IMPLICATIONS FOR ENERGY AND CLIMATE-CHANGE POLICIES OF USING PURCHASING-POWER-PARITY-BASED GDP

There is a much better correlation between energy use and GNP or GDP when the latter are calculated using purchasing-power parity (PPP) rather than market-exchange rates (MER). Using PPP-adjusted GDP also shows that the larger developing countries of the world are not, when viewed overall, less energy-efficient than their industrialized country counterparts. The per capita GDPs of the larger developing countries are typically about 1/10 to 1/4 of those of the O.E.C.D. countries, on a PPP-adjusted basis, rather than in the range of 1/80 to 1/10 on an MER-basis. This result may have major implications for future energy requirements of the developing countries, associated emissions of CO2, and formulation of policies for addressing global climate change.