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Executive Chair of Santander
the world needs to improve energy intensity
the world needs to improve energy intensity
"Energy supply is critical but business must also reduce demand "
Ana Botín, Executive Chair of Santander
In a volatile world, governments face a range of challenges. How can they support ageing populations, finance the green transition and higher defence spending, or service sizeable debts? The list is long and differs from country to country, but there is one common theme: all will rely on financing from economic growth.
This growth relies in part on affordable and reliable energy. Demand for energy is set to rise by up to a third between now and 2050 to support a global economy that will be twice as large and a population of 2bn more people. This surge in population and productivity will be most concentrated in emerging markets, which makes the energy transition even more challenging.
For businesses, there is a clear commercial benefit intaking action. Energy that was previously wasted can instead be redirected to more productive uses. This will help companies reduce overall energy use—without reducing output— lowering cost and boosting profitability and competitiveness. In other words, energy demand and costs down, productivity up. By using these levers, which are already available, we can reduce current energy usage by up to a third, without decreasing output. If this were to happen by 2030, it would save up to $2tn each year, at today's energy costs, and pay back within 10 years.
Yet this opportunity is not being realised. Companies are held back by a lack of awareness of what they can achieve and nervousness about how quickly they can expect payback. To help realise the opportunity, governments need to develop national energy transition plans that factor in demand-side action as much as supply-side. They have already started down this road. At COP28, more than 120 countries pledged to double the rate of energy efficiency improvement by 2030. Now we need to turn pledges into action. Without deliverable transition plans, these worthy aims will remain just words.
Businesses, working together with governments, are crucial to supporting and realising these plans. They should be encouraged to consider their current energy use, research best practice and partner with the public and private sectors to overcome barriers to action. By doing this, we can reduce energy intensity and help the world's economy to grow faster. Both are needed to deliver the Paris climate goals.