In this article, we will discuss the 20 most energy-efficient countries in the world. You can skip our detailed analysis of the most efficient countries and go directly to the 5 Most Efficient Countries in the World.
Energy efficiency is one of the most beneficial practices in current times. It helps deal with the growing energy demands while also mitigating climate change. This significant phenomenon has immense potential. It could enable countries to reduce GHG emissions and bring them closer to achieving SDG 7. Energy efficient policy actions also help save the citizens’ money, create new jobs, and reduce pollution. According to a report by IEA, Energy-efficient policies could create an extra ten million jobs by 2030. The IEA’s World Energy Outlook 2022 claims that a 13% reduction in annual carbon emissions would significantly reduce the impact of climate change.
The rising attention towards energy efficiency globally has led to the growth of the energy efficiency industry. Global investments in efficient energy are at an all-time high. The pandemic and the Russian-Ukraine war have catalyzed this process; governments worldwide are now prioritizing efficient, sustainable, and reliable energy sources. According to IEA, since 2022, $1 trillion has been spent on energy efficiency globally. The IEA has forecasted this spending to reach $2.8 trillion in 2023. It also mentions that 90% of the entire investment in electricity generation would be concentrated on low-emission power.
Why energy efficiency?
Global energy demand is increasing rapidly. Meeting this demand using our current energy practices would be unsustainable. According to the Sixth Assessment report by the IPCC, our planet will hit almost 1.5 degrees Celsius of warming without considerable intervention to control GHG emissions in the next 20 years. The ACEEE report pointed out that energy efficiency can help achieve 50% of the GHG emission reduction goal set by the Paris Agreement. This practice also increases grid reliability while providing resilience in extreme weather conditions. Energy fuels all sectors of the economy and enables economic growth. More energy efficiency, therefore, entails more efficient economic growth. It creates more jobs, while controlled pollution rates improve the health of the citizens. The pandemic seriously affected and slowed down its progress. According to IEA’s Energy Efficiency 2022 report, the annual gains for the international energy intensity progress dropped to almost 0.5% in 2020 and 2021. It is an inevitable benchmark for achieving a net zero scenario in the future.
The energy efficiency measure holds immense value. According to estimates by IEA, it can help avoid 5 gigatonnes of CO2 emissions per year by 2030. These practices would also have a positive spillover into other sectors of the economy. The governments adopting these policies are conscious of these positive implications. Achieving it is a process that requires profound changes in both policy and practice. Some of the world’s largest energy consuming countries are getting more energy efficient. There has been an increase in investment in renewables. According to a June 2023 report by the World Economic Forum, in 2022, investments in renewables reached $1.3 trillion, almost a 70% increase from pre-pandemic levels in 2019.
Alternative Energy Sources
Fossil fuels still dominate the global energy supply. The high energy density of fossil fuels has contributed to this persistent position. However, options like nuclear fusion could help reduce this share. According to the IAEA, nuclear fusion is four million times more dense than fossil fuels. According to the Culham Centre for Fusion Energy, one kilogram of fusion fuel provides the same energy as 10 million kilograms of fossil fuel.
Nuclear fusion also does not emit any greenhouse gasses and many of the most developed countries are now focusing on nuclear fusion. According to the European Commission, the E.U. contributes 45% to the ITER (International Thermonuclear Experimental Reactor) project. It is an engineering megaproject aiming to generate fusion energy. It has allocated EUR 5.61 billion to the project from 2021 to 2027.
Major Companies That are Working on Energy Efficiency
Let’s take a look at some notable companies that are working on energy efficiency. Siemens Aktiengesellschaft (OTC:SIEGY) is one of the most prominent companies in this regard. Siemens Aktiengesellschaft (OTC:SIEGY) is a leading provider of energy efficiency solutions, offering a wide range of products and services including wind turbines, solar panels, and energy-efficient building technologies. The company reportedly grew its revenue by 14% in the second quarter of 2023 and generated EUR 19.4 billion on a nominal basis. The company’s net income rose to EUR 3.6 billion.
Honeywell International Inc. (NASDAQ:HON), a leading developer of energy technologies, is also a noteworthy name when we talk about energy efficiency. In the first quarter of 2023, the company reported earnings per share of $2.07 and outperformed EPS estimates by $0.14. The company’s revenue for the quarter amounted to $8.86 billion, up 5.83% year over year and ahead of Wall Street estimates by $349.90 million.
Johnson Controls International (NYSE:JCI) and Schneider Electric (OTC:SBGSY) are also important contributors to the energy efficiency industry. As of July 20, Johnson Controls International (NYSE:JCI) has surged more than 35% and Schneider Electric (OTC:SBGSY) has gained roughly 40%, over the past 12 months.
Our Methodology
We have only considered the world’s top energy-consuming countries for this analysis. We have calculated their average ranking based on their energy efficiency scores, energy efficiency in the industrial sector, and the energy transition index, from the World Economic Forum.
