DECOMPOSITION OF AGGREGATE ENERGY AND GAS EMISSION INTENSITIES FOR INDUSTRY - A REFINED DIVISIA INDEX METHOD

Several methods for decomposing energy consumption or energy-induced g as emissions in industry have been proposed by various analysts. Two c ommonly encountered problems in the application of these methods are t he existence of a residual after decomposition and the handling of the value zero in the data set. To overcome these two problems, we modify the often used Divisia index decomposition method by replacing the ar ithmetic mean weight function by a logarithmic one. This refined Divis ia index method can be shown to give perfect decomposition with no res idual. It also gives converging decomposition results when the zero va lues in the data set are replaced by a sufficiently small number. The properties of the method are highlighted using the data of the Korean industry.