Introduction

Country reports

   Austria ranks 16th in energy intensity among OECD countries. The trend has been slowly downward since 1973. Between 1989 and 1994, energy intensity declined at an average rate of 0.9% per year. Energy consumption by industry was the same in 1992 as in 1973, while industrial production increased 70%.

   Belgium ranks 7th. The trend has been slowly downward since 1973. Between 1989 and 1994, energy intensity decreased at an average rate of 0.3% per year. Belgium has an export oriented economy; in 1994 exports accounted for 77% of GDP. There has been a decline in the traditional heavy industries of coal, steel, heavy engineering and textiles, which now account for under 20% of manufacturing output, while light engineering, chemicals and food processing have emerged as the new growth industries. Belgium is also a European transit country, depending heavily on road transport. The prospects are for Belgium to continue reducing its energy intensity but at a slow rate.

   Canada is the second most energy intensive country in the OECD (after tiny Luxembourg). The trend has been slowly downward since 1973. Between 1989 and 1994, energy intensity declined at an average rate of 0.4% per year. Its high energy intensity is a product of its size, cold climate, high standard of living and industrial structure, which relies resource-based, heavy industries. In 1994 the six largest energy users, responsible for 80% of industrial energy, were pulp and paper, mining, refining/petrochemicals, iron and steel, and smelting/refining. Energy intensity has been increasing in pulp and paper, chemicals, and mining, while decreasing in iron and steel, refining/petrochemicals, and smelting/refining. Given its reliance on heavy industry for export earnings, Canada will have difficulty reducing its industrial energy intensity as it exhausts the possibilities for cost-effective efficiency improvements. To make further gains, Canada will have to look for opportunities to reduce energy use in its residential, commercial, and transport sectors.

   Denmark ranks with Italy and Japan as one of the OECD countries with the lowest energy intensity. The trend has been rapidly downward since 1973. Between 1989 and 1994, energy intensity decreased at an average rate of 0.6% per year. Since the early 1970s, Denmark has surpassed the other Nordic countries in delinking growth in energy consumption from economic growth. Gains have been made in the residential sector as a result of efficiency improvements prompted by high taxes on heating oil and electricity as well as in the industrial sector as the result of efficiency improvements and a shift towards less energy intensive manufacturing. The manufacturing sector is relatively small and non-energy-intensive in character - the share of food and related products is relatively high while the share of raw materials processing, heavy goods production and chemicals is low. However, Danish manufacturers are still relatively energy inefficient when compared with their counterparts (in the same manufacturing sectors) in other OECD countries. The structure of Danish industry may not change significantly in the future, but Denmark has room to further reduce its energy intensity by improving energy efficiency in its manufacturing sector. Improvements in the residential, commercial and transport sectors will be more difficult and costly to achieve.

   Finland ranks 7th (along with Belgium). The trend was slowly downward between 1973 and 1988 but sharply upward (0.9% per year average) between 1989 and 1994. Due to its cold climate and energy intensive industrial structure, overall energy consumption in Finland is high compared with other OECD countries. Three industries - forest products (mostly pulp and paper), metal products, and chemicals - account for about 90% of industrial energy demand. Export led growth as high as 5-6% a year is expected in coming years. Finland will find it difficult to reduce its energy intensity in the future and to do so will, like Denmark, have to find ways to reduce energy consumption in the residential, commercial, and transport sectors.

   France ranks 16th. The trend has been slowly downward since 1973, with the average rate of change increasing to 0.9% per year between 1989 and 1994. Industrial energy consumption decreased 20% between 1973 and 1990, while over the same period, industrial production increased 52% and industrial energy intensity fell 34%. The decline in energy intensity was due both to energy efficiency improvements in some branches and to structural change, that is, a drop in the share of energy intensive industries. The residential/commercial sector is the largest end-use sector in France, accounting in 1990 for 37% of final energy consumption in 1990 while industry accounted for 33% and transport for 30%. The government has been supporting energy efficiency improvements in the residential and commercial sectors for a number of years but has done little to restrain growth in electricity use. It is also reluctant to intervene to reduce private vehicle use.

   Germany ranks 14th. The trend was fairly rapidly downward between 1973 and 1988; between 1989 and 1994 the rate of change increased markedly (an average of 2.9% per year) due to reunification of West and East Germany and the near-collapse of the economy of eastern Germany. Whereas energy consumption in industry declined by 21% between 1973 and 1993 as a consequence of structural changes and energy efficiency gains, the West German transport sector nearly doubled. In East Germany energy consumption in the industrial sector increased 9% between 1970 and 1990, while doubling in the transport sector. Between 1986 and 1993, industrial energy consumption decreased 67%, with most of the decline taking place in 1990-91 as a result of the collapse of the GDR regime and the economy. The challenge for the government as the economy of the 'new eastern states' recovers will be to keep the increase in energy consumption below the rate of economic growth by requiring efficiency gains not only by industry but also in the residential sector, where there is room for substantial improvement.

