Measuring energy intensity in Japan: A new method

Energy intensity and energy conservation have been important pillars of energy policies in Japan. Recently, the government has introduced new initiatives to enhance energy efficiency and reduce energy intensity. We analyze the energy intensity in Japan for the period 1973-2006 by proposing a new method which takes into account all other inputs used in production and corrects for the bias in the traditional energy intