Policymakers Guide to the Various Ways of Calculating Energy Productivity

About the Project
This project explores the uncertainties surrounding calculations of energy productivity, which arise through the existence of different approaches to measuring energy consumption and gross domestic product. Many factors can produce conflicting energy productivity estimates, all of which are systematically examined in this study. This project is part of a larger body of KAPSARC research analyzing energy demand, energy efficiency and rebound.

Key Points

The existence of multiple approaches to calculating energy productivity, with its resulting diverse outcomes, makes it difficult to draw meaningful comparisons between economies and monitor their progress over time. To understand better the implications of this, we conducted a systematic in-depth survey of the various approaches. 

Our analysis showed that calculated energy productivity could vary vastly depending on the assumptions used in the accounting of renewables, international marine bunkering and traditional biomass. We illustrate this divergence based on three of the most commonly used global energy databases. 

When measuring gross domestic product, whether market or purchasing power parity (PPP) exchange rates are used will have an impact, especially on developing economies. The lack of timely PPP exchange rates adds to the complications. Furthermore, for large oil exporters, the way real GDP is measured can affect the evolution of their energy productivity. 

We see a need for a greater degree of standardization in the energy economics community on the matters we have raised. Standardization, combined with a deeper understanding of the different ways of calculating energy productivity, should enable policymakers to design better energy and climate policies.