Almost all of the world’s energy demand growth is projected to occur in low- and medium-income countries (LMICs). Targeted energy efficiency investments have the potential to mitigate tensions between economic growth objectives and sustainable development commitments.

In this publication, the authors review the empirical evidence on both the private and social benefits of energy efficiency improvements in LMICs. They highlight the role that energy subsidies, unreliable power supply, and capital constraints may play in the underinvestment in energy efficiency. They also discuss some recent policy design innovations and emphasize the importance of rigorous evaluation.