Why it matters
Efficiency matters more, in the age of electricity
Energy efficiency and electrification go hand in hand.
The world is entering what the International Energy Agency (IEA) describes as a new “Age of Electricity”. Electricity currently accounts for around 23% of final energy consumption, yet powers economic activities representing nearly half of global GDP. Demand for electricity is growing rapidly as transport, heating, cooling, industry, digitalisation and artificial intelligence become increasingly electrified.
This growing role of electricity is increasingly reflected in international climate and energy policy. The 35-by-35 Global Electrification Pledge, launched by the COP31 Presidency in September 2026, calls for electricity to supply 35% of global final energy consumption by 2035. At the same time, the European Commission’s Electrification Action Plan aims to increase electricity’s share of final energy consumption in the EU to 46% by 2040.
3-4x
More work done per unit of energy by electrical systems compared with fossil technologies in production, heating and transport.
~23%
Electricity’s share of final energy consumption today, highlighting the significant opportunity for further electrification.
4,000 TWh
Electricity savings in 2035 from efficiency improvements in appliances, lighting and space cooling.
40% faster
Rate at which grids must expand and modernise compared with the previous decade.
Together, these figures tell a systems story. Electrification increases electricity demand, infrastructure must grow to meet it, and energy efficiency reduces the amount of generation, grid capacity and storage required. As the world enters the age of electricity, efficiency and electrification become increasingly interdependent.
Efficiency and electrification are twin engines, not alternatives
Electrification is one of the most powerful tools available to improve energy productivity. Electric technologies typically deliver the same services using significantly less energy than fossil-fuel alternatives. Electric vehicles, heat pumps and electric motors convert a larger share of their energy input into useful work, enabling economies to produce more value with less energy.
At the same time, the IEA makes clear that faster electrification increases the importance of energy efficiency. In its High Electrification Scenario, electricity demand grows by almost 1,400 TWh every year through 2035, while grids need to expand and modernise around 40% faster than during the previous decade.
Energy efficiency helps manage that growth. More efficient buildings, industrial processes, appliances, cooling systems and equipment reduce the amount of energy that must be generated, transmitted, distributed and stored. The IEA finds that efficiency improvements in appliances, lighting and cooling could save almost 4,000 TWh of electricity in 2035, creating valuable headroom for new electric demand.
Electrification changes how energy is supplied. Energy efficiency reduces how much energy is required. Together they lower costs, strengthen energy security, reduce emissions and keep the infrastructure requirements of the transition manageable.
Electrification changes how energy is supplied
Electrification replaces combustion-based technologies with electric alternatives that deliver the same services using significantly less energy. Heat pumps can provide three to four units of heat for every unit of electricity consumed, while electric vehicles and motors convert a much larger share of their energy input into useful work than fossil-fuel technologies.
As power systems become increasingly renewable, electrification is what enables clean electricity to reach transport, buildings and industry. Without electrification, renewable power cannot displace fossil fuels at the point of use.
Examples include: heat pumps, electric vehicles, electric motors and drives, electrified industrial processes
Energy Efficiency reduces how much energy is needed
Efficiency reduces how much energy is required in the first place.
In its 2026 Electrification Special Report, the International Energy Agency (IEA) identifies energy efficiency alongside electrification as a key lever for increasing electricity’s share of final energy consumption. By reducing total energy demand, efficiency creates headroom for electrification while limiting the growth in generation, grid and storage requirements.
Efficiency measures across industry, transport and buildings make electrification faster, cheaper and easier to deliver.
Examples include: industrial efficiency investments, building retrofits, process optimisation, heat recovery, minimum energy performance standards (MEPS), high-efficiency motors and variable speed drives.
“Electrification is the answer and efficiency is optional” is the biggest misconception.
The IEA’s High Electrification Scenario reaches around 35% electrification by 2035, but it does not rely on electrification alone. Efficiency improvements across buildings, industry and transport reduce total energy demand, creating the headroom needed for electricity’s share of final energy consumption to grow.
The question is not electrification or efficiency. Achieving higher electrification rates depends on both.
The next challenge is not deploying a single technology, but optimizing the entire energy system.
