• Focus Area Productivity and Economic Diversification Productivity and Economic Diversification
  • Type Discussion paper
  • Date 6 March 2014


Ratios that link energy consumption, or its related emissions, to the economic value generated accommodate the differing progress on economic development of nations better than absolute measures. Policymakers are increasingly using indicators such as energy efficiency, intensity, and productivity to address the interrelated issues of economic development, energy security, and environmental sustainability. Although setting formal targets in terms of energy intensity has helped to build consensus on several issues, policymakers have an opportunity to enroll even greater public support through the use of energy productivity. Energy productivity and energy intensity may be reciprocals that share the same components and policy-relevant attributes. But energy productivity has important advantages—the differences between the two measures go beyond semantics. Productivity has a more positive connotation, is more intuitive, is aligned with efficiency, and portrays grander ambition. From a behavioral economics perspective, these traits can help frame policies that yield more meaningful improvements. The mathematical representation of energy intensity makes comparisons of relative change across time and countries more difficult because of something we call the energy intensity illusion—the metric appears to converge towards a mean. Energy productivity’s mathematical representation, on the other hand, avoids this illusion, providing additional insight and making it a more directly relevant measure of a country’s economy, energy, and environmental performance.

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