Driving forces for aggregate energy consumption: a cross-country approach

Abstract

Although a cornerstone for development, past and current energy use has often posed a major challenge for policymakers with respect to planning and management. Within this context, in this paper an updated multi-sectorial cross-country assessment of energy consumption trends was undertaken, aiming at identifying the main drivers of changes in aggregate energy consumption. These drivers have been interpreted in the light of the policy measures that have been implemented over the years by different countries to achieve a sustainable development of the energy sector. The cross-country assessment encompasses a set of developed (United Kingdom, Portugal and Spain) and emerging (Brazil, China, and India) countries. Resorting to the Logarithmic Mean Divisia Index (LMDI) decomposition method, changes in the aggregate energy consumption were decomposed into three main explanatory effects: activity, structure and intensity. The major findings achieved reflect the relevance of intensity and activity effects in detriment of the structural effect. The assessment of energy consumption trends using the LMDI decomposition method provides critical information regarding which is the dominant factor that should be focused in policy design.