1. Interpretation of macro indicators of energy intensities Bruno Lapillonne, Vice President, Enerdata Reunión Técnica de Trabajo del Proyecto BIEE 24 – 26 de febrero, 2014, San José, Costa Rica

2. 2 Increasing number of countries with quantitative targets Targets are expressed in different ways and relate to different part of the consumption: on total (primary )consumption (around 20%), on final energy consumption (around 20%), or end-use sectors (case of 60% of countries) Source WEC surveys ( 85 countries, of which 10 in Latin America)

3. 3  Predominance of targets on energy savings and energy efficiency improvement which can be either a fix savings compared to an historical consumption (case of EU countries that must save 9% of their average final consumption over 2001- 2005 ) or compared to a projection (case of several Latin American countries).  But also targets on energy intensity reduction still exists. Source WEC surveys ( 85 countries, of which 10 in Latin America)

4. 4  Macro indicators are mainly energy intensity indicators that relate the energy consumption to the GDP.  These energy intensities can first of all be used to monitor these energy intensity targets;  They also enable to understand the dynamics of the primary and final energy consumption in relation to the economic growth and the different trends in these intensities.  As the difference between the primary energy intensity and final energy intensity is mainly explained by the power sector, macro indicators will also include the power sector. Macro indicators: what are they ?

5. Outline 1.Energy intensity trends 2.Primary vs final intensity 3.Final energy intensity variation: role of structural changes

6. 1.Absolute values of intensities are not really meaningful. 2.Instead of showing annual trends with multiple fluctuations, summarize trends by period Argentina How to analyze trend in energy intensities? Costa Rica 3.A trend over 1990 -2011 is meaningful in both countries (increase then decrease)  define trends on homogenous periods (e.g. 1998-2004 and 2004-2011 for Costa Rica).

7. Variations over time of energy intensities are usually expressed in average annual growth per year (%/yr) over a period: they measure overall energy efficiency trends from an economic viewpoint Trends in primary energy intensity : Argentina (%/year) Average annual growth rate (% per year) (agr) between year m and n : agr= ((I n /I m )* (1/(n-m) – 1)*100 as In= Im (1+agr) n-m ( with I energy intensity) Regular decrease in Argentina since 2004, slightly faster for final than primary intensity Before increase faster for primary than final

8. Sendero Energético: case of Uruguay Source: DNE/MIEM

9. Outline 1.Energy intensity trends 2.Primary vs final intensity 3.Final energy intensity variation : role of structural changes

10. 10 Primary and final intensity trends: case of Brazil Source BIEE/EPE Different trends as to the variation of primary and final intensity in Brazil depending on energy transformations and mainly the power sector Since 1998, and especially since 2005, energy transformations contribute to increase the primary intensity due to the development of thermal power generation and biofuels production

11. Different trends in primary and final energy intensities  As a long term trend, primary intensity increases faster (or decrease slower) than final intensity due to increased losses in energy transformations.  Indeed, economies are more and more electricity intensive, which increase transformations losses as electricity is produced with conversion losses, the magnitude of which depends on the power mix (thermal vs renewables (hydro, wind…) and the accounting of hydro and wind (no loss for hydro and wind with IEA but same losses as thermal for OLADE)  However on recent years and in some EU countries reverse trends are observed due to improved efficiency of power plants (gas combined cycle, cogeneration, wind)  With the IEA accounting, year to year variation depend on the share of hydro and wind in power generation as there is no loss for hydro and to 60-70% losses for thermal plant and 67% for nuclear

12. The primary intensity decreases slower than the final intensity in Argentina since 2004 (or increased faster between 1998 and 2004). Part of it may be due to increasing losses in transformations linked to a reduction in power efficiency and increasing market share of electricity for final consumers Trends in primary energy intensity : Argentina (%/year)

13. 13 Share of hydro in power generation in Brazil Source BIEE/EPE Increase in thermal power generation, contribute to reduce the average efficiency of power generation, which increases losses in energy transformations and contributes to increase the primary intensity. Efficiency of power generation in Brazil

14. Decomposition of primary intensity variations Case of Brasil Source: BIEE/EPE Case of Argentina Source: BIEE/Secretaria de Energia  Most of the losses in transformations come from the power sector : 80% of the gap in general, of which 3/4 losses in thermal power generation and 5% T&D losses

15. Share of electricity in final consumption in Argentina Source BIEE Increasing share of electricity result in increasing losses in transformations as significant part of power generation in thermal power plants, i.e. with losses

16. Outline 1.Energy intensity trends 2.Primary vs final intensity 3.Final energy intensity variation : role of structural changes

17. Final energy intensity by sector: Argentina Where does the reduction of energy intensity come from ? Contraction of industry and services contribution to total final energy intensity

18. Industry: energy consumption to VA Agriculture: energy consumption to VA Services: GDP: energy consumption to VA Transport: no intensity as VA of transport correspond to transport companies only ; can only be related to the GDP As industry is more energy intensive than services ( industry has a higher intensity than services, by ~ a factor 7 on average at word level), any increase in the share of services in GDP contribute to decrease the final energy intensity (or the other way around if the share of industry increases)  structural effect To see what is the impact of structural changes, need to show : -- the change in the share of agriculture, services and industry in total GDP -- the differences of intensity by sector Sectoral intensities

19. Sectoral intensities and structural changes: case of Brazil (1/2) Intensidad energética sectorial (ktoe/M$2000) Source: BIEE/EPE Services are 20 times less intensive than industry As the share of services in increasing, this contributes to reduce the final energy intensity GDP structure

20. Sectoral intensities and structural changes: case of Brazil Source: BIEE/EPE The increasing share of services in the GDP contributed to reduce the final energy intensity by 0.4%/year between 1995 and 2009, all things being equal

21. Sectoral intensities and structural changes: case of Uruguay Intensidad energética sectorial (koe/MUYU05) Source: MIEM/DNE Services are 11 times less intensive than industry As the share of services in increasing, this contributes to reduce the final energy intensity GDP structure

22. Sectoral intensities and structural changes: case of Uruguay (2/2) Source: MIEM/DNE As the share of services in increasing, this contributed to reduce the final energy intensity by 0.5%/year on average between 2000 and 2011, all things being equal