Many indicators can be used to measure energy efficiency. One is energy intensity, or the ratio of energy consumption to gross domestic product (GDP) or some other economic indicator. It is commonly used as proxy or headline indicator for energy efficiency: a decreasing ratio is seen as an improvement, and an increasing ratio, a deterioration, over a period of time.
By Asian Development Bank
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Energy
efficiency is defined as the “ratio between the useful output of the end-use
service and the associated energy input” (World Bank and IEA 2014). The IEA
(2014b) defines it as the relationship between the energy requirements of a
certain device (for example, a light bulb, boiler, or motor) and the service
that the technology provides (for example, lighting, space heating, or motor
power). In other words, energy efficiency can be equated with delivering more
services for the same energy input, or delivering the same services for less
energy input. It can be achieved through better performance, the use of more
energy-efficient equipment, or a change in consumer habits. The experience of
many countries in Asia and the Pacific provides the economic case for achieving
this goal. In the PRC and India, for example, energy efficiency initiatives
have reduced energy intensity and resulted in energy savings (ADB 2013b).
Energy efficiency is also an important enabler for energy access. Greater
efficiency frees up resources to expand the reach of energy, lowers the cost of
energy for consumers, and creates a surplus that allows more energy to be used
for productive undertakings.
Many
indicators can be used to measure energy efficiency. One is energy intensity,
or the ratio of energy consumption to gross domestic product (GDP) or some
other economic indicator. It is commonly used as proxy or headline indicator
for energy efficiency: a decreasing ratio is seen as an improvement, and an
increasing ratio, a deterioration, over a period of time. Among the top
contributors of primary energy demand in developing Asia and the Pacific,
energy intensities have been decreasing—if not decelerating in compounded
annual growth rate, as in Thailand—since 1990, and especially in the most
recent years (Figure 1). The top four countries—the PRC, India, Indonesia,
and Thailand—are likewise classified as high-impact countries under the Global Tracking Framework (GTF),
given their significant contribution to global primary energy demand, and could
thus affect the achievement of the global SE4All objectives.
Figure 1: Primary Energy Intensity among the Top 10 Primary Energy Consumers, 1990–2012 (%)
Worth noting,
however, are the limitations of primary energy intensity as a proxy indicator.
Economic sectors have different processes and therefore also varying energy
requirements, but the differences are lost in the process of using an economic
indicator as large as GDP. This fact is widely recognized in the literature,
hence the move to keep indicators as dis-aggregated as possible. Given the
complexity of sector-specific characteristics, comparison across countries
might be challenging, especially as countries also have varying sectors and
services. Moreover, the ratio’s movement across time could be attributed to the
many factors influencing both the numerator (energy demand) and the denominator
(GDP).
To address
some of the indicator’s limitations, energy efficiency can be measured through
the decomposition method of analysis. This method isolates the energy
efficiency component from other factors affecting energy demand, such as
economic structure and economic activity. The Logarithmic Mean Divisia Index
(LMDI) was used under the GTF to net out the energy intensity factor, which
accounted for the contribution of energy efficiency improvements to the
reduction in energy demand, indexed to the base year 1990. The GTF computations
show deteriorating energy efficiency in recent years in some of the countries
with the highest energy demand (Figure 2), as evidenced by the positive
compounded annual growth rates for energy intensity between 2010 and 2012. The
PRC, Indonesia, and Malaysia, on the other hand, have consistently improved
their energy efficiency since 1990.
Figure 2: Energy Intensity Component of Final Energy Demand among the Top 10 Energy Consumers, 1990–2012 (%)
The decomposed
energy intensity index derived from the LMDI was also used in computing the
cumulative avoided energy consumption, which represented the difference between
hypothetical energy consumption—energy intensity remaining at its 1990 level—and
actual consumption. GTF data showed that the PRC, the top consumer of energy,
produced the highest cumulative savings from 1990 to 2012, at 867,500 exajoules
as a result of its continuous improvements in energy efficiency
(Figure 3).
Figure 3: Cumulative Avoided Energy Consumption of Top 10 Energy Consumers, 1991–2012 (’000 exajoules)
Another useful
indicator is the ratio of final energy consumption to primary energy
consumption, which measures overall energy conversion efficiency. A higher
ratio represents lower energy conversion and transmission losses. In countries
where primary energy is mostly used directly to meet final energy demand,
efficiency will be relatively higher. With 2012 data from the IEA’s non-OECD
energy balances, the ratio was computed for developing members in Asia and the
Pacific. Nepal took the lead, at 98.9%, followed by Myanmar with 94.7% (Figure 4). Caution should, however, be observed in comparing across countries as the
indicator is influenced by resource endowment factors.[1] A higher ratio for a
country does not imply that its overall energy system efficiency is better than
that of other countries.
Figure 4: Ratio of Final Energy Consumption to Primary Energy Consumption of Selected Asia and the Pacific Developing Members, 2012 (%)
Publication Details:
This article is an excerpt from a technical report titled - SUSTAINABLE ENERGY FOR ALL TRACKING PROGRESS IN ASIA AND THE PACIFIC: A SUMMARY REPORT / Download The Report - PDF
ADB Team. 2015. SUSTAINABLE ENERGY FOR ALL TRACKING PROGRESS
IN ASIA AND THE PACIFIC: A SUMMARY REPORT
© Asian Development Bank https://openaccess.adb.org. Available under a CC BY 3.0 IGO license.
Endnote:
[1] According to the GTF, primary energy and final energy will be more directly related in a country with a significant hydroelectric sector.
In a country rich in geothermal energy, on the other hand, the ratio of final energy consumption to primary energy consumption will
be lower because of the low thermodynamic quality of the primary resource (World Bank and IEA 2014)
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