We have used the ACEEE report that evaluates these top energy-consuming countries across 36 different policy and performance metrics to obtain a combined score for each. The score has been marked out 100.
Incorporating the industrial sector was significant as it accounts for almost half the total energy consumed globally. The industry score includes indicators like the energy intensity of the industrial sector, mandatory energy audits, investment in manufacturing R&D, etc. It has been scored out of 25. It is based on 10 different metrics relating to both policy and performance.
We have also included the total final energy consumption for each country, sourced from the ACEEE report. The ETI is based on energy equity, sustainability, and security. It provides a measure of transition readiness and their current energy system performance.
After compiling this comprehensive dataset of metrics, we calculated each country’s Insider Monkey score that was based on the average of the three scores we pointed out and ranked them in ascending order of this metric.
20 Most Efficient Countries in the World
20. Russia
Total Final Energy Consumption (Ktoe): 514,447
ACEEE Score: 28
Industrial Sector Score: 10
ETI Score: N/A
Average: 19
Russia ranks lowest in energy efficiency among the 20 top energy-consuming countries. It is a giant in the world energy market. The energy infrastructure has been weaponized during the Russian-Ukraine war. However, it has massive potential to reduce its energy consumption. The IEA has called it “the Saudi Arabia of energy efficiency.” With an average score of 19, Russia is one of the most efficient countries in the world.
Some of the top companies dominating the energy efficiency race include Johnson Controls International (NYSE:JCI), Schneider Electric (OTC:SBGSY), Honeywell International Inc. (NASDAQ:HON), and Siemens Aktiengesellschaft (OTC:SIEGY).
19. South Africa
Total Final Energy Consumption (Ktoe): 71,344
ACEEE Score: 23.5
Industrial Sector Score: 1
ETI Score: 52.2
Average: 25.56
South Africa is the second largest economy in Africa. The South African government has set a target for 2030 to achieve a 29% reduction in energy consumption. Almost 70% of its electricity comes from coal. The 2019 Integrated Resource Plan is focused on diversifying the power mix by 2030. It aims to reduce its carbon footprint while meeting the growing energy demand. South Africa’s integrated policymaking and implementation would facilitate a smooth transition into energy efficiency.
18. Saudi Arabia
Total Final Energy Consumption (Ktoe): 148,039
ACEEE Score: 25
Industrial Sector Score: 5.5
ETI Score: 55.3
Average: 28.6
Saudi Arabia has high energy intensity but needs proper investment in energy efficiency. Considering the starting position, Saudi Arabia is already disadvantaged in sustainability. The ETI Score has, however, improved by almost 11% over the past decade. There is a focus on the building and transport sectors. All new buildings are mandated to be insulated. There are improvement opportunities present, especially in the industrial sector. It could enter into voluntary agreements with the manufacturers and work towards improving energy efficiency. Regardless, it scored 28.6 and is therefore placed 18th on our list of the most efficient countries in the world.
17. Thailand
Total Final Energy Consumption (Ktoe): 100,161
ACEEE Score: 31.5
Industrial Sector Score: 12.5
ETI Score: 55.9
Average: 33.3
The country aims to reduce energy intensity by 30% in 2036. Thailand also has an above-average score for the industrial sector. This score can be attributed to energy-efficient policies like compulsory energy audits. It is also focused on reducing dependence on natural gas. Energy efficiency could be improved further by making more energy-efficient policies in all sectors of the economy. With an average score of 33.3, Thailand is one of the most efficient countries in the world.
16. Australia
Total Final Energy Consumption (Ktoe): 83,350
ACEEE Score: 35.5
Industrial Sector Score: 6
ETI Score: 63.6
Average: 35.03
According to the ACEEE report, the country was ranked 13th globally among 25 countries because of the national efforts towards energy efficiency. The country aims to reduce its GHG emissions significantly by 2030. The government is focused on market integration and resource development. It is also investing in low-emission technologies. It intends to increase its energy productivity by 40% by 2030. Australia is ranked 16th among the most efficient countries in the world.
15. India
Total Final Energy Consumption (Ktoe): 609,865
ACEEE Score: 41.5
Industrial Sector Score: 12.5
ETI Score: 54.3
Average: 36.1
India has been ranked 16th on our list of the most efficient countries in the world because of its national efforts to improve energy efficiency. There is no unified national goal for energy efficiency. However, the country is determined to reduce GHG emissions. It already has a low share of natural gas in power generation. The government has introduced many energy market reforms. There have been significant investments in clean energy. Since 2000, almost 700 million people have gained access to electricity.
14. Indonesia
Total Final Energy Consumption (Ktoe): 156,055
ACEEE Score: 38
Industrial Sector Score: 15
ETI Score: 55.8
Average: 36.26
Indonesia is the largest energy consumer in Southeast Asia and also one of the most efficient countries in the region. Indonesia ranks low on the scale of the national effort, as per the ACEEE report. However, it ranks high in the industrial energy efficiency category. There are many energy-efficient practices in place, like the energy audit requirements. It is the largest biofuel producer in the world. Indonesia is exploring its renewable energy potential.
