DECOMPOSITION OF THE ENERGY-INTENSITY INDEX WITH APPLICATION FOR THE KOREAN MANUFACTURING-INDUSTRY

We present a method for decomposing industrial energy demand using the Divisia approach. This method involves decomposition of the aggregate energy-intensity index measured in terms of energy consumption per un it output. The factors considered are changes in production structure and sectoral energy intensities. The effect associated with sectoral e nergy intensities is further decomposed into those associated with fue l substitution and real energy intensities. We have applied the method ology to data of the Korean manufacturing industry. The results obtain ed show that increases in aggregate intensity for total energy consump tion since 1988 are due primarily to the effect of increased real ener gy intensities, The contributions from structural changes and interfue l substitution were relatively small.