Energy consumption indicators
Energy indicators are metrics that help analysts, policy makers, and researchers understand how energy consumption changes over time and compare changes in geographic regions, types of end user, or types of end use. For example, with the right amount of data, energy consumption indicators can assess how energy consumption changes after new technology, energy efficiency programs, or energy conservation efforts are introduced. These examples are just a few ways that you can use energy indicators to analyze energy markets.
Energy indicators can explore trends in total energy consumption or in a specific end-use sector or subsector. The four end-use sectors are commercial, industrial, residential, and transportation. Depending on data availability and the purpose of the analysis, the energy indicator could include total end-use energy consumption for one of the end-use sectors or energy consumption for a fuel's specific purpose within an end-use sector, among other options.
Types of indicators
Energy indicators have three major categories: absolute value, a ratio, or an index. The energy indicator you use will depend on the scope of your analysis, your purpose, and the data availability.
Type 1: Absolute value indicator
An absolute value is the easiest indicator to develop because it requires only energy consumption data—for example, energy consumption in the commercial sector. In addition to being easy to use, it can also be valuable to highlight where you should explore more. For example, you might notice an unexpected change from a long-run trend or a lack of a change following the start of new energy efficiency or conservation programs.
The benefits of the absolute value indicator hint at the limitations of the indicator. The absolute value indicator lacks context about why changes occur. Using the commercial sector example, reduced energy consumption could be due to a new energy efficiency or conservation program, an economic downturn, or mild winter or summer weather that require less energy-intensive heating and air conditioning. For example, from the absolute indicator alone, we don't know why Texas total energy consumption decreased between 2000 and 2010 then increased between 2010 and 2020.
Type 2: Ratio indicator
Ratios are commonly used energy indicators that divide energy data by non-energy data, such as population or economic output or activity, which you can use to draw inferences. Common ratio indicators of energy intensity are energy consumption per person (per capita) and by dollar of GDP. Energy analysts often look at ratios for economy-wide energy consumption and for energy consumption in each of the four end-use sectors. Although these indicators provide more context than the absolute value indicators, they probably won't completely explain why energy consumption changes at the economy or sector-wide levels. To better understand the cause, you could construct a more detailed ratio by using a lower level of aggregation of data. For example, you could calculate energy consumption for space heating in the residential sector per floor area and adjust for heating degree days. This type of detailed ratio indicator is a typical energy efficiency indicator.
When working with ratio indicators, use physical-based measures of activity (such as tons of steel produced) instead of value-based measures (such as value-added in the steel industry) when possible. Outside factors unrelated to energy consumption (such as inflation or trade) could affect value-based measures. If you use value-based measures, use inflation-adjusted indicators, such as real GDP, when evaluating the energy consumption ratios across time. For example, despite an absolute increase in total annual energy consumption in 2020 from 2000 in Texas, the state had less energy consumption per unit of real GDP in Texas in 2020 than in 2000.
Type 3: Index indicator
Index indicators build on ratio indicators to determine the change over time in energy consumption per unit of non-energy data, such as population or economic activity. Index indicators divide all years by a base year. This method allows you to compare variables across time as well as compare a number of index indicators. For example, you can use the index indicator to show the magnitude of changes in the ratio indicator.
Indicator levels
You can create and analyze three types of indicators—absolute value, ratio, and index—at various levels of disaggregation. Each level tells a different part of the energy story. Aggregate indicators, which include the ratio of energy consumption and GDP or population, are common because the data required are typically available across time and geographic regions. Although aggregate indicators will help you track change over time or compare geographic regions (states, census regions, or countries), these indicators cannot explain why the changes occurred. Often when considering energy intensities, the changes that occur over time or across geographic regions are likely due to structural change or differences rather than changes in energy efficiency or conservation. A decrease in energy intensity across time could be due to a shift from more energy-intensive manufacturing to less energy-intensive manufacturing or a switch away from manufacturing altogether. An increase in energy intensity could happen if incomes for a large portion of the population rose, resulting in more private vehicle use and less public transportation or walking and biking.
The International Energy Agency lists four indicator levels. As you move down the indicator levels, the data requirements increase but so does the ability to explain key changes in energy consumption and provide policy-relevant analysis. You can also apply the general principles of the four indicator levels to analyze energy production and expenditures.
Level 1: Total energy consumption
A common indicator at this level is the ratio of energy consumption to GDP; however, you could use other macroeconomic indicators, such as population. These indicators are commonly used because the data they need are often easily available, but they do not provide details about why energy consumption changes over time or is different across geographic regions.
Level 2: Energy consumption by end-use sector
When analyzing energy consumption by end-use sector, use sector-specific physical or value-based measures of activity to develop ratio or index indicators. When data are available, evaluate both physical and monetary units. An example of a physical unit is the number of residential households you use to develop the ratio indicator of residential energy consumption per household. An example of a value-based unit is the industrial sector dollar of value added, which you can use to create the ratio indicator of industrial sector electricity consumption per dollar of value added.
Level 3: Energy consumption by end-use subsector
Each end-use sector is made up of many subsectors. Analyzing the subsectors can help you better understand the changes you see when analyzing the entire end-use sector. For example, several industrial subsectors (such as basic chemicals, refining, and iron and steel) are more energy intensive than other subsectors. As a country shifts either to more energy-intensive industries or away from these industries, the shift will affect the overall energy consumption for the industrial sectors. Looking at energy consumption by subsector will help you better understand how energy consumption within the sector is changing and may provide high-level insights on how energy efficiency and conservation programs are working
Level 4: Energy consumption by appliance, physical process, or energy service within an end-use sector
Analysis at this level results in the clearest picture of how energy efficiency and conservation programs affect energy consumption. However, data at this level are not always available. Examples of analysis you can conduct at this level are electricity consumption by refrigerators within the residential sector or diesel consumption by buses per passenger mile within the transportation sector.
When data are available, calculate indicators from the most detailed level possible and then aggregate up to help explain the changes in higher-level indicators. You often need several indicators to develop a holistic picture of energy consumption.
Production and expenditure energy indicators
Energy indicators and the types and levels of indicators discussed above are not limited to energy consumption. You can apply these concepts to energy production and energy expenditures. Examples of energy production indicators include the amount of oil extracted from a single well or the amount of natural gas used to produce electricity. Energy expenditure indicators can quantify energy costs for end users or the costs to produce or transform energy.
Last updated February 14, 2023.