The energy intensity of the global economy continues to fall
The world continued to generate more value from its energy use in 2016. Global energy intensity – measured as the amount of primary energy demand needed to produce one unit of gross domestic product (GDP) – fell by 1.8% in 2016. Since 2010, intensity has declined at an average rate of 2.1% per year, which is a significant increase from the average rate of 1.3% between 1970 and 2010. The improvement in intensity varies widely across countries and regions, with China once again having the most significant impact on global trends. This is avoiding huge amounts of energy use, generating financial savings for consumers and holding back the growth in greenhouse gas (GHG) emissions. Despite these positive impacts, there is no room for complacency. Policy performance is mixed and new policy implementation slowed significantly in 2016. The current level of efficiency gains will erode quickly if the pace of policy delivery does not accelerate.
The decline in global energy intensity means that the world is able to produce more GDP for each unit of energy consumed – an energy productivity bonus. Measured as the difference between actual GDP and the notional level of GDP that would have been generated had energy intensity stayed at the previous year’s level, this bonus was USD 2.2 trillion in 2016 – equal to twice the size of the Australian economy.