13. Brazil
Total Final Energy Consumption (Ktoe): 224,620
ACEEE Score: 34
Industrial Sector Score: 9
ETI Score: 65.9
Average: 36.3
Brazil, the 9th largest economy in the world, has a high energy intensity and could improve energy efficiency. It has a goal to reduce energy consumption by 10% by 2030. The high ETI Score refers to the country’s energy efficiency potential. These scores have seen substantial improvements over time. Renewables meet 45% of the primary energy demand.
12. Turkey
Total Final Energy Consumption (Ktoe): 102,961
ACEEE Score: 45.5
Industrial Sector Score: 13.5
ETI Score: 54.3
Average: 37.76
Tax incentives and loan programs are in place at the national level that encourage energy efficiency. It also has remarkable incentives for energy efficiency in the industrial sector, like the 2007 energy efficiency law. This policy urges industries to reduce their energy intensity by offering generous incentives. It also has an energy management systems policy in place. Turkey is diversifying fossil fuel supply sources as well.
11. Mexico
Total Final Energy Consumption (Ktoe): 124,616
ACEEE Score: 46
Industrial Sector Score: 13.5
ETI Score: 54.1
Average: 37.86
Mexico has enthusiastic goals to curb GHG emissions and reduce energy intensity in the future. Between 2013 and 2018, in just 5 years, Mexico reduced its energy intensity by 9.5%. Now it aims to reduce it by 1.9% every year. Furthermore, Mexico also aims to reduce GHG emissions by 22% by 2030. Mexico also incentivizes manufacturers to adopt energy efficiency. There is a significant increase in power generation from renewable sources. Mexico is placed 11th among the most efficient countries in the world.
10 Canada
Total Final Energy Consumption (Ktoe): 206,063
ACEEE Score: 49.5
Industrial Sector Score: 9
ETI Score: 64.2
Average: 40.9
Canada is the second largest country in the world by land area and is also one of the most efficient countries in the world when it comes to managing energy. Canada also has an optimistic goal of reducing GHG emissions by 40-45% by 2030. There are national efforts to improve energy efficiency. The per capita investment toward improving energy efficiency R&D is also high. The industrial sector could, however, be improved by employing better policies. Canada aims to achieve net zero emissions by 2050. The Indigenous communities could especially influence the country’s energy transition.
9. South Korea
Total Final Energy Consumption (Ktoe): 182,205
ACEEE Score: 53
Industrial Sector Score: 15
ETI Score: 62.3
Average: 43.43
The energy intensity in South Korea also had a steady decrease from 2013 to 2018. During these five years, there was a 6.6% reduction. It aims to further reduce it by 38% by 2040. The country has conscious policies to improve energy efficiency in place. The overall spending on energy efficiency R&D is also noteworthy. With a score of 43.43, Indonesia secured a spot among the most efficient countries in the world.
8. China
Total Final Energy Consumption (Ktoe): 2,066,635
ACEEE Score: 57.5
Industrial Sector Score: 9.5
ETI Score: 64.9
Average: 43.96
China is one of the biggest consumers of electricity and emitter of GHGs. It accounts for one-third of the total global GHG emission. According to the ACEEE report, China ranks in the 9th position out of 25 countries. Coal accounts for 60% of the total power output. Renewable energy capacity is being financed and enhanced. The country has one of the largest energy intensities globally.
7. The U.S.
Total Final Energy Consumption (Ktoe): 1,594,129
ACEEE Score: 54
Industrial Sector Score: 12
ETI Score: 66.3
Average: 44.1
Despite being one of the largest energy consumers, the United States of America does not have national energy reduction targets in place. However, there is a focus on improving energy efficiency. The ETI Scores have been steadily improving over the past decade. Power generation in the U.S. is undergoing a pertinent transition as well. The US is ranked seventh on our list of the most efficient countries in the world.
6. Spain
Total Final Energy Consumption (Ktoe): 86,152
ACEEE Score: 66
Industrial Sector Score: 16
ETI Score: 65
Average: 49
Spain aims to improve energy efficiency by 39.5% by 2030. The country spends more on energy efficiency and R&D than other countries. It also mandates energy audits in the industrial sector. It has aligned its goals with E.U. objectives. Energy efficiency can be improved further by introducing incentives for manufacturers to adopt energy efficiency. Spain is one of the most efficient countries in the world.
For investors that are looking to increase their exposure to companies that are developing green technologies, some viable options to consider include Johnson Controls International (NYSE:JCI), Schneider Electric (OTC:SBGSY), Honeywell International Inc. (NASDAQ:HON), and Siemens Aktiengesellschaft (OTC:SIEGY).
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Disclosure: None. 20 Most Efficient Countries in the World is originally published on Insider Monkey.