Concerns about climate and energy security are leading to greater government intervention in the energy sector than has existed since before the start of energy market liberalization several decades ago. This trend is expected to continue as both concerns intensify. Fossil fuels provide 80 per cent of global energy while being responsible for 60 per cent of global greenhouse gas emissions. If the objective of climate change policies, namely an effectively zero-carbon-emitting energy sector in the developed world by 2050, and substantially lower carbon emissions in the developing world too, is to be achieved, within a generation the way in which energy is produced and used will have to have changed totally. Similarly, as easily accessible sources of oil and gas become scarce, and remaining resources become ever more concentrated in unstable or unfriendly regions, energy security will require major changes, particularly for oil and the transport sector.
There are a number of ways to reduce emissions from the energy sector. Improving energy efficiency unambiguously addresses climate and energy security concerns simultaneously. It has the added advantage of often being cheap to achieve, with many energy efficiency measures delivering financial savings. This can be seen across all sectors, for example in vehicles, electrical appliances, and the heating and cooling of buildings. In addition, relative to most supply options, efficiency measures are in general quick to implement. Without efficiency improvements, supply-side initiatives can bring only limited success in respect of either climate change or energy security.