Energy services

Energy consumers are driven by their demand for energy services (such as space and water heating, cooking, transportation, lighting, entertainment and computing). This piece introduces the reader to the concept of energy services, and explains why it is important to analyze energy markets and climate policies from the perspective of energy services. The paper discusses the theoretical foundations and empirical evidence, particularly related to the rebound effect and the demand in developing economies. The paper concludes that governments should encourage the collection of statistical information about energy services in order to help economists analyse markets and policies through this lens. Most importantly, governments should formulate more integrated policies that focus explicitly on energy services, connecting markets for energy and for energy-using equipment with the development of technologies. Careful and balanced energy service policies are especially important as economies industrialise because they can help reduce economic, political and environmental vulnerability.