1.         INDICATOR 

(a)        Name:  Intensity of Energy Use in the Commercial/Service Sector.  

(b)               Brief Definition:  Energy consumption per unit of commercial/service sector output or per unit commercial/service sector floor area.  

(c)                Unit of Measurement:  Megajoules per US$ (mJ/$) or megajoules per square meters (mJ/m2).  

(d)               Placement in the CSD Indicator Set:  Economic/Consumption and Production Patterns/Energy Use.

  2.         POLICY RELEVANCE

(a)                Purpose:  This indicator is used to monitor trends in energy consumption in the commercial/service sector, which is the largest sector of most economies.

(b)               Relevance to Sustainable/Unsustainable Development (theme/sub-theme): The service sector is less energy intensive than manufacturing, and the growth of the sector relative to manufacturing contributes to the long-term reduction in the ratio of total energy consumption to GDP.  The sector, however, is a large consumer of electricity, generation of which contributes to many local or global environmental problems.

(c)        International Conventions and Agreements:  There are no international agreements.  Some countries are promulgating energy-efficiency standards for lighting, office equipment or other devices, while others are negotiating voluntary agreements to reduce energy consumption per square meter of floor space.

(d)               International Targets/Recommended Standards:  There are no international targets or standards.  Many industrialized countries have previously set targets for reducing the space-heating component of service-sector energy consumption per unit of floor area.  Now, many countries are trying to reduce electricity consumption for cooling, lighting, and information systems.

(e)                Linkages to Other Indicators:  This indicator is one of a set for energy intensity in different sectors (manufacturing, transportation, commercial/services and residential), with the indicator for energy use per unit of GDP as an aggregate energy intensity indicator.  These indicators are also linked to indicators for total energy consumption, greenhouse gas emissions, and air pollution emissions.

3.         METHODOLOGICAL DESCRIPTION

(a)                Underlying Definitions and Concepts:  Energy consumption per unit of value added or per unit of floor area in the commercial/service sector is one way of measuring energy requirements and trends in the sector.  As with the manufacturing sector, the commercial/service subsectors are diverse and difficult to classify.  They include subsectors that require a great deal of electricity per unit of output (retail trade), those that use large quantities of fuel for water and space heating (health care establishments), and those that by their nature consume little energy (warehousing, parking).  Energy efficiency in this sector is more directly related to the efficiency of general energy services (lighting, ventilation, computing, lifting, etc.) than to the efficiency of the particular sectoral activities.  But there are almost no data on actual energy service outputs per unit of energy input (lumens of light, cubic meters of air moved, computing power or use, tonnes raised in lifts, etc.).  Hence, the usual measure of energy intensity, megajoules per unit of output in economic terms (mJ/$), can be a useful indicator provided it is clear that this summarizes many processes and types of buildings.  Because of the differences in processes, it is very important to separate electricity from fossil fuel and purchased heat.

An alternative indicator is energy consumption relative to floor area (in sq. meters), which is a good measure of the total amount of physical activity for the sector.  In warmer countries, built area is a less accurate proxy for the total amount of activity, since a substantial amount of business activity occurs outdoors.  In low-income countries, substantial activity takes place in front of homes that also serve as stores.

It is often difficult to measure and interpret energy intensities per unit of value added within subsectors (private services, public service, etc.) because different activities often take place in the same building, hence, the real partition of energy use between activities is uncertain.  In such cases, intensities expressed per unit area disaggregated by building type may be more easily related to real energy efficiencies.  However, these have the similar problem that a variety of activities may take place in a particular type of building.  A hospital, for example, will contain space for food preparation or laundry services, as well as for health care.

(b)               Measuring Methods:

§         Energy Consumption:  Energy consumption is usually measured at the point of use, i.e., the building or enterprise.  Data for buildings must be collected through surveys of building owners, operators, or tenants, while data for enterprises are usually collected through the enterprise’s normal accounting of expenditures or consumption of energy.  Note, however, that the correspondence between enterprise and building type can be very loose.

In a few countries, energy consumption in buildings is measured or imputed by surveys of actual buildings (United States, France and Japan, and Sweden for space and water heating only).  Where these data exist, they can be used to represent real efficiencies.  Heating energy consumption per sq. meter of floor area heated is an important example of such a measure.  Electricity use per sq. meter is important to measure, but it is difficult to disaggregate into heating, cooling, water heating/cooking, lighting, etc., without recourse to detailed surveys.  Some colder countries (e.g., Norway) have very high energy intensities, which are clearly dominated by electric heating, while others (e.g., Canada, Finland) have very high intensities, yet do not have much electric space heating.  Similarly, warmer countries have substantial amounts of space that are fully air-conditioned.  For many countries, the amount of air-conditioned space is unknown.

Despite all these uncertainties, fuel intensities (plus district heating) and electricity intensities recorded separately give useful indicators of space/water heating/cooking on the one hand and electricity services on the other.  Primary energy use should be used to aggregate electricity and fuel consumption (see methodology for manufacturing sector).

