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Abstract

Improving energy efficiency is key to moving toward sustainable development. It contributes to the reduction of energy consumption and carbon emissions, as well as to climate change mitigation. Indicators of energy efficiency play an important role in this field because their improvement is targeted by policy makers. Indicators based on the ratio between energy consumption and gross domestic product (GDP) are currently used by multiple key organizations, including Eurostat and the World Bank, as the main energy efficiency indicators. This study examines the most widely used indicators and identifies their deficiencies. Over the last decades, these indicators tend to show a continuous strong improvement, signifying positive progress toward energy efficiency, even in cases when the physical consumption of energy has increased significantly. This phenomenon is based on GDP adjustment. The energy intensity of economies, used currently to measure energy efficiency, masks problems and has led to the green labeling of wealthier economies. An analysis of energy efficiencies reported for multiple countries and the structure of their energy spending shows that the reported values are counterproductive for comparing economies in the context of environmental protection. The indicators sanction economies with low energy consumption and low or moderate GDP. The economies belonging to the group of the largest energy spenders per capita are labeled highly efficient because of GDP adjustment. Decision makers are therefore prompted to focus on GDP growth even at the cost of a major increase in energy consumption. An additional problem in the indicators is that they do not properly model international trade. The responsibility for energy spending is shifted toward the producers of energy-intensive goods and services. Energy intensity is a useful indicator to measure the resistance of an economy to the volatilities of energy prices. However, the challenges in the fields of environmental pollution and climate change are related to physical processes and energy consumption rather than to changes in the GDP or the monetary valuation of products and services. Indicators measuring energy efficiency as GDP per unit of energy use are inadequate and misleading as principal tools to measure energy efficiency.
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