Understanding the Historical Trend of Final Energy Intensity of GDP During Economic Transitions: The Case of Portugal (1960–2014)

Abstract

Reducing the energy intensity of economies is key to meeting sustainable development goals. In the past, energy intensity has generally decreased or has shown inverted U-shape patterns. However, most global energy scenarios project unrealistically increasing relative decoupling rates of primary and final energy when compared to the observed historical trends. Here, we develop a final energy intensity decomposition which considers both productive and non-productive sectors, includes both traditional and commercial sources, and uses the exergy metric to aggregate different energy flows. We study the Portuguese economy between 1960 and 2014, a period of major energy and economic transitions. First, we find that the strong decrease of final energy intensity during the period of highest economic growth (1960–1974) is mainly driven by the following: (1) the efficiency increase in the residential sector, due to the transition from traditional sources (firewood) to electricity; (2) the relatively slow growth of energy use in the residential sector; and (3) the efficiency improvements in the productive sectors. We find that the second factor was determined by the fact that increasing per capita economic consumption was not channeled through private energy use. Second, excluding the last decade, private transportation had a growing effect on final energy intensity throughout the whole time range. Overall, we find that, essentially, remarkable technical improvements in terms of increasing final-to-useful energy efficiency made possible a relative decoupling at the final stage.

Keywords

• final exergy intensity
• exergy efficiency
• index decomposition analysis
• economic transition
• energy transition