U.S. Economy Energy-Efficiency
March 21, 1996
EIA Session Summary
"To achieve efficiency in energy use" is
part of the U.S. Department of Energy's mission. By measuring energy-efficiency changes,
we have a way of knowing if we have achieved our goals.
Energy efficiency is an interesting and useful
concept for analyzing energy use. Energy efficiency is usually analyzed in relative terms;
For example, "is energy efficiency increasing or decreasing," rather than
"what is the energy efficiency of a particular energy-requiring product or
service?" Considered in relative terms, energy efficiency is a fairly simple concept
to describe theoretically--energy-efficiency improvement occurs when more or enhanced
goods or services are provided with level energy inputs. Energy-efficiency loss occurs
when more energy inputs are required to produce the same or reduced products or services.
Because energy needs to be assessed relative to the
amount of product or service provided, energy-use rates, commonly called energy
intensities, are the measures ordinarily used to assess efficiency trends. Energy
intensities reflect not only energy efficiency but also changes in other effects such as
weather and extent of occupancy. However, the advantage of considering individual energy
intensities is that you may easily measure and track them over time.
Measuring energy efficiency in the
overall economy is more complex than in the individual sectors. The participant
discussions in this session suggested EIA has opened Pandora's box. Participants seem well
aware of the difficulties and complexities of doing energy-efficiency assessments for
How Should Energy Efficiency Be Defined Economy-Wide?
Diverse opinions were abundant in this last
workshop; workshop participants suggested that:
- Different Energy-Efficiency Indicators were
Needed. Energy-efficiency indicators could measure some kind of economic well-being,
suggesting that a wide range of indicators would offer insight into the "ordinary
business of life" and the relationships, causes, and opportunities in observed
trends. The central question in the analysis of energy efficiency may really be
"efficient with respect to what?" Is the concern specifically about economic
well-being, higher productivity, increased employment and incomes, or improved
environmental quality? Different answers call for different indicators.
- Definition Depends on Perspective.
Definitional issues come down to whether one assumes a service perspective or a
mechanistic, strict intensity, perspective with regard to energy efficiency.
- Measurement Depends on Policy Issues.
Measurement of energy efficiency always relates to the specific policy issues at stake.
Otherwise, why should we care how efficient we are? For this reason, the appropriate
indicator is dependent on the policy objective, as in the following:
Research and Development
All of the Above
As an example, from the global-warming perspective,
the absolute carbon emissions are obviously most important. From this and every other
perspective, the least important indicator is based on Btu energy intensity.
- Should Focus on Strict Energy Consumption and not
Energy Intensity or Efficiency. Alternatively, some people believe that
differentiating between intensity and efficiency is senseless. Focusing on
"services" is shying away from the real issue of how much energy we use. Why is
the increase in strict energy consumption such a sacred cow? Is there a perception that
more consumption equals increased or improved services? In fact, we are not necessarily
getting more services from increased consumption; we may be using energy for things we
used to be able to do without energy.
For example, at one time, children's recreation was
to play in the backyard; since this did not require energy consumption, we did not measure
this service. Now, recreation may be playing Nintendo instead. This required more energy,
but did it increase the level of service or is there a higher utility achieved?
is the Audience for Economy-Wide Energy-Efficiency Indicators?
Workshop participants suggested quite an array of
users for the efficiency indicators including:
- Policy Makers. Obvious uses for such
indicators are policy formulation, assessment, and justification. Therefore, Congress and
the State houses are the most important users of the indicators.
- Academic Community. Potential users
are more widespread than just policy makers. It is true that most users of such indicators
are policy makers and their staff, but a huge academic community would also be interested
in using the indicators.
- Research Organizations. At the Center for
Global Change, such data are used for analysis of energy tax proposals, for example.
- Modelers. Energy-efficiency analysis and
indicators could be used by the Energy Information Administration (EIA) internally to
model and forecast energy usage.
- Program Offices. The indicators could be used
by program offices where programs are designed, evaluated, and defended.
What is the Appropriate Disaggregation for Analysis of
Energy Efficiency in the Economy?
Most workshop participants seemed to agree that EIA
should not only consider the development of aggregated energy-efficiency indicators but
disaggregated ones as well. It was noted by one participant that aggregate indicators of
intensity are useful, but the underlying components are critical to interpretation. For
example, a youth soccer referee may feel that he has refereed successfully if he leaves
the field with a 50% overall approval rating. Yet that aggregate alone cannot guide his
performance, underlying it are three disparate factors: fan approval, coach approval, and
player approval. The evaluation of his performance will be different for each; by
considering all three factors can he identify problems and improve his performance from
game to game. Some other participants' thoughts were that:
- EIA Needs to Show the Aggregate Indicators are Not
Enough. Policy makers may only want one indicator, but alone it is not a useful guide
for policy decisions. If policy makers ask for one indicator, give them two. If they ask
for two, give them four to show them what the aggregate masks.
- EIA Needs to Show the Structural Components
Underlying the Indicators. It is wrong to overlook aggregate Btu energy intensity,
because this too has a policy implication for sustainability. However, without a
structural context, the aggregates are misleading. For example, it looks like the
industrial sector has made the most progress toward energy efficiency, whereas the
residential sector's progress seems unimpressive. On the other hand, residential
opportunities may have been at their limits. If analysis is not conducted at the
disaggregated level, opportunities for improvement will be missed. The structural
component of intensity is important because it shows where policy might or might not be
- EIA Should Investigate the Effects of Sector
Redefinition. Aggregates may be useful at sector level. However, it might be more
interesting to redefine sectors as "Work," which might include portions of
transportation and buildings, or "Recreation," for example. Likewise, it would
be more illuminating to distinguish among worker/producer buildings and customer-use
buildings, in addition to transportation for work or leisure.
