The Divisia real energy intensity indices: Evolution and attribution of percent changes in 20 European countries from 1995 to 2010

This paper analyzes the evolution of real energy efficiency in the European Union and the attribution across countries of its percent change. Relying on a multiplicative energy intensity approach that is implemented through the Sato-Vartia Logarithmic Mean Divisia Index method, we decompose the change in aggregate energy intensity in 20 European countries for the period from 1995 to 2010. A comparative analysis of real energy intensity indices is also carried out. In addition, a new tool to monitor changes in real energy intensity in greater detail is applied. The attribution analysis of IDA (Index Decomposition Analysis) as proposed by Choi and Ang (Choi KH, Ang BW. Attribution of changes in Divisia real energy intensity index – an extension to index decomposition analysis. Energy Economics 2012;34:171–6) is used in order to assess the contribution of each individual sector to the percent change in real energy intensity. Results indicate that the European countries, particularly the former communist ones, made a remarkable effort to improve energy efficiency. Our analysis also suggests some strategies –including promotion and adaptation to more efficient techniques, innovation, improved use of technologies, R&D, and substitution for higher quality energies-, which are of particular interest to the industry sector -including construction- in ex-communist EU members, and to the industry and transport plus hotels and restaurants sectors in Western countries.