  Unit:  The preferable unit is a multiple of joules, usually terajoules (1012J), petajoules (1015J), or exajoules (1018J).

  §         Output.  There are different approaches to measuring output in the commercial/service sector, with value added as the most direct measure of economic output.  However, for estimating energy efficiency, physical area is preferred because most energy services (heating, cooling, lighting, etc.) are related to the floor area and size of the building. Surveys of floor area by building type have been carried out in many IEA countries. Often, the building type is specifically related to the activity of the enterprise, e.g., school (education), hospital (health care), or restaurant (food services).  However, in many cases, particularly for offices and restaurants, buildings contain a mix of activities and enterprises, each with its own energy system and with considerably different energy use patterns.

  An alternative measure of output that may be useful for measuring the economic impact of the entire sector and its energy use is energy consumption of the sector relative to its GDP share.  In this case, it may be desirable to remove the contribution of transportation services as well as the contribution of “implied value of household mortgages and rents”, as transportation is considered as a separate sector and mortgages and rents do not directly involve energy use.  However, using service sector energy consumption relative to its share of GDP means that the resulting intensity should not be associated with energy efficiency.  As with manufacturing, care must be taken in deflating sectoral GDP to the desired base year.

Unit:  Constant US dollar.  Market value of output in real local currency is deflated to a base year using GDP deflators corresponding to each branch.  Local currency is then converted to a common international currency, normally US dollars, preferably using purchasing power parity for the base year.  For floor area, sq. metres of built space is usually the unit, but in some colder countries, sq. meters of occupied or heated space is recorded.  The difference, which can be significant (up to 10%), reflects unheated spaces, garages and stairwells, etc.

  (c)        Status of the Methodology:  The methodology is in use in many developed countries.

  (d)        Alternative Definitions/Indicators:  It has become increasingly desirable to measure CO2 emissions per unit of production.  IPCC Coefficients can be used to convert each fuel consumed to CO2 emissions.  For electricity and heat, the broad rules suggested for primary energy can be followed, but the same uncertainties exist.  Since in many countries more than half of all final energy consumed in this sector may be in the form of electricity, accounting for the emissions from electricity generation is extremely important.

  4.         ASSESSMENT OF DATA

(a)                Data Needed to Compile the Indicator:

(i)            Energy use in the commercial / service sector;

(ii)          Real output (value added) of the commercial / service sector; and/or

(iii)         Built areas or occupied space (sometimes, heated space).

  (b)               National and International Data Availability:  Value added or GDP in one-digit service sector branches is available for almost every country.  More detailed data exist for OECD countries, both from national sources and from the OECD national accounts.

  Energy consumption data at the sector-wide level are available from almost all OECD countries and most others, but there are some important caveats.  First, one must check the residential sector data from the same source to determine whether liquid and solid fuels have been divided between these sectors.  In many of the IEA time series, this division is not done, and one sector or the other has all of the liquid or solid fuels.  For developing countries, this split is a problem for gas as well, which is often entirely allocated to either residential use or services rather than being split. 

  Second, one must ascertain whether the commercial/service sector contains data from other sectors.  Data from western Germany for the sector (“Kleinverbraucher”) contained significant amounts of both agriculture and construction through the early 1990s.  Other countries may include street lighting and even non-energy utilities like water and waste disposal.  Some countries include anything that cannot be classified elsewhere.

  Reliable time-series energy data disaggregated at the subsectoral level exist for only a few countries, namely, the United States, France, Japan, and Sweden (heating only).

  IEA sent a questionnaire to OECD countries asking for data on floor area and energy use, but few responses on floor area were received.  The IEA will pursue this and expects to report data for floor area in its future energy indicators.

  (c)                Data References:

  IEA:     Energy Balances of Member Countries

            Energy Balances of non-Member Countries

  Eurostat:  Energy Balances

  The Latin American Energy Organization / OrganizacRon Latinoamericana de EnergRa (OLADE)

  Asia Pacific Energy Research Centre (APERC)

  UN:  Industrial Statistics

  OECD:  STAN database (structural analysis database)

  EU:  NACE system

  5.         AGENCIES INVOLVED IN THE DEVELOPMENT OF THE INDICATOR

  (a)                Lead Agency: The lead agency is the International Energy Agency (IEA).

  (b)               Other Contributing Organizations:  None.

6.         REFERENCES

(a)                Readings:  

Krackeler, Tom and Lee Schipper, 1998.  “Carbon Dioxide Emissions in  OECD Service Sectors. The Critical Role of Electricity use”. Energy Policy (February).

Schipper, L., and Steve Meyers, 1986. “Energy Use in the Service Sector. An International Comparison”. Energy Policy (June).

Meyers, S., Ed., 1986.  Electricity Use in the Service Sector. Report of An International Workshop.  Palo Alto, CA: Electric Power Research Institute.

(b)               Internet site:  The International Energy Agency:  http://www.iea.org