21 March 2013 A new model for measuring energy efficiency

China is now the world’s largest energy consumer, and the national government is investing billions and introducing policy measures to encourage energy conservation, emissions reduction and production of renewables.

Lincoln University’s Dr Baiding Hu has been evaluating the accuracy of a commonly used energy efficiency calculation and creating a new model which could impact government priorities.

Energy efficiency is traditionally calculated as a ratio of output to energy input, and an increase for any reason is interpreted as an improvement. But what this globally-accepted methodology doesn’t take into account is the impact of substitution for energy with other production factors such as capital and labour.

“I saw that this formula could be misleading because if a factory adjusted its allocation of labourers or machinery rather than increasing its energy usage, the simple ratio would indicate an improvement despite the fact that there was no actual increase in energy efficiency,” says Dr Hu, a Senior Lecturer in Economics.

Dr Hu manipulated existing data from coal mines, power plants and petroleum refineries using ‘frontier analysis,’ a method of economic modelling used in studies comparing production, cost, revenue and profit. The study was launched in 2010 and partially funded through the Faculty of Commerce’s Summer Research Scholarship programme.

The research will help to identify priorities for fuel-specific policies in China, which is targeting to cut its energy use by 15% by 2015 and boost use of renewables to 15% of total energy consumption by 2020.

“If the world’s largest consumer can improve their use of energy, global demand for oil and gas will be significantly eased – so it’s an important international topic,” adds Dr Hu. While based on Chinese data, the model itself is universally applicable.

The next step is to compare the data set from the new model to the calculations using the original formula.

For more information, read the full article on page 35 of the University’s research profile publication Transform.