How to prioritise which energy efficiency indicators to develop? Emer Dennehy Energy Analyst (Energy Efficiency Indicators) Energy Technology Policy Division © OECD/IEA 2014 What is an indicator? © OECD/IEA 2014 What is an energy efficiency indicator? energy efficiency indicator (EEI) energy consumption activity © OECD/IEA 2014 Why are energy efficiency indicators important?  Understand how energy is used Understand the main factors influencing trends in energy use Evaluate the role of energy efficiency to restrain growth in energy consumption  Evaluate the impact of existing and future energy efficiency policies and programmes © OECD/IEA 2014 How are energy efficiency indicators used? In IEA analysis energy efficiency indicators link with scenarios, technology and policy High-level engagement Develop more detailed indicators Evaluate progress on energy efficiency recommendations © OECD/IEA 2014 Indicators Scenarios Policy Technology Enhance regional / technology detail Sector roadmap development National roadmap Overview of IEA Energy Efficiency Indicators Work  Establish a harmonised framework for data collection and analysis  Harmonisation => Comparability  Comparability => Understanding of global trends and drivers  Produce meaningful cross-country analysis to provide guidance to policy-makers on:  Underlying drivers (economic activity & structure, income, prices...)  Trends in energy use and CO2 emissions  Energy efficiency opportunities and progress  Policy effectiveness © OECD/IEA 2014 IEA Energy Efficiency Indicators Pyramidal Approach © OECD/IEA 2014 Energy Efficiency Indicator Manuals © OECD/IEA 2014 Energy Efficiency Indicators: Essentials  What are the basic indicators & how to prioritise development of indicators?  What key insights do indicators provide into trends driving energy use?  How can these indicators be used to quantify energy efficiency and track policy impacts?  Discusses what additional data and indicators are required for more robust analysis and cross country comparisons © OECD/IEA 2014 Essentials sector chapter structure  What is driving energy use?  How is energy being used and how has it evolved recently?  What sector / sub-sector / end use / technology / process should be prioritised?  Develop indicators by level of the pyramid  Additional indicators  Decomposition analysis  Policy information and evaluation © OECD/IEA 2014 How to get started?  What is the most energy consuming sectors?  What is the faster growing sector?  Analyse  By total energy or by fuel  What is the data availability?  What level of disaggregation is available?  What level of disaggregation is required?  What indicator is most relevant for policy development?  What indicators are useful for cross-country comparisons? © OECD/IEA 2014 Why is a pyramid used to describe EEIs?  Emphasise that the more data available the more meaning indicators can be calculated  Level 1  Sector or total fuel consumption  Level 2  Sub-sector or end use  Level 3  Process of technology  Beyond level 3  Depends on data availabilty  Additional indicators © OECD/IEA 2014 Level 1 indicators: Residential Example Indicator Residential energy consumption per capita Residential energy consumption per occupied dwelling Data required  Total residential energy consumption by energy source.  Population.  Energy consumption.  Number of occupied dwellings. Purpose  Can be constructed for many countries and provides a consistent basis for comparison.  Provides qualitative information on which end use might have been the fastest growing. Limitation  Does not measure energy efficiency developments.  The indicator is influenced by the penetration rate of different appliances, the number of inhabitants per house, the income level of households, the trends in house size and dwelling type, the efficiency of water and space cooling devices, the type of light bulbs used, the efficiency of the building envelope, etc.  Provides a general overview of the trends in aggregate energy intensity. When energy use by end use is not known, energy use per occupied dwelling can be used as an energyintensity indicator. Some important conclusions can be drawn if the weather, ownership of energy-using appliances and dwelling area are known.  Monitor energy use in the residential sector. Combined with energy use per household, provides useful insights on what might have been the main driver of energy consumption.    Residential energy consumption per floor area © OECD/IEA 2014   Energy consumption. Total floor area.     Does not measure energy efficiency developments. Influenced by many factors not related to energy efficiency such as changes in income level or energy prices. Does not measure energy efficiency developments. Influenced by many factors not related to energy efficiency such as changes in income level or energy prices. Residential level 1 indicators © OECD/IEA 2014 Level 2 indicators: Services Example Indicator Space heating energy consumption per value-added Data required  Energy use for space heating.  Services valueadded. Space heating energy consumption per floor area  Energy use for space heating.  Total floor area. Purpose  Provide an indication of the trends in space heating energy intensity. Limitation  This indicator does not take into account the effect of floor area and the share of floor area heated.   Provide an indication of the trends in space heating energy intensity.    Space heating energy consumption per floor area heated  Energy use for space heating.  Total floor area heated.  Provide a better indicator as it takes into account the share of floor area heated.    © OECD/IEA 2014 Does not provide a distinction between equipment and building efficiency. Does not measure energy efficiency developments. Does not take into consideration the share of floor area heated. Does not consider the level of heating required by different types of buildings. Does not provide a distinction between equipment and building efficiency. Does not measure energy efficiency developments. Does not consider the level of heating required by different types of buildings. Level 3 indicators: Transport Example Indicator Data required Purpose Limitation Energy use per passengerkilometre by road transport vehicle  Passenger transport energy consumption by road transport vehicle.    