Measurement of Energy Efficiency: A New Economic Indicator

Energy productivity, defined as the ratio of GDP to energy used, is pervasively used as an indicator of energy efficiency at national level, although it is not an appropriate one. We point out that the traditional energy productivity could measure only the cost effectiveness of energy to achieve a given level of real GDP, but not the efficiency of energy per se. After critically reviewing a number of existing indicators, we propose a new economic indicator to measure energy inefficiency that could be decomposed into four components, wirh each representing the inefficiency source. Meanwhile, the new indicator also allows us to compare energy inefficiency under alternative environemntal regims. Actual data is used to demonstrate the trend of energy efficiency in Taiwan, and the underlying driving forces contributing to inefficiency are also identified. See above See above