is that the European Union, the energy intensity of the European Union is actually relatively low, not only compared to IA member countries, but also compared to the world average. But having said that, the European Union has been very adamant in trying to reduce its primary energy use. Part of that, it arguably relates to some energy security issues, as you may know over the last couple of years at various points, Europe has faced shut off of gas either because of an issue between Russia and Ukraine or Belarus and the like. So energy security issues are often a major point for Europe, but also Europe has been a leader in a variety of other fronts, including on greenhouse gas mitigation. But in any event, they adopted a directive by which by 2020, they need to have reduced their primary energy use by 20% compared to a baseline. And you see that reflected in this graph here on the lower left-hand side. So the top line of business as usual case, the bottom line where they want to be by 2020. And what's interesting is the red line in the middle is where they probably were in 2009. After some very difficult negotiations of the last 18 months, they came to some agreements, but those agreements are anticipated to only produce benefits that are more in the gray area. So a lot of people expect them in two or three years they're going to have to come back to this issue and push for more aggressive mandates and programs in order to get all the way down to the red line. Any sense of what's going on in Europe? And in Europe, a lot of energy efficiency actions are driven by decisions by the European Parliament and the European Commission. China, we took a look at China and we looked at China for two reasons. One reason is because it's China and it's obviously a major consumer of energy and so very important when we think about global energy issues. But we also looked at China because we wanted to highlight the importance of supply side efficiency. A lot of time in all we see the countries and the like, there's a tendency to look at energy efficiency interventions relating to end users. How can the consumer be more efficient in their use of energy? But in many countries, in particular in emerging economies, you often have inefficiencies in terms of how energy itself is generated. And what you have here, at least on the coal side, is a description of how China is moving to more efficient coal technologies. But again, from a global perspective, beyond the issue of how consuming end user energy efficiency opportunities, they are often very interested in how they can improve supply side energy efficiency areas. And then an illustration of South Africa here, what you have is a very nice diagram that shows a relatively comprehensive program that ESCAM, which is the utility in South Africa, has put in place to promote end user programs. And part of the purpose of this, the reason I put up this slide, is really also to convey the message. On the one hand, we see a lot of innovative thinking in emerging economies and we are very much moving into a world and have moved into a world in which IEA member countries can learn from emerging economies and vice versa. So in terms of prospects, looking forward, we feel that energy efficiency markets are expected to grow in the short term. We see a lot of this growth coming from private investment catalyzed by government policies. End use energy price is a key driver, so it's a combination of policies and prices. But one of the fundamental issues and challenges that we faced in preparing this report is the issue of limited data availability. We'd love to move to a point where next time we won't be talking about the 11 countries and what has been the impact, but we can talk about 15, 25, 30. And we feel very much that this energy efficiency market report will provide a vehicle for us to improve the quality of data and to encourage others to do so as well. Looking ahead, we plan on doing this every single year, so we'll have one next year in 2014 and I hope you'll invite me back. Some of the issues we plan on looking at in that case in particular are is to look at energy efficiency relating to electricity specifically. One reason we want to look at that is that our current projections in terms of electricity demand in OEC countries is that's going to stay relatively flat. It might increase actually because of increased use of electric vehicles, but otherwise it will stay relatively flat, diminishing in some cases. So there's a question of what is going to be the interplay between that kind of dynamic and improvements in energy efficiency we want to continue to work on and deepen our country specific knowledge. We will continue a technology focus. My preference probably would be to do transport in the way you transport buildings that would then look at it at more of a global level and clearly what we're doing is working with our member countries to improve the quality of data that they're generating. So in summary, it's a big market in terms of investments. It's a big market in terms of the outputs, policy, and the current high energy price environment and expectations that we're going to remain at prices consistent with that is also a driver. Many, many countries have energy efficiency policies and are looking at deepening and expanding those energy efficiency policies. Energy efficiency has a variety of important impacts on the global economy that go well beyond simply energy savings and greenhouse gas mitigation. I'll come back to that in a second. And we see a market that is going to grow. So that is an overview of what the market report looks like. But what I'd like to do now is spend a few moments describing to you why we did the market report. So the first thing is we see a variety of benefits