How to Improve Energy Productivity?

Economies can improve energy productivity in two ways:

1) They can generate a given level of energy-related benefits with fewer inputs by using energy less intensively (with smaller appliances, for example), using energy in a more technically efficient way (car engines that use less fuel, say), or changing the mix of fuel they use (for instance, by switching from wood-burning stoves to electric ranges powered by coal-generated electricity).

2) They can increase output more rapidly than demand for energy by changing the composition of economic activity. Energy productivity rises, for example, when growth shifts from more to less energy-intensive sectors—from steel, say, to services, or to higher value-added activities within services.

Unfortunately, the gain of 1 percent a year in energy productivity over the past decade has been outstripped by global energy demand, which has risen by 1.6 percent a year. In the near future, that demand is likely to grow even faster—by 2.2 percent a year.