Sources of structural change in energy use: A decomposition analysis for Korea

Abstract

Quantifying the sources of change in energy use by decomposition can provide policymakers with useful information, especially for Korea, which has energy-intensive industries such as steel and petrochemicals. In this article, intermediate energy demand is analyzed using a four-part structural decomposition model. The proposed model can distinguish a structure effect from the Leontief effect. From the results, a noticeable structure effect is observed from 1995 to 2005. Moreover, the results show that the Leontief effect can be estimated oppositely according to energy demand sector. Consequently, this article shows the necessity of investigating intermediate demand when analyzing energy use applying a decomposition analysis method.