How Valid Energy Intensity Index Is In Measuring Energy Efficiency

Energy Intensity is a widely used index to measure energy efficiency and defined as the amount of energy used per unit of gross domestic product (GDP). However, due to methodological shortcomings, policy makers should employ this index with caveat. Relying solely on Energy Intensity index might be misleading as according to this index some of the poorest countries like Congo, Bangladesh and Namibia perform better than UK, Japan and Germany in term of energy efficiency which seems counterintuitive. In this paper we showed that Energy Intensity index suffers from the lack of face validity and criterion related validity. Thus, it may not be able to differentiate countries on energy efficiency performance as expected i.e. we already know that the mentioned developing countries are characterized by energy poverty rather than energy efficiency , therefore low energy intensity index may not represent true energy efficiency. To deal with this methodological issue, we propose that the alternative recently introduced multidimensional indices like ACEEE International Energy Efficiency Scorecard should be employed.

Keywords:

Energy Intensity Index , Methodological Issue , Criterion Related Validity