from energy efficiency. And one thing that we have done is we have started a work scheme called the Multiple Benefits of Energy Efficiency because we believe that in order to scale up energy efficiency, we need to move beyond a highly technical analysis that is directed at ministries of energy and the like into one that engages a variety of other key stakeholders. So for example, when we're talking about emerging economies and developing countries, energy efficiency can improve affordability. That's a major concern for them. It can support a variety of development opportunities. As I mentioned a little earlier when you're thinking about the European Union or a variety of island states and the like, energy efficiency can reduce the need for fuel imports and thereby support energy security objectives. What we want to do is engage in a practice in which we identify and analyze a variety of different benefits from energy efficiency to enable energy ministries and other stakeholders to engage with a broader range of actors who see their own interests being served by energy efficiency. Second related point, this is a projection of where we feel the demand for energy at a global level will go given current policies. So basically going from about 14,000 million tons of oil equivalent to above 17,000. At the IEA, you may recall last year, the IEA did an analysis and it looked at what was the potential of economically viable energy efficiency operations and what were we doing relative to that. So just to be clear, not looking at what would technically be feasible but rather within the range of what was technically feasible, taking certain assumptions regarding energy prices, taking assumptions, setting up certain parameters regarding payback periods, identifying what are the amount of efficiency operations activities that we could do and what would be the impact of that. And that was called the Efficient World Scenario. And what you have here is what the Efficient World Scenario would look like, which would be the green line and how much it would use the need for coal, oil, gas, and other sources. So again, another benefit and I in some ways the clearest benefit of energy efficiency, we would need less coal, we would need less oil, would need less gas. And obviously, that will also have an impact on the price of oil. So under our analysis, we would expect that the price of oil would be $15 less by 2035 if we actually implemented all of the energy efficiency activities that make sense from an economic perspective. So that's another important benefit from energy efficiency. Related to that, we worked together with the OECD and looked at what would be the impact on economic growth. Would it be positive or negative, given the fact that we would be pouring money into energy efficiency activities. And the conclusion was that you see reflected in this graph is if you look across a variety of countries, you see a positive impact on GDP growth in these various countries to different levels. Now obviously, let me just also say something, which is the IA does a certain amount of forecasting and projections, but the IA does more scenario analysis. So putting together not so much what the world is going to look like, but saying if you did certain things under certain assumptions, this is what might be the result. In this regard, what we see often, and this is relevant in terms of the language issue, we see a variety of different benefits, but what we see is different stakeholders focusing in on different types of benefits. So as I mentioned in the EU, a lot of the discussions around energy efficiency, energy security, but also greenhouse gas mitigation, climate change mitigation. I was at a presentation relating to, from the climate negotiators and the representative from India was talking about the importance of energy efficiency, and she stated clearly, energy efficiency is very important for us. We want to do more of it. Why? It reduces poverty and will support our development. Greenhouse gas abatement was not a principal or secondary objective from her perspective. So a recognition, a variety of benefits and different benefits for different people and adapting one's language to that is important. And obviously, one of the big issues is greenhouse gas emissions abatement. So what you have here, and let me just point out on the, oh, sorry, on the right hand side is you have emissions. So before I showed you our expectation in terms of what would happen in terms of energy demand, that was the new policy scenario, here's our projection as to what we think will happen in terms of emissions if current policies are implemented. And that is consistent with a chain an increase in a global average temperature of about four degrees. Now the UNFCCC and scientists point to two degrees as a threshold. So this is high and we would like to theoretically be more along the green line. And in order to get there, we have to undertake a variety of investments in a variety of different activities. And under the IEA scenario analysis, here is a constellation of activities that would allow us to reduce our emissions from where we seem to be heading down to where we need to. And within that, you see a lot in terms of energy efficiency. So energy efficiency is a major part of our efforts in terms of greenhouse gas abaping. And all the more so when we think about what's going on in the emerging economies because there are two very important dynamics going on in large emerging economies. The first is they are growing and the second is there are more people. And there's a tendency to see more energy use when you have more people and there's a tendency to see more energy use when your economy grows. So the whole issue of mitigation figuring out ways to allow