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How accurate are energy intensity projections?

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Abstract

Recent projections of energy intensity predict a more rapid decline in intensity than has occurred in the recent past. To assess how well such projections have performed in the past, I assess the accuracy of the business as usual energy intensity projections embedded in the annual World Energy Outlook (WEO) produced by the International Energy Agency since 1994. Changes in energy intensity depend on economic growth, and historical errors in projecting energy intensity can partly be explained by errors in projecting the rate of economic growth. However, recent projections of the elasticity of energy intensity with respect to economic growth probably overstate the likely future reduction in energy intensity even if economic growth is projected accurately. This could be because energy efficiency policies are not implemented as effectively as expected or because the economy-wide rebound effect is larger than modeling assumes.

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Notes

  1. Following IEA practice, I refer to each annual WEO by attaching the date of publication with a hyphen. The “Current Policies” scenario assumes that only energy and climate change policies that are already implemented will be in place in the future. The IEA’s “New Policies” scenario assumes that other policies that have been announced but not yet implemented will be implemented. In WEO-2016 this includes policies that countries agreed to as part of the Paris Climate Change Accord (International Energy Agency, 2016).

  2. IEA makes projections for the level of energy use for a number of specific years in the future—in WEO-2016: 2020, 2030, and 2040 for the Current Policies scenario. I derived the rates of change in energy intensity from IEA’s stated assumptions on the future rate of economic growth and their projections of the level of energy use at these future dates. IEA makes both global and regional projections. Here, I only analyze the global projections.

  3. Other studies, such as Aleklett et al.’s (2010) review of WEO-2008’s projection for world oil production, do not compare projections to actual outcomes.

  4. From here on, when comparing values of the elasticities, absolute values are assumed.

  5. The decomposition results are only very slightly different if instead the projected growth rate is used together with the actual elasticity first and then the residual found.

  6. Changes in energy intensity are of course not just the result of energy efficiency improvements and the rebound effect. Independent changes in other factors and the efficiency with which they are used and structural change in the economy can all have an effect (Stern, 2012; Saunders, 2015).

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Acknowledgements

I thank Ken Baldwin for inviting me to give a presentation on the 2016 World Energy Outlook at the ANU Energy Change Institute 2016 Energy Update. I thank Stephan Bruns, Paul Burke, Bob Costanza, Ida Kubiszewski, and two anonymous referees for their very helpful comments and encouragement. I also thank the Australian Research Council for funding under Discovery Project (DP160100756) “Energy Efficiency Innovation, Diffusion and the Rebound Effect.”

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  1. Crawford School of Public Policy, The Australian National University, 132 Lennox Crossing, Acton, ACT 2601, Australia

    David I. Stern

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Correspondence to David I. Stern.

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Stern, D.I. How accurate are energy intensity projections?. Climatic Change 143, 537–545 (2017). https://doi.org/10.1007/s10584-017-2003-3

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