Should Different Energy Sources, such as Electricity or
Renewables, be Considered Separately?
Workshop participants seemed to have explicit ideas
when discussing whether energy-efficiency indicators should be developed for total
consumption or for the individual energy sources. Some of these ideas were that it was:
- Important to Remove Renewables; Need to Make a
Distinction Between Energy Sources. Energy intensity without such distinctions is
conceptually incoherent. For example, we do not count the solar energy, which warms our
planet and sustains our lives as energy consumption, so why count the solar energy used to
generate electricity. If we are to use an energy-intensity aggregate, therefore, all solar
energy should be eliminated from the total. In the proposed Btu tax, for example, solar
and wind energy are exempted for obvious reasons.
- Important to Wait Until Renewables Penetrate the
Market. Exempting renewables makes sense until they penetrate the market so much that
there is a scarcity of the technology used for them or unless you are concerned about the
cost of building the plants.
- Expenditures Should be Used. It has been noted
that using expenditures rather than Btu is a way of accounting for the relative scarcity
or associated losses of particular types of energy. (For example, site electricity is much
more expensive than site-fuel consumption.) However, if the concerns include the
environment, it would be necessary to adjust these values to a social price.
- Aggregate Indicators Should use Primary Energy and
Disaggregated Indicators Should Use Site Energy. If the indicators relied on primary (
energy that includes losses such as transmission losses) rather than site energy, we could
deal with solar energy more logically, since it would not show up in the primary energy
consumption. Primary energy is better than site energy in the construction of aggregate
indicators. At disaggregated levels, however, we may also be interested in site energy.
What is More Important--Frequent Data Collection or
Workshop participants seemed to understand that EIA
faces budget constraints and cannot collect more detailed data and at the same time
collect data more frequently. Workshop participants were asked which would they
prefer--detailed data or data available more frequent. Some of the participants' comments
- Detail is More Important than Frequency. It
would be better for EIA to publish data on 100 sectors of the economy every 5 years than
to publish data on only 40 sectors every 3 years.
- Need Trend Data. Consistent time series are
essential for this efficiency analysis or we will be misled by recessions. We need time
series trends as well as snapshots.
- Need Consistent Format. It would be a huge
improvement if only the existing data were published in a consistent format. This would
highlight the data gaps and show Congress and the public how little we really know.
- No Need for Annual Data. It is not critical to
have annual data when you are concerned with long term growth. One can smooth out the
"blips" with moving average growth rates. It is much more important to have
greater detail than increased frequency.
- Need More Detail. EIA should find a way to
publish consumption data at the four-digit SIC level, even if it happens only every 10
years. This detail is necessary to reveal technical versus structural change.
is the Role of EIA in Economy-Wide Efficiency Analysis?
Workshop participants provided many
diverse roles for EIA. Among the suggested roles were that:
- EIA Needs to Maintain its Primary Role--that as a
Data Gatherer. EIA needs to place greater emphasis on data gathering, which is its
traditional role. EIA is a data engine first and foremost, and analysis of trends may not
really be its role.
- EIA Could Provide the Tools for Analysis. EIA
can and should provide the necessary data and even simple tools to facilitate external
analysis. It is potentially within EIA's intended role to offer simple ratios of existing
data. EIA could provide the components, such as energy use levels or use rates, since
different customers would want different indices for their particular circumstances. Given
budget constraints, EIA should publish the basic tools on its CD ROM to reach these
potential users, rather than doing the analysis itself. Also, EIA could consider a
publication analogous to the Bureau of Labor Statistics chart books on productivity.
- EIA Needs to Provide Emission Equivalents. EIA
needs to move beyond energy consumption Btu. Recognizing that the policy implications
surround not the Btu but the associated carbon, it should provide the conversions of all
consumption to emissions equivalents. Energy expenditures and carbon intensity are
- EIA Could Provide a Consistent Format. EIA
would also be doing the policy analyst community a great service if it were to provide a
single consistent format for energy data across all sectors. The sources of energy data
are so fragmented and poorly coordinated
- that any analyst undertaking an economy-wide analysis
must first learn at least four different data systems.
- EIA Should Revive the National Energy Accounts. Even
before the demise of the National Energy Accounts, there existed huge holes in our
knowledge of energy consumption, including a lack of annual data. Yet at least then there
was a standardization, which it has been our great misfortune to have lost.
- EIA Could Act as an Information Broker. This
would require reaching out to other sources of energy and services data in order to
promote standardization and consistency as well as to fill as many of the remaining gaps
as possible. Such standardization and consistency is lacking within the EIA itself. Why
should the role of broker be the EIA's? EIA already is the best source of such data for
most sectors of the economy and for certain sectors it is the only reliable source.
- EIA Needs to Undertakes Efficiency Analysis--It
has the Stamp of "Approval. In many contexts it is especially important to have
the EIA's "stamp of approval" on energy-efficiency data; even world renowned
experts in energy efficiency will be questioned about their data. The strength of EIA
publications, for example, is that the methodologies and assumptions are always
transparent. It would not be necessary for the EIA to certify the interpretations of any
published indicators, or even the methodology used, as definitive; rather, it would be up
to analysts using the indicators to interpret trends and convince others of their
questions on this topic may be directed to:
Modified: October 17, 1999