High Energy Costs: Incentive or Obstacle for Energy Efficiency?

(21 December 2021) Achievement of the long-term global temperature goal — to limit global warming to well below 2 degrees Celsius, ideally to 1.5 degrees, above pre-industrial levels — requires not only a transition from fossil fuels to renewable energy, but also more efficient use of energy. In this dashboard we’ve put together data from different sources to estimate whether high energy prices can serve as an incentive to increase energy efficiency.

Our estimates for a sample of 79 countries for 2019 confirm the hypothesis that high energy prices in general correspond to high energy efficiency, which suggests that energy price regulation policies can contribute to efforts to limit global warming.

Note: Energy intensity has been calculated as a ratio of total primary energy consumption (from a dataset by bp) to GDP at current PPPs (World Bank). Gasoline price, converted to international dollars using PPP to exchange rate ratios, has been used as a proxy for energy price.