Structural change and convergence of energy intensity across OECD countries, 1970-2005

This paper uses new and unique data derived from a consistent framework of national accounts to compute and evaluate energy intensity developments across 18 OECD countries and 50 sectors over the period 1970-2005. We find that across countries energy intensity levels tend to decrease in most Manufacturing sectors. In the Service sector, energy intensity decreases at a relatively slow rate, with diverse trends across sub-sectors. A decomposition analysis reveals that changes in the sectoral composition of the economy explain a considerable and increasing part of aggregate energy intensity dynamics. A convergence analysis reveals that only after 1995 cross-country variation in aggregate energy intensity levels clearly tends to decrease, driven by a strong and robust trend break in Manufacturing and enhanced convergence in Services. Moreover, we find evidence for the hypothesis that across sectors lagging countries are catching-up with leading countries, with rates of convergence that are on average higher in Services than in Manufacturing. Aggregate convergence patterns are almost exclusively caused by convergence of within-sector energy intensity levels, and not by convergence of the sectoral composition of economies.

► Evaluation of energy intensity developments across 18 OECD countries and 50 sectors, including Services. ► New and unique data derived from a consistent framework of national accounts. ► Structural changes explain a considerable and increasing part of aggregate energy intensity dynamics. ► Cross-country convergence only after 1995, driven by a trend break in Manufacturing ► Aggregate energy intensity convergence is mainly caused by efficiency convergence, and not by convergence of sector structure.