   Greece ranks 9th. Energy intensity increased slowly between 1973 and 1988 and then decreased at an average rate of 0.3% per year between 1989 and 1994. In 1991 Greece's energy intensity was about 50% higher than the OECD average. The most energy intensive industries are cement, steel and non-ferrous metals, fertilisers and sugar. Industrial energy use is stabilising due to restructuring and diversification. The potential for energy efficiency improvements in Greece is large. The government has only recently begun, with support from the EC, to establish building insulation, lighting and equipment/appliance efficiency standards. However, transport is the highest energy use sector and road travel is increasing rapidly.

   Ireland ranks 11th. The trend was moderate decline between 1973 and 1989, followed by rapid decline (average 2.6% per year) between 1989 and 1994. Ireland's energy intensity is near the OECD average, reflecting the lack of heavy industry. Industrial energy consumption decreased 18% between 1980 and 1993, while residential consumption increased modestly and commercial and transport energy use increased markedly. Given the dispersed population in rural Ireland, transport will continue to be dominated by road travel. The priority of the government is economic growth and raising living standards to the EU level. However, it is initiating energy efficient programmes in the residential and commercial sectors, including tougher building standards.

   Italy ranks (with Japan and Denmark) among the OECD countries with the lowest energy intensity. The trend was slowly downward between 1973 and 1988. Between 1989 and 1994, energy intensity decreased at the more rapid pace of 0.7% per year. Industry is the biggest consumer of energy, accounting for 36% of total consumption in 1993, down from 49% in 1973. In 1993 residential/commercial energy demand accounted for 33% of total consumption while transport accounted for 31%. Italy is experiencing some of the highest increases among OECD countries in road transport. Government support for energy efficiency improvements and conservation in industry, commercial establishments and households is limited by budget constraints.

   Japan ranks (with Denmark and Italy) among the OECD countries with the lowest energy intensity. The trend was rapidly downward between 1973 and 1988 and more moderately downward (average rate of 0.4% per year) between 1989 and 1994. Beginning in the 1970s the Japanese economy began a shift in orientation from heavy, energy-intensive industries, such as iron and steel, cement, non-ferrous metals and petrochemicals, to machine-based and high technology industries, such as automobiles, appliances, consumer electronics, industrial ceramics, etc. This shift can be expected to continue, but at a slower pace than in the past. Japan is under pressure to increase its domestic consumption to a level more in line with its trade competitors. This and growth in road transport can be expected to increase energy intensity.

   Luxembourg is the most energy intensive OECD country. However, it is also the country which reduced its energy intensity the most, 30%, between 1973 and 1994. Industry, dominated by iron and steel production, is the largest single consumer of energy, accounting for 47% of the total in 1994. The contribution of iron and steel to GDP has declined sharply since 1973 partly because of diversification but also because of efficiency gains. The restructuring of the steel industry towards electric arc furnace production is cutting the amount of energy required per unit of steel in half. In 1994 transport accounted for 37% of energy consumption, compared to 16% in the residential/commercial sector, and transport's share is increasing relative to the other sectors. Since Luxembourg is almost entirely dependent on energy imports, the government is eager to conserve energy and, to this end, is promoting industrial diversification and is strengthening energy efficiency requirements in the residential and commercial sectors. However, as a European transit country, it will find it difficult to make gains in the transport sector.

   Netherlands ranks 9th (along with Greece). The trend since 1973 has been moderate decline. Between 1989 and 1994, energy intensity decreased at an average rate of 0.7% per year. In 1994 industry accounted for almost 40% of energy consumption. The oil refining capacity of the Netherlands and the availability of cheap natural gas have allowed it to develop an important chemical industry. The Netherlands is an open, export-oriented economy, with exports accounting for almost 50% of its GDP. Manufactured goods, especially low technology petrochemical and bulk chemical goods, made up 64% of exports in 1992 while agricultural and food products comprised 25%. The growth of the European internal market and the opening up of eastern and central Europe has contributed to this growing export trend. The geographical location of the Netherlands and the importance of Rotterdam as the world's largest port have made the country a major staging post for European trade. Road density in the Netherlands is the second highest among OECD countries and road freight transport is expected to continue to rise as the opening up of eastern and central Europe promotes an increasing volume of trans-European trade. The government has adopted targets for industrial energy efficiency improvements and is entering into 'voluntary' agreements with companies stipulating agreed reductions energy use.

   New Zealand ranks 4th. The trend has been rapid increase since 1973, with the average rate between 1989 and 1994 being 1.6% per year. The New Zealand economy is heavily dependent on the processing and export of natural resources; 70% of export earnings come from the agricultural and forestry sector, including wool, meat, dairy and forest products. Despite the continuing predominance of agriculture, New Zealand is also developing a strong manufacturing and petrochemical industry, which has contributed to the increasing energy intensity of the economy. The dispersed nature of New Zealand's population over two islands with a combined length of 2000km has led to a heavy reliance on road transport and private passenger vehicles. New Zealand has 94,000km of roads, but a rail network of only 4,000km. New Zealand's energy intensity should begin to decline as its economy diversifies and the petrochemical industry cuts back in response to the exhaustion of New Zealand's domestic gas resources.