economies to grow to serve more people while using less energy, i.e. energy efficiency is a big part of the solution. But what we see is under investment. So what we have here is remember I told you about the analysis that the IA did in terms of economically viable investments which represents 100% versus what we think will be the amount of investments under current policies and that represents the solid parts. And what you see is different percentages. So relatively low in buildings, higher in industry but basically the point is what's above represents unused underutilized potential investments that makes sense from an economic perspective. So not only would we want to do more there's a lot more that we can do that makes economic sense. So in order to do this with you I have thought about three we're implementing three and I call non-conventional because everybody loves to talk about non-conventional oil and gas but non-conventional strategies. So the first is come about this point about multiple benefits. Focusing on the issue of multiple benefits figuring out a way to engage with a variety of different stakeholders at the national level the sectoral level and the like to get them engaged in supporting ministries and others in promoting energy efficiency. But we also recognize that we need to look beyond stakeholders. We need to look also at the public at large. I am often I said to my colleagues who work on renewables that I'm jealous of my colleagues who work on renewables because one thing that they managed to do was they managed to capture the imagination of the public. I can tell you the number of times my daughter would come to me and have a question about renewables and how wonderful it was in the light. And even when you think about for example what happened in Germany in Germany fundamentally they paid a heavy price for renewables but there was a general sense within the population that this was part of the social contract that they felt it was reasonable for them to undertake. And so that type of support in the public for something like renewables has had a major impact in promoting and supporting policies on the renewable side. We need to move to that on the energy efficiency side. The second thing is interestingly enough as I mentioned we talk about energy efficiency versus other fuels. In fact we don't count energy efficiency the same way we count other fuels. If we make that's a year old sign. If we make an investment for example in an oil project year after year after year we will count how many barrels of oil are produced. So if that that oil if that well was drilled 10 years ago and is producing oil today we'll count it. Even if that were a renewable power project every year that it produces a kilowatt hour we count that investment. 10 years later 12 years later hydro power project 40 years later. Think about what happens really on the energy efficiency side. You have a cafe you have an improvement in fuel efficiency in cars 2010. We forget about it almost immediately. But the fact of the matter is it keeps on producing benefits year after year after year after year. And that was what was reflected in that slide I showed you where where basically energy efficiency came out as one of the largest fuel sources is because we went back and we counted it year after year after year. Now a variety of agencies actually do this. So for example the energy information administration agency here in the US does it. But those that do it sometimes don't market it. So we have a situation where either a variety of entities aren't counting and those that are counting are not effectively marketing this issue. And so we find ourselves in some ways where the irony is not only isn't there really preferential treatment for energy efficiency in some ways we are penalizing energy efficiency. The other thing that's also very relevant when you think about it in particular in this issue about energy security is that energy efficiency is in some ways a domestic fuel. When you put in place the improved insulation in your home or in the office building or the like year after year after year it'll produce benefits irrespective if Russia shuts off gas to the Ukraine. It's because it's fundamentally generated through your energy consumption so it's a home grown benefit and that provides a variety of related benefits such as on the security side. So for countries to sort of recognize that when you make an investment in energy efficiency sure okay you buy the appliance maybe you import it but when it's sitting in your country it's generating benefits from your country. And then the other issue is to put it on par with market reports. So we've had these four market reports from the IA now we have this fifth energy efficiency fuel market report. And then the last thing in some ways maybe to summarize this and this I'm going back to this diagram I showed of the United States. The big as I mentioned one of the big conclusions of the big uptake in terms of the press in terms of the for the WIO 2012 report was energy independence of the United States from increased oil supply shale gas and the like. But the fact of the matter is about 45 percent of that benefit up to that point was from energy efficiency. We want to get to the point where policymakers more explicitly say and recognize I have an option. I can invest in oil. I can try to get gas out from underneath here or I can spend money on energy efficiency. At the end of the day the impact on how much oil I have to import is largely identical. Thank you. I'm going to go to Q and Asian a minute or two and and when we do please identify yourself in your organization when you ask your questions. But Phil, one of the things that always I guess intrigued me as both that when I was at