Energy efficiency is, in principle, a simple idea: an output of human value, for example, vehicle-km traveled, divided by the needed input energy. Efficiency improvements are regarded by many as an important means of mitigating not only climate change, but also other environmental problems. Accordingly, many countries have efficiency ratings for appliances and efficiency standards for road vehicles. Despite the vast number of articles published on energy efficiency, few question whether it is a useful or accurate measure in its present form. This review addresses this lack, by a critical review of the literature, not only in energy efficiency, but in other areas of research, such as ‘energy services’, that can help broaden the scope of this idea, both geographically and conceptually. These shortcomings are illustrated in case studies of road passenger transport and buildings. The main findings are that energy efficiency inevitably has an ethical dimension, that feedbacks are more widespread than generally considered, and that conventional efficiency measures omit important energy input items, particularly those concerned with mining of the materials needed for renewable energy plants. Finally, the key results of this review are summarized, and its limitations are discussed, as is the future research needed to overcome these shortcomings.