Energy intensity, sectoral activity, and structural change in the Norwegian economy

Abstract

We analyze energy-use patterns since 1950 in the residential, service, manufacturing, and transportation sectors of the Norwegian economy, concentrating on changes in energy intensity, sectoral activity, and sectoral structure between 1973 and 1987. In most sectors, energy intensity has increased since the 1973 oil shock, even though the total energy-to-GDP ratio has decreased over the same period. Energy efficiency has not improved as much in Norway as in the other OECD countries. There are several reasons for this. First, electricity has been inexpensive and Norway is a net oil exporter. The income from oil development in Norway, in response to the oil shocks of the 1970s, resulted in energy-use increases while other nations responded by reducing energy utilization. A more subtle factor is that the use of energy in Norway is reaching maturity in most sectors as the ownership of principal energy-using equipment saturates. If changes in energy policy were put into place to increase the price of electricity in Norway, the energy efficiency of the economy could improve dramatically in the future.