Energy efficiency as a driver of total primary energy supply in the EU-28 countries – incremental decomposition analysis

Energy efficiency is a common element in European energy and climate policies. In the EU energy policy, energy efficiency is a policy target, and in the EU climate policy, energy efficiency is a means to achieve the CO2 targets. In this paper, energy efficiency trends in the European Union and its 28 countries are analyzed during the period 1990–2015 by using the data provided by international Energy Agency (IEA). Total primary energy supply is decomposed into the effects of change in population, economic activity, final energy intensity, and the ratio between primary and final energy use. This paper introduces an incremental decomposition analysis method based on the Sun-Shapley method. Incremental decomposition provides information about annual changes. Information for longer periods can be obtained by summing up the necessary annual results. The empirical analysis carried out for the EU-28 countries clearly shows the effects of financial crisis 2008–09. When the whole period 1990–2015 is considered, despite of significant decrease in energy intensity, total primary energy supply has decreased only slightly in the EU. Differences between the countries are significant.