the IEA and watching the models that the world that are in the world the world energy outlook etc. was the one of the points you made was try to disaggregate that total energy efficiency or productivity between price-related versus structural change versus policy. Are you comfortable the way that modeling is doing or you see when you did this report obviously you've got numbers and you show structural change as part of total energy efficiency but how you feel that you think there's room for methodological improvement I just as a former analyst in both the IEA and EIA that well first of all we have to agree that we'll group questions that way I can avoid the most difficult ones. But in some other presentations I have a series of slides that describe some of the challenges that we faced in terms of doing this report. So let me just take a couple of minutes to go over them so so you understand touches on the point you're dealing with. The first one was defining the market. What is the energy efficiency market? We can have a sense of oil and the like so we had a lot of debate internally on what was the market. We decided it was as I had mentioned in some ways in passing at the beginning when you spend money to reduce your energy consumption or and this is relevant for emerging economies in particular when you spend money to get more output from a given energy level that would represent the market. So that was kind of an indicative of a methodological issue that we had. The second one was sizing the market. So I talked about investments. We need to improve that figure going forward. We need to improve the methodology. I mean part of the part of the question is I mean in some ways let's just take this room. I can't tell. I assume those are efficient lights and those efficient lights have an impact on the electric wiring and the like. So how much of that is energy efficiency? How much of that is not really energy efficiency? And it becomes more difficult when you're looking at certain items where basically the cost has dropped. So how much of that is what portion of that product is energy is an energy efficiency expenditure or not. So we recognize there are a lot of issues there. And then so in some ways our view, this is the inaugural report. We felt it was useful and we hope you find it useful to try to sort of change the nature of the debate around it to start talking about energy efficiency as a market to appeal in some ways to businesses so that they can sort of see actually there is money going in and out of this market and to fundamentally move energy efficiency from something that has stayed maybe too much with specialists into something that's a little more accessible because we believe fundamentally that by supporting that type of movement we can get the type of support for a variety of energy efficiency activities that'll see the scale up that we need. Other than that, sorry, one last point is you know I find modeling and I'm not a modeler is part science, part art. Thank you. But just for the record it's a lead certified at the gold level. Congratulations. We thought I think in the planning process they really wanted to do platinum but there's even there's a cost benefit they show there as you know. So Molly have the honor and the first question. Molly Williamson. Thank you. A fascinating presentation. Could you say a word about the role of government incentives for promoting energy efficiency? We are in the United States now wrestling with the unintended consequences of incentivizing and in some cases mandating the use of ethanol for example. Can you talk about how this skews the market or how this is comparable to other subsidies for other forms of energy? Our basic view is the following or let's just say personal view. Not all energy efficiency investments make sense. But there's a there are we're leaving and that was reflecting that in that table. We're leaving a lot of energy efficiency investments that do make sense on the table. We're not doing it. So we have to be very careful in terms of developing government incentives for investments in energy efficiency that they're properly targeted and like. Having said that and I'll analogize to the renewables. I think what we've seen in the renewables mark in particular for example in Germany I want to obviously clearly in Spain is arguably is over investment. And the question in some ways becomes it's very difficult to hit it right on the mark. So it kind of depends where your tolerance level is going to be are you going to be more concerned about under investment or you're going to be more concerned about over investment? Our basic sense when we look at the energy efficiency markets and in particular given what's happening on the climate change side and the climate change needs is we are significantly under investing and so we need to figure out a way to increase those investments but recognizing not all energy invest energy efficiency investments make sense under all conditions and so we have to be smart about it. Thank you Phil. That was a excellent overview. One of the fundamental challenges to energy efficiency is whether the market will take cost effective measures on its own. McKinsey study of 2009 and other studies have documented fairly successfully that there are a lot of profitable energy efficiency opportunities that aren't taken. And your study seems to say we are going to rely on the energy efficiency market to achieve the benefits. There seems to be a bit of a market failure going on perhaps its lack of information perhaps its split incentives perhaps its other kinds of barriers. Does your report get to the recommendation of policies that would address some of those barriers and help us at least achieve the cost effect of energy efficiency? Thank