   Norway ranks 14th (along with Germany). The trend was rapidly downward between 1973 and 1988, with the pace increasing further to an average rate of 2.5% between 1989 and 1994. Norway is the most electricity-intensive country in the OECD. However because virtually all electricity is based on hydropower its energy use is lower than the average for OECD average. exports. Since 1990, Norway has been the leading OECD exporter of oil and natural gas, surpassing the UK and second only to Russia as the world's largest oil exporter outside of OPEC. Like Canada, Norway depends on a high proportion of resource-based, heavy industries for export income. It is working hard to improve its industrial energy efficiency but will have to do more in the transport sector if it is to sustain the present downward trend.

   Portugal ranks 5th (along with Australia). The trend was rapidly upward between 1973 and 1989, with the pace moderating somewhat to an average rate of 1.6% per year between 1989 and 1994. The main manufacturing sectors in Portugal are: textiles/clothing/footwear; transport machinery and equipment; chemicals/rubber/plastic; and food and beverages. Although major structural changes are not taking place, there are signs of a broadening of the base of industrial production, which will reduce energy intensity. However, energy use is increasingly rapidly in the transport sector, most of it in road transport, as evidenced by the doubling in the number of automobiles on the road between 1980 and 1990. Rapid growth is likely to continue, since the number of vehicles per 1,000 inhabitants is around half the EU average and support for public transport infrastructure expansion is weak. The government's focus is on economic development, not curbing energy use.

   Spain ranks 16th (along with France and Austria). The trend was a slow decline between 1973 and 1988, followed by an average rate of increase of 1.1% per year between 1989 and 1994. Industry's 42% share of total energy consumption was slightly greater than transport's share (38%) in 1990, but transport is growing more rapidly. Industry is gradual diversifying, reducing aggregate energy intensity. The residential and commercial sectors accounted for about 20% of energy use 1990. There is considerable room for efficiency improvements in buildings and homes, which are relatively inefficient. Transport policy is road-oriented and public transport infrastructure is underdeveloped. Road travel tripled between 1972 and 1990. As in Portugal, the government's priority is economic development.

   Sweden ranks 11th (along with Ireland and the UK). The trend was rapid decline between 1973 and 1989 followed by rapid increase (1.7% per year average) between 1989 and 1994. Sweden has a high proportion of heavy, energy intensive industries, including pulp and paper, aluminium, wood products, iron and steel, chemicals, and automobiles. Sweden is sparsely populated, with urban centres far apart, and it has a thriving vehicle manufacturing industry. Not surprisingly, therefore, the automobile is something of a holy cow and the transport sector is the fastest growing in terms of energy use. However, Swedish homes and buildings are among the most energy efficient in the world. Sweden will find it difficult to reduce its energy intensity.

   Switzerland ranks lowest of all OECD countries. The trend was stability between 1973 and 1988 and slow increase (0.3% per year average) between 1989 and 1994. There is comparatively little energy-intensive, heavy industry, the Swiss economy being dominated by services and light manufacturing. The transport sector is the largest consumer of energy and, like all OECD countries, private road travel has been growing faster than public travel. Driven by concern over air pollution, congestion and noise, the government is working to develop Switzerland's rail infrastructure and to restrict road freight. Outside of the transport sector, Switzerland will find it difficult to further reduce its energy intensity.

   UK ranks 11th (along with Ireland and Sweden). The trend was rapid decline between 1973 and 1988 and more moderate decline (0.6% per year average) between 1989 and 1994. The UK has a highly diversified industrial sector. Buildings are responsible for half the energy use, yet the government has in the past been relatively inactive in promoting conservation and efficiency. As a result, the scope for improvements is large. The UK has experienced explosive growth in passenger and freight transport in the past few decades. Between 1952 and 1992, total passenger-kilometres trebled in a population that grew by only 15%. However, transport policy has focused almost exclusively on road building and improvements, a trend reinforced by rail privatisation.

   US ranks 3rd behind Luxembourg and Canada. The trend was rapid decline between 1973 and 1989 followed by somewhat more moderate decline (0.9% per year average) between 1989 and 1994. In 1992 transport and industry each accounted for one-third of energy consumption, but transport energy use is increasing while that of industry is declining. US industry is mature and highly diversified. Transport accounted for nearly 40% of the increase in energy end-use between 1990 and 1995 and is almost entirely in road travel. Car ownership in the US is the highest among OECD countries, and the total distance travelled exceeds that of all other OECD countries combined. The US will have to make gains in all sectors to sustain its present downward trend.