Analysis of the EU Residential Energy Consumption: Trends and Determinants

Abstract

This article analyses the status and trends of the European Union (EU) residential energy consumption in light of the energy consumption targets set by the EU 2020 and 2030 energy and climate strategies. It assesses the energy efficiency progress from 2000 to 2016, using the official Eurostat data. In 2016, the residential energy consumption amounted to 25.71% of the EU’s final energy consumption, representing the second largest consuming sector after transport. Consumption-related data are discussed together with data on some main energy efficiency policies and energy consumption determinants, such as economic and population growth, weather conditions, and household and building characteristics. Indicators are identified to show the impact of specific determinants on energy consumption and a new indicator is proposed, drawing a closer link between energy trends and policy and technological changes in the sector. The analysis of these determinants highlights the complex dynamics behind the demand of energy in the residential sector. Decomposition analysis is carried out using the Logarithmic Mean Divisia Index technique to provide a more complete picture of the impact of various determinants (population, wealth, intensity, and weather) on the latest EU-28 residential energy consumption trends. The article provides a better understanding of the EU residential energy consumption, its drivers, the impact of current policies, and recommendations on future policies.