you for that question because I think that gives me an opportunity to clarify something. What we try to do very much in terms of this market report was to be agnostic. Agnostic in terms of objectives and the like. So I ended in the middle I said thank you and then I went into some of the why of why we decided to do it and also why one reason I decided to do it and I must admit I should admit that the head of the energy efficiency and environment division and there are three units in there so a big part of my work is to look at this issue from the climate change perspective but not only from the climate change perspective. We really didn't want to go we didn't want to write another piece that as we've done in the past on what are good policies. We wanted to avoid that we've done a lot of work on what are good policies. We wanted to write a piece and we didn't totally achieve it and we hope to do a better job on how much money is in here. What are we talking about in terms of supply and demand just like we would talk about in terms of the oil side? How big is the oil market? What's investing worth? Where are we expecting it to go in terms of demand? So very much trying to disassociate the issue why you might be motivated to invest in energy efficiency from what is actually happening in terms of investments in energy efficiency. In the past was it your division that did the energy technology perspectives publication? No, so it's the other division within within my director but we are very close. That if I'm correct that had a lot of policy. Okay, so no actually interesting enough so my division is responsible for energy efficiency policies. So we have something called for example policy pathways which are basically laid out in certain defined areas what policy pathway you should follow to implement policies. So we've done them on a variety of issues. We just issued one on building energy codes. We've done one on urban transport. My division is responsible for the 25 policy recommendations of the IEA which covered a variety of sectors. The fact of the matter is the following. Let me put it another way. And I'm going to go into climate because I think in some sense it's related. Energy efficiency there are a lot of benefits from energy efficiency that we are leaving on the table. And that's too bad. That's a shame. The problem is if you then feel that people's expectations on the climate side and where we need to be in terms of emissions are credible. You find yourself in a situation where energy efficiency goes from being a very nice thing to have into an imperative. And what we see is when we compare that imperative if you trust like the IEA scenario analysis and you believe the scientists believe that compared to what's going on you see a major gap. So then that raises the question for us because one of my unresponsive energy efficiency is okay what can we do to scale up? So we're already doing policy analysis at the IEA. We do a variety of scenario analysis with the we on the ETP and the like. We try to promote uptake of new technologies but at the end of the day we're kind of repeating ourselves and we're saying the same thing we've been saying for years maybe louder and with more support but fundamentally it isn't changing that much. So we said to ourselves is there a way of changing the nature of the conversation around energy efficiency? And we view very much the idea for example of trying to position energy efficiency more clearly in people's minds as an alternative to other fuels as a way of changing the discourse around energy efficiency so that it moves from the area of technocratic policy specialists more into the mainstream just like just like renewables did. And I know there's a review of the U.S. energy policy coming up or I think early next year so I'm assuming that someone from your staff will be part of that and energy efficiency I'm sure will play in a prominent role in that review. So if I could before going out but if I could just make that give an illustration on that so I said I'm from New York. It's always interesting for me we don't question so much issues relating to defense. If it's defense we don't really do or it's a detailed cost benefit analysis. There's a sense of this makes sense and in different countries they have these different type of objectives and what we find some people are very motivated by the climate change objective. I work with many emerging economies that are sort of like that's you know the OECD countries created that problem whether it's true or not it's not our problem. So what we see is at the end of the day that different countries have different interests different stakeholders have different interests but under our analysis we need to see a significant increase in energy efficiency. Renewables are on track under our analysis. The growth in renewables is sufficient to get us toward two degrees. The change in the energy efficiency market is not on track. John. Oh then you're next so John. Hi Steve Rosenzack as Electric Institute just kind of curious you're talking about doing more countries are you thinking about doing countries where energy is very heavily subsidized like countries like Venezuela where I think the price of gasoline just went up to 15 cents a gallon and certain countries in the Middle East where electricity is about 0.0 cents a kilowatt hour and just kind of you know you're talking about global markets well those markets where basically people persuaded use as much as you want because it's seen as a I'll say a good thing for their society and kind of the other that's also the other side is that some of these countries are just trying to push as much energy use because they're such surplus and they don't really care about the future in a way