Measuring underlying energy efficiency in the GCC countries using a newly constructed dataset

Abstract

Energy consumption accounts for most of global anthropogenic greenhouse gas emissions. Managing the growth in energy demand is therefore a key part of climate change mitigation. In the Gulf Cooperation Council (GCC) countries, energy consumption has been growing rapidly. Between 2004 and 2014, final energy consumption grew at an average annual rate of 6.8% compared to a global average of 1.8%. Energy efficiency can help GCC countries manage their energy demand growth, but it is difficult to measure energy efficiency, so analysts often rely on indirect indicators such as energy intensity. Frontier analysis can be used to measure energy efficiency, but is data intensive. To undertake frontier analysis for the GCC countries it was therefore necessary to construct a new dataset, which was used for corrected ordinary least squares to estimate underlying energy efficiency between 2004 and 2014 for two key sectors in the GCC countries: residential electricity and road transport gasoline. The results suggest that underlying energy efficiency generally improved in the GCC region, in contrast to the trend of rising energy intensity that the region has been witnessing. The energy efficiency improvements may have been driven by global technical progress and tighter global fuel economy standards, of which the GCC countries were beneficiaries. With the provision of high quality, recent data with shorter lag times, frontier analysis could be used to provide prompt feedback on the impact of energy efficiency policies and programmes, leading to better outcomes.