Passenger-kilometres by road transport vehicle. Energy intensity by road vehicle is a meaningful summary indicator, if specified at a detailed enough level. Intensities can be used to help develop transportation energy policies. Provide insights on the average fuel economy of the vehicle stock. As opposed to energy/pkm, it is not influenced by vehicle occupancy.  Energy use by vehicle kilometre © OECD/IEA 2014  Stock of vehicles by type of LDV.  LDV vehiclekilometres.  LDV energy consumption.    Or fleet fuel economy survey.  The indicator is still affected by factors that are not related to energy efficiency such as the change in vehicle weight for LDVs within the fleet and vehicle features. May mask important structural changes if the level of disaggregation is limited. May mask embedded structural changes if the level of disaggregation is limited. Additional indicators  Indicators that are not necessarily energy related but which help to explain energy consumption  Examples:  CO2 indicators  The purpose and limitations identified for energy efficiency indicators also apply to CO2 indicators © OECD/IEA 2014 Aren’t some of the EEIs giving conflicting results?  Cannot look at indicators in isolation  EEIs cannot predict variation in overall energy consumption or quantify the impact of individual components or factors on overall energy consumption.  Thus, it is often necessary to undertake more detailed analysis to fully understand the combined impact of a number of different factors or driving forces on overall energy consumption.  Use decomposition or factorization analysis to explain the interaction between different elements or factors influencing total energy consumption © OECD/IEA 2014 Decomposition analysis… … how to get started? generic energy efficiency indicator energy consumption Total energy consumption energy consumption activity generic energy efficiency indicator generic energy efficiency indicator Subsector or end use activity activity Sub-sector or end use share of total activity What are the impacts of these factors over time? © OECD/IEA 2014 Generalised 3-factor energy equation n n Ai Ei E   A    A   ( Si  I i ) A Ai i i i subsector or end-uses within a given sector Aggregate activity A value-added for manufacturing industry and services; population in the household sector; or as passenger-kilometres and tonne-kilometres, respectively, for the passenger and freight transport sectors Sectoral structure S mix of activities within a sector and further divides activity into industry sub-sectors, measures of residential end-use activity or transportation modes © OECD/IEA 2014 Energy intensity I energy use per unit of activity Impacts on energy consumption over time… E  E YearT E Year 0 E  E ACT  ESTR  EINT  ERSD  Additive or sum form  Ideally a residual of 0 R  E YearT / E Year0 R  R ACT .RSTR .RINT .RRSD © OECD/IEA 2014  Multiplicative form  Ideally a residual of 1 Solving the equations… E   At S i ,t I i ,t i d  dt Si ,t I i ,t Et At   S i ,t I i ,t   At I i ,t   At Si ,t t t t t i i i t 1   dt E0 0 t t S i ,t At I i ,t I i ,t At S i ,t  Et  t At S i ,t I i ,t    ln     dt    dt    dt t E0 t E0  E0  0 i t E0 0 i 0 i Fortunately we do not need to solve this equation and various methods have been developed… © OECD/IEA 2014 Which decomposition methodology?  Index decomposition analysis is used in energy decomposition analysis so that indicators with different units can be combined  Choice of index decomposition methodology  Perfect decomposition  Sub-sectors additive  Time reversible  Easy to understand?  Choice of format  Additive  multiplicative © OECD/IEA 2014 Overview of different methodologies © OECD/IEA 2014 Index Perfect decomposition Subsectors additive Time reversible Easy to understand LMDI I Yes Yes Yes Moderately Refined Laspeyres Yes Yes No Moderately LMDI II Yes No Yes Moderately Fischer Ideal Yes No Yes Moderately Simple average/ arithmetic mean/ divisia (Törnqvist) No No Yes Moderately Adjusted PMD I and II No Yes Yes Difficult Paasche No Yes No Very easy Simple Laspeyres No Yes No Very easy Decomposition analysis other choices  Key issue is the choice of activity variable  Level of dissaggregation  Other factors can be added if data is available  By fuel  Geographical or regional level  Fixed base-year vs. rolling base year  depending on data availability  Correction for heating degree days, cool degree days, purchasing power parities and currency should be incorporated into the calculations © OECD/IEA 2014 Annex A in Essentials Manual  Detailed equations for Laspeyres and Log Mean Divisia Index (LMDI-1) decomposition methodologies in both additive and multiplicative formats  How to calculate hypothetical energy use  How to extend energy decomposition analysis to CO2 decomposition analysis by adding a fuel mix (including electricity) and a carbon intensity factor © OECD/IEA 2014 Decomposition of residential space heating © OECD/IEA 2014 © OECD/IEA 2014 Aggregate intensity Structure effect Efficiency effect IEA20 United States UK Sweden Spain Norway New Zealand Netherlands Luxembourg Korea Japan Italy Hungary Germany France Finland Denmark Canada Belgium Austria Australia Average annual percent change Decomposition of changes in industry 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% -7.0% Decomposition of passenger transport © OECD/IEA 2014 The views expressed in this presentation do not necessarily reflect the views or policy of the International Energy Agency (IEA) Secretariat or of the individual IEA member countries. The IEA makes no representation or warranty, express or implied, in respect to the presentation’s content (including its completeness or accuracy) and shall not be responsible for any use of, or reliance on, the presentation. Thank you [email protected] © OECD/IEA 2014 Wrap Up… How to get started:  IEA manuals  Fundamentals on Statistics  Essentials for Policy Making  IEA energy efficiency indicators questionnaire  Collaboration with IEA energy efficiency indicator teams © OECD/IEA 2014 Take away messages  Decomposition analysis is essential to analyze energy end-use  Energy consumption can be decomposed in Activity (A), Structure (S) and Intensity (I)  LMDI I preferred method  Fixed base-year vs. rolling base year (depending on available data)  Data corrections should be applied where possible (HDDs, CDDs, PPPs, etc.) © OECD/IEA 2014 IEA Energy Efficiency Indicators Energy Efficiency Indicators Policy Data © OECD/IEA 2014 Calculations & Analysis