so just in terms of your 2014 any thoughts about looking at those countries and maybe the other unfortunately the anti-effect of that? Yeah no that's that's a valid question so at the IEA is you're probably familiar we spend a lot of time on the whole issue of fossil fuel subsidies if you almost see any IEA publication we always identify that as a major issue that's having a distortionary impact on oil consumption and the like and we feel also what happens is that obviously undermines energy efficiency into it's increasing the amount of consumption and then the other thing is it's obviously it's also making energy efficiency operations not relatively cost effective you know one of the drivers I put up there when we were talking the US in a slightly different context was prices to end users so clearly in a heavily subsidized market the consumers don't have the same incentive to care about energy efficiency so as a general proposition that's an issue that we're raising and so for example we are working we prepared this 25 policy recommendations on energy efficiency that was targeted at IEA member countries and we've done some outreach to other parts of the world and we did one in the MENA region the more Middle East North Africa region where one of the recommendations that came out was you need to look at fossil fuel subsidies if you want to be serious about moving ahead on energy efficiency but I do want to come back and sort of say the market report fits in a portfolio of activities and it's designed to serve to meet a certain purpose and part of the purpose it's not designed to meet is to sort of say what are good policies having said that clearly fossil fuel subsidies will have an impact on the market I noticed early on you had that graph that showed the expenditures on energy efficiency I was quite frankly very surprised to see how high that number was relative to expenditures on oil, gas, et cetera those public and private expenditures and what went into that and in which countries because I don't believe in the U.S. our expenditures on energy efficiency are anything close to our net outlay for energy supply okay so just to clarify one point it's not how much money is being it's relative to on the investment side right as opposed to the consumption side in the United States on fuel the way we the way we generated the figures and it's described in this it's actually consistent with what was in the wheel 2012 as well is that in particular variety multilateral institutions and public sector institutions do estimates as to what they think was the leverage of their monetary outlays and so that 300 billion is based on figures that we got that have been refined since last year from a variety of multilateral and bilateral institutions and the type of leverage that they see and that's on their on for example lines of credits and the like and that's how we generated that figure and it's described in here with all its with the recognition of all its shortcomings and as I said it's totally consistent as well with the the figures we had last year in our wheel report this is an area where we would like to improve our data collection and our methodological our methodological approach so we very much you know I want to stress this is an inaugural report and we want to improve the quality in both those respects going forward having said that it was interesting sort of reading some of the press coverage that came out and one of them talked about is it higher is it low and so far it hasn't sounded crazy to people I will say from my own perspective I think it's actually probably low because you have a variety you know again if you go back to cafes standards and the like you have you know all these cars where you have improvements on fuel efficiency standards and the like variety of buildings and things like that there are a variety of expenditures so the use of probably best one is the refrigerator as they become more efficient and even sometimes the cost of them understood but that that doesn't mean we shouldn't try and in fact I think there's a lot of benefit in trying for the reason that's reflected in the last graph I showed I mean when the WIO report came out last year in 2012 and the big story in the press was about energy independence as a result of unconventional gas and oil there was very little discussion about the fact that 45% of that result was from energy efficiency intervention so that's part of the mindset that I think we need to change just by giving people facts to what extent did you break things down into various sectors such as buildings industry transportation okay so we broke it down into sectors in a section that gives an update on some of the performance in terms of improvements in energy efficiency so what we have is we have an initial section that describes what's happening at at a macro level and so those figures are basically macro figures and they're you know you look at an economy you look at its energy intensity you look at it 30 years later you look at its energy intensity you look at how much they're actually consuming you sort of look at certain structural changes between the economies you figure out how much of that difference probably comes from energy efficiency so we do that at an aggregate level for a very limited number number of countries then the other thing we do that we've done as a general proposition is we do our indicators work and in our indicators work we show what has been the shift in certain key sectors and so in this report the thing that our data people liked is that this report provides a good vehicle for them to get some of their information out and so we have a section that looks at improvements in industry across I think 15 of the IA member countries looks at transport