Determinants of energy productivity: A comparison of 39 countries

About the project 

Quantifying the determinants of a country’s energy productivity trends answers the fundamental question of whether its economy is becoming more energy productive because of technological and efficiency gains, or whether it is due to structural economic shifts. Using three types of analysis, this paper investigates the drivers of energy productivity changes occurring in 39 countries during 1995-2009. The comparison between countries allows for examining whether demographic and economic characteristics contribute to energy productivity performance and the rates of improvement. The findings of the analysis can help inform policy-making efforts focused on improving energy productivity.

Summary 

Quantifying the determinants of a country’s energy productivity trends answers the fundamental question of whether its economy is becoming more energy productive because of technological and efficiency gains, or whether it is due to structural economic shifts. 

This paper uses three types of analysis to investigate the drivers of energy productivity changes occurring in 39 countries during the 1995-2009 period. Several key findings about global energy productivity trends emerged: 

- Sectoral energy productivity improvements from efficiency gains and changes in product mix were the primary drivers behind country level energy productivity improvements. 

- Structural economic shifts away from industry and towards more service-oriented sectors played a lesser role in aggregate energy productivity improvements. 

- Nations with similar demographic and economic characteristics showed similar levels of energy productivity and rates of improvement. 

- Former communist countries and nations undergoing economic liberalization exhibited the highest rates of improvement—although they remain less energy productive than developed nations. 

- Long-standing hypotheses that higher levels of income per capita and higher energy prices are associated to greater energy productivity are reinforced by the analysis. 

- Higher levels of investment are also associated with aggregate energy productivity improvements, although the response from the investments may take a few years to materialize.