Duro (2004) analyze this inequality by means of the Theil index. In a recent
paper, Duro et al. (2010) use a Theil index decomposition which allows the
inequality in energy consumption per capita to be decomposed into explanatory
factors. They demonstrate that, although differences in affluence are the most
significant factor in explaining inequality in energy consumption per capita, the
reduction of the inequality in energy intensity levels plays a prominent role in
reducing the inequality in energy consumption per capita between 1980 and
2006 among OECD countries.
The reduction in differences in primary energy intensity found in the cited
studies may have various causes. It may stem from a more efficient way of
transforming primary energy into final energy. Or, it may in contrast be the
consequence of convergence in final energy use per GDP unit among
countries1. That is, such a decline may be attributable to changes in the energy
sector or to changes in final energy consumption in the economy.2 Determining
the relative importance of both factors is useful both for analytical purposes and
the formulation of policy recommendations. Accordingly, a significant weight of
the energy transformation index would suggest a large scope for improvement
in countries not efficient in transforming energy. In that vein, energy policies
could successfully reduce energy intensity inequalities by converging to greater
efficiency levels in energy transformation —either improving the efficiency of
energy conversion processes or changing the energy mix. In contrast, a
significant weight of the final energy intensity component, would suggest that
measures implemented to achieve greater efficiency in final energy
1 This second component can in turn be due to two different factors. It could be caused by
energy consumption efficiency convergence among countries, or may be due to convergence in
production composition. Duro et al. (2010) develop a shift-share methodology to analyze these
factors for 16 OECD countries. They conclude that the convergence in final energy consumption
per GDP unit could be attributed to a convergence in the efficiency in the use of final energy
across countries. Meanwhile, the difference in production composition could have increased
without offsetting the first effect. Miketa and Mulder (2005) run an econometric analysis of the
final energy productivity convergence across 56 countries in 10 manufacturing sectors. They
found that the differences in the final energy intensity levels of these sectors diminished across
some countries.
2 The importance of taking into account conversion-efficiency was showed by Hamilton and
Turton (2002) who employed a decomposition formula that separated out the effects on
emissions growth of changes in population, economic growth, energy intensity, energy
transformation index, share of fossil fuels and carbon intensity of fossil fuels. They found that
changes in energy transformation contributed to increase emissions in OECD countries over the
period 1982-1997.