Efficiency reduces demand. Electrification improves how energy is converted and supplied. Heat recovery captures energy that would otherwise be wasted. Together, they lower infrastructure requirements, improve resilience and create value across all four Efficiency Advantage pillars.
A systems approach
Three levers that compound each other
Companies that move fastest think in systems rather than assets, combining efficiency, electrification and heat reuse rather than chasing single-equipment upgrades in isolation. Together these three levers can greatly increase the useful work done by every unit of energy, and the technologies for all three already exist.
Remove the demand before you move it
Audits, rightsizing, high efficiency motors, variable speed drives and better maintenance cut consumption without changing what you produce.
- Around 40% of global final energy demand sits in industry
- Nearly two thirds of primary energy is currently wasted
- Ten industrial actions could deliver roughly $437 billion a year in savings by 2030
Switch the remaining demand to electric
Heat pumps for low and mid-temperature process heat, electric industrial fleets and electrified processes convert far more of their input into useful work.
- Heat pumps deliver 3 to 4 units of heat per unit of electricity
- Electric vehicles reach up to 90% efficiency against around 40% for combustion
- Electricity’s share of final energy could rise to around 40% by mid-century
Recover what still escapes
Even a heavily electrified system loses energy as heat, as any data center operator knows. Recovering it reduces total demand and can create new revenue.
- Up to half of all energy used in industry is lost as heat
- Up to 30% of that waste could be used elsewhere
- Only around 7% of Europe’s waste heat potential is currently used
“Electrification is a major contributor to energy efficiency, but electrical systems also need to be made as efficient as possible, since the infrastructure for electricity production, transmission and distribution is costly and takes time to build.”
The business case
The business case for electrification
Electrification is not an environmental initiative competing for a sustainability line item. Framed correctly, it competes on the same terms as any other capital allocation decision: return, payback and risk reduction.
Lower cost per unit of output
Electric technologies do more work per unit of energy, and the cost of the equipment that delivers them has fallen sharply. With some clean technology costs down 80 to 90% in a decade, the economic case for electrified and efficient systems keeps strengthening.
Less exposure to fuel markets
Average monthly Brent prices have swung by more than 340% in a decade. Moving end uses onto electricity, and cutting how much of it you need, reduces exposure to fuel price volatility and supply disruption, and buys headroom to electrify on your own timeline rather than the grid’s.
Emissions cut at the point of use
Electrification is what lets clean electricity reach transport, heating and industry. Combined with efficiency, it reduces both emissions and total energy demand, which is why the two together outperform either on its own.
New industries and skills
Electrification and efficiency solutions rely on engineering, digital optimization, system integration and industrial services. Global investment in clean energy technologies is expected to pass $2 trillion before the end of the decade.
From ambition to execution
The ambition to increase electricity’s share of final energy consumption towards 35% by 2035 reflects a growing recognition that electrification will play a critical role in improving energy security, competitiveness and decarbonisation. The International Energy Agency identifies both electrification and energy efficiency as essential levers for achieving that ambition.
Achieving electrification at scale will require organisations to reduce demand, improve energy productivity and deploy efficient electric technologies across industry, buildings and transport. The challenge is no longer understanding what needs to be done. It is delivering it consistently, affordably and at scale.
That is where the Energy Efficiency Movement focuses its efforts. By sharing proven technologies, implementation approaches and real-world industrial experience, we help organisations capture the demand-side efficiency opportunity that makes electrification faster, cheaper and easier to achieve.
Our role is simple: help organisations use less energy, electrify more effectively and unlock greater value from every unit of energy consumed.
Stop debating ambition. Start building delivery.
The technology exists. Where progress breaks down is the unglamorous work of turning a target into a financed, repeatable, executed programme. That is the gap our network exists to close, by comparing what is actually working across sectors and geographies and turning it into frameworks other organizations can adopt rather than reinvent.
Go deeper
The Efficiency Advantage
Our full narrative on why energy efficiency is a strategic driver of performance, resilience and growth rather than a cost-saving measure.
Learning
Assess where your business stands, watch the training video series and find partner programmes that build the skills to deliver.
Reports
The Energy Efficiency Investment Report 2026 and our research on where industry is investing in efficiency and electrification, and why.
