Energy productivity

Energy productivity measures how much the economic benefit comes from using primary energy. This value is calculated by taking the ratio of GDP (the total money made in a country) to total primary energy use (TPES) (all of the primary fuels and primary flows that a country uses to get energy). This quantity (measured in $/MJ) indicates how effectively a country (or jurisdiction) uses their primary fuels and primary flows. This quantity is very similar to energy intensity (EI), which is one divided by the energy productivity.[1] This inverse relationship means that as energy productivity improves it goes up, but energy intensity (EI) goes down. Mathematically this can be expressed as:

[math]\text{Energy Productivity} = \frac{1}{\text{Energy Intensity}}= \frac{\text{GDP}}{\text{TPES}}[/math]

When a country reduces primary energy use the denominator goes down, so energy productivity goes up. For example when power plants become more efficient, less fuel is needed to produce electricity. This improvement would increase energy productivity. Likewise, when a country increases GDP faster than TPES, energy productivity goes up. Reducing wasted energy makes an economy more efficient.

This ratio quantifies how much good the primary energy provides. Energy use per capita describes only how much energy people use on an individual basis, but it provides no details as to how that energy is helpful. Energy production is one way to clarify 'what energy does for a person', which certainly varies from country to country. Wealthier countries almost always use more energy per capita than poor countries and EI accounts for this discrepancy in wealth.[2]

That being said, richer countries tend to have better infrastructure, so they tend to have better energy productivity. The economies of countries around the world benefit from having access to energy infrastructure. Energy productivity describes how well this infrastructure is doing it's job. Below is a graph showing the relative energy intensities of regions across the globe. Click 'explore data' in the graph to explore specific countries. Note that energy productivity is improving in almost every country in the world, even after adjusting for inflation.

Energy productivity is calculated by adding up all of the primary energy sources that a country uses (TPES). This adds all of the raw forms of energy (coal, wind, natural gas, energy found in natural resources, etc.) before they are converted to energy currencies like electricity. [3] The amount of these raw forms of energy (primary fuels and flows) includes everything that's been imported, but does not include any energy that was exported (since another country gets to use that primary energy). The amount of energy used to calculate energy productivity is only the energy that the country uses as energy. For example, if a country produces a barrel of oil, and sells it to another country, that would be a commodity that the country is selling and wouldn't be part of the energy productivity calculation. Imported oil that's used for energy would be.[2] Below is a graph showing how the two indicators for energy productivity, GDP and total primary energy supply (TPES), have changed for countries over time relative to a normalized year (the first year data is available).

Although energy productivity is a valuable way to describe how well a country uses energy, there are drawbacks to this method. First, there are different accounting methods to determine total primary energy used. Additionally, GDP does not always directly correspond to the welfare of a country (see problems with GDP). When discussing energy productivity, it is important to consider factors that affect a country's economy. For example, countries that have a economies based on extracting natural resources (primary sector) often use more energy because mining resources is very energy intense, making for a relatively poor energy productivity. Also, manufacturing (secondary sector)takes a tremendous amount of energy, for the amount of money that's made from exporting those goods. A service based economy, like a country with an industry based on banking or computer programming (tertiary sector), tends to be less energy intensive, so has a better energy productivity. Other factors like size and climate of a country can also play into the calculation, but tend to have a smaller impact than how much an economy is based on each leveled sector (primary, secondary or tertiary sector).

Energy Productivity vs. Energy Efficiency

Energy productivity does give some indication for how efficiently economies are able to harness primary energy. A high energy productivity is desirable—as it indicates an effective energy infrastructure. For example, large scale power plants tend to be more efficient than small generating stations (although cogeneration can provide exceptions). Governments often aim to improve energy productivity by targeting energy efficiency (one common example is replacing traditional light bulbs with CFL light bulbs and LED light bulbs). This improvement in energy efficiency does improve the energy productivity for a country, and is much of the current strategies in combating climate change.[2] Improving energy productivity is important as it encourages more economic activity and GDP growth so that a country can prosper, but not rely on increased energy consumption to create this growth.[2]

Most people would prefer to maintain economic prosperity, while taking care of environmental concerns. Energy productivity is more meaningful of a measurement than energy efficiency because it includes the idea of how well a country is doing. At a personal level, energy efficiency tends to be easier to understand, so people focus on that more.[4]

Trends

Generally, energy productivity gets worse during the early stages of industrialization as economic advancement uses less effective equipment. There is also quite a bit of embedded energy needed for the energy infrastructure like the grid. After this rapid industrialization, the energy productivity gets better as technology and infrastructure improve. This infrastructure includes having paved roads, and buildings with a fair amount of steel. Once this is put into place, maintaining these assets is much cheaper (both in terms of money and energy use) than putting them up in the first place. Other ways of increasing energy productivity include advancing methods of extraction of raw materials and increasing the efficiency with which production materials can be obtained. Recycling aluminum can dramatically improve energy productivity because so much energy goes in to making aluminum in the first place.

Among the countries with the best energy productivities are Switzerland and Japan; they use the least energy to produce a unit of their GDP. These economies rely heavily on services (tertiary sector); be careful when comparing them with countries like Canada, which are very reliant on the primary and secondary sectors.

For Further Reading

References

  1. Richard Wolfson. (April 26, 2015). Energy, Environment, and Climate, 2nd Edition. W.W. Norton & Company.
  2. 2.0 2.1 2.2 2.3 The Conference Board of Canada. (April 26, 2015). Energy Intensity [Online]. Available: http://www.conferenceboard.ca/hcp/details/environment/energy-intensity.aspx
  3. US Department of Energy. (April 25, 2015). Energy Analysis [Online]. Available: http://www1.eere.energy.gov/analysis/eii_trend_definitions.html
  4. US Department of Energy. (April 26, 2015). Energy Intensity Indicators: Efficiency vs. Intensity [Online]. Available: http://www1.eere.energy.gov/analysis/eii_efficiency_intensity.html

Authors and Editors

Jordan Hanania, Kailyn Stenhouse, Jason Donev
Last updated: April 22, 2021
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