International inequality in energy intensity levels and the role of production composition and energy efficiency: An analysis of OECD countries Juan Antonio Duro a , Vicent Alcántara b , Emilio Padilla b, ⁎ a Departamento de Economía, Universidad Rovira i Virgili. Av. de la Universitat, 1. 43204 Reus, Spain b Departamento de Economía Aplicada, Universidad Autónoma de Barcelona 08193 Bellaterra, Spain abstract article info Article history: Received 3 November 2009 Received in revised form 8 June 2010 Accepted 14 July 2010 Available online 5 August 2010 JEL Codes: C69 D39 Q43 Keywords: Energy efficiency Energy intensity Inequalities between countries Inequalities between regions Sectoral composition Shift-share analysis This paper analyses the inequality of energy intensity levels between OECD countries, its causes and evolution. The paper develops a methodology which allows the inequality in energy consumption per capita to be decomposed into explanatory factors. It also analyses the contribution of different groups of countries to this inequality. The results show that although differences in affluence are the most significant factor in explaining inequality in energy consumption per capita, the inequality in energy intensity levels plays a prominent role in reducing the inequality in energy consumption per capita over the analysed period. The paper also develops a methodology which determines the importance of different production structures and energy efficiency of productive sectors in the differences in energy use per unit of GDP between the countries analysed. The results show that sector specialisation becomes increasingly important in explaining the inequality of energy intensity, while there is a significant trend towards the convergence of energy efficiency between countries sector by sector. This trend would explain the decreasing weight of energy intensity as an explanatory factor of the inequalities in energy consumption per capita. © 2010 Elsevier B.V. All rights reserved. 1. Introduction Energy intensity of GDP can be very variable among different countries and periods (Ang, 1999; Roca and Alcántara, 2002; Alcántara and Padilla, 2005). Differences in energy intensity might show differences in economic structure and technologies. Various studies analyse international differences and the evolution of energy intensity inequalities. For example, Alcántara and Duro (2004) and Sun (2002) analyse a reduction in the inequality of energy intensity between Organisation for Economic Co-operation and Development (OECD) countries. Sun (2002) does this through an analysis of deviations from the mean. Alcántara and Duro (2004) use the Theil index, which weights observations according to GDP, giving greater importance to those countries with a greater share in global production. Miketa and Mulder (2005) analyse the convergence of energy productivity in 10 manufacturing sectors across 56 countries. They find that the differences in the energy intensity levels of these sectors are diminishing across some countries. Greening et al. (1997) compare 6 different decomposition methods to analyse energy intensity evolution in the manufacturing industries of 10 OECD countries. In their study, they found that most of the changes in energy intensity levels, which tended to decrease, could be explained by changes in the energy intensity of individual sectors, more than by changes in the sectoral composition of production. This paper will first show the relevance of final energy intensity and GDP per capita in explaining the inequality across all OECD countries in final energy consumption per capita between 1980 and 2006. For the period considered, final energy consumption per capita of OECD countries has increased by 6.1%. This is the result of a 63.5 increase in GDP per capita and a 35.1% decrease in energy intensity of GDP. Our analysis will investigate if this evolution of energy consumption, and its components, has been followed by changes in international inequality in energy intensity and its components. Moreover, the meaning of a reduction of energy intensity inequality in a context of a great reduction of global energy intensity would mean a convergence to more apparent efficiency in the use of energy. Energy intensity levels and the differences between countries are associated with the sectoral structure – which might be biased to activities using more or less energy – and with the degree of energy efficiency. Studying the factors that influence on the differences in energy intensity levels, both in static and dynamic terms, could be useful in forming public policies which aim to reduce energy consumption and mitigate pollution. If greater weight is attributed to the sectoral structure component, reducing energy intensity Ecological Economics 69 (2010) 2468–2474 ⁎ Corresponding author. E-mail addresses: juanantonio.duro@urv.net (J.A. Duro), vicent.alcantara@uab.es (V. Alcántara), emilio.padilla@uab.es (E. Padilla). 0921-8009/$ – see front matter © 2010 Elsevier B.V. All rights reserved. doi:10.1016/j.ecolecon.2010.07.022 Contents lists available at ScienceDirect Ecological Economics journal homepage: www.elsevier.com/locate/ecolecon