commercial transport looks at freight transport and the like and we will continue in each of the reports to provide more information on indicators the funny thing about indicators is you know indicators don't reflect the market so we we always have we always have this problem which is on the on the one hand every time you start talking about energy efficiency we start moving into more of a policy approach as opposed to moving more into a dollars approach but that's our challenge you mentioned I think that Japan and South Korea were examples of some efficient economies or making investments there is the reason really because of the price of energy in those countries versus other other government incentives and for countries that do not have high prices of energy do you have any data on what works for kind of middle of the road economies and countries? I think the answer that to that in part is my sense of Japan is it's actually not driven by prices directly it's relevant it's more that Japan imports so much of its energy so Japan is totally vulnerable because of its import situation which obviously has an impact on prices but in some ways is almost more fundamental than prices so actually Japan for many many years in many areas has been a leader in terms of energy efficiency interventions and I think we're seeing that a little with Korea now the other thing that's interesting is to see Korea as well as with Japan focusing on those aspects where it's high level technological improvements related to appliances and things like that because that also I think fits in with probably some other geopolitical strategies they have in terms of you know Samsung, Sony and those type of those type of companies and I think in some ways which are your question or in some ways my response to your question reflects goes back to my point about the multiple benefits energy efficiency has a variety of benefits and also why people are doing promoting energy efficiency policies are also driven by a variety of different consideration that go far beyond simply the question of price if I could just make one other point in that regard it's interesting if you think about the IEA when did the why did the IEA come into existence because of the oil shock I mean and that was I mean I remember that that was more than just a price issue that was waiting on lines for it to get to get gasoline so Japan for many many years has been a has been ahead of the curve when it comes to energy efficiency and I think for security issues more than anything else Is China participating in many of the activities you have with the countries outside of the IEA in terms of especially energy efficiency yeah so I mean that's an interesting question the IEA has been changing over time as you know well because basically while it started off as an OECD organization to protect the OECD countries against OPEC activities what we have seen in particular over the last 20 years that is going to continue over the next 20 to 30 years is a shift in terms of how much of energy is being consumed within OECD members versus emerging economies like China and India so as a result the IEA's general proposition has increased its outreach and its engagement with non-member countries China, India, Brazil, Indonesia and the like recognizing in particular for most energy markets maybe less energy efficiency but for most energy markets what happens in those countries will have a major impact in terms of price and security of supply and the like so we have a very we're trying to be very proactive and try to engage with those countries and actually there are some efforts to try to create a more formal bond with those countries on energy efficiency we've done some stuff a lot of it's driven for example when you talk about China by what the Chinese are interested we did a publication called saving electricity in a hurry which talked about how you can respond to a short-term interruption of electricity and we did a presentation in China on that regard but we've been active actually believing on the climate change from where the Chinese maybe more than the energy efficiency side well when you look at the local pollution issues I mean I don't know how much more motivation felt the public and the and the government would have you know then what's been going on and the the most densely populated areas in China so well are there if there are any final questions or comments for Philip I almost said Philippe still haven't gotten right if not well yes ma'am last one's always the the tone well does this report have any projections on how investments in clean coal technologies such as CTL would have or could improve the efficiency in the transportation sector that's my question investments in clean coal technologies and how it could potentially improve transportation sectors efficiency no so we don't deal with that issue directly I mean to be frank in some ways your question I think touches on some of the complexities of the various linkages across I don't know even I'm thinking of some of the linkages power sector into electric vehicles and the light so we haven't really focused in on some of those linkages in this particular report to be frank we're having it we're having enough problems to try to just sort of define what energy efficiency in the most traditional sense looks like and improvements well thank you all once again for coming here this afternoon thanks to Annie Hudson and Fernando Ferreira for assisting and putting this meeting together and especially the Phil Bonoit for traveling from Paris to present this inaugural outlook or mark it up report from energy efficiency I think it's a great initiative and look forward to to hearing from you next year thanks Phil and please join me in thanking Phil