Factors shaping aggregate energy intensity trend for industry: Energy intensity versus product mix

Understanding the mechanisms of change of energy consumption in industry has attracted much attention since the 1973 world oil crisis. A popular line of research has been to decompose changes in the aggregate energy intensity of industry to give the relative impacts arising from energy intensity change and product-mix change using a decomposition technique. Many empirical studies covering a large number of countries have been reported. The main objective of this paper is to put together the empirical results reported in these studies in a coherent framework and identify possible systematic features. Of particular interest are the basic trends in this line of research, the relative importance of energy intensity change and product-mix change, possible variations over time and between country groups in the energy impacts of these changes, and inconsistencies in findings among studies. An overview of the decomposition technique, including its strengths, weaknesses, and role in industrial energy consumption studies, is also presented.