U.S. Economy Energy-Efficiency Workshop
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 entire economy.

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:

  Policy Objective     Environment         Economy/Productivity     National Security     Research and Development

  Intensity Indicator Carbon-Emissions Energy-Expenditures Petroleum-Reliance 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?

Who 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 directed.

• 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 Detailed Data?

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 were:

• 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.

What 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 preferred measures.

• 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 interpretations.

Conference Papers

Industrial Energy-Efficiency Workshop

Contacts

Specific questions on this topic may be directed to:

Stephanie Battles

Stephanie.Battles@eia.doe.gov

(Phone: (202) 586-7237)

FAX: (202) 586-0018

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URL: http://www.eia.doe.gov/emeu/efficiency/economy_ws.htm

File Last Modified: October 17, 1999