But for my last point, let me share with you the real key to adapting to higher energy prices. It will also be the number
one contributor to reducing emissions, and also to energy security. That is energy efficiency – what we have called the
hidden fuel.
There are pragmatic strategies that governments and industry can pursue today to reduce energy use. And the good
news is, they are either cost neutral, or even improve economic growth.
Because it is so important, I am pleased that energy efficiency has finally become a focal point of energy policies –
partly thanks to the hard work of the IEA to convince governments.
And yet, our analysis shows that by 2035, two-thirds of the economic potential for energy efficiency will remain
untapped. That is, unless market barriers such as fossil fuel subsidies can be overcome. Artificially low prices for oil
and other fuels in places like Southern Asia mean that people use more dirty energy than they need to.
Europe has already done much to improve its efficiency, and is a leader in this area.
However, one of the problems in Europe is that there remains uncertainty around energy efficiency regulation, and how
those regulations will fit into the larger European energy package. That lack of policy coherence discourages people
from investing in energy efficiency, and thus from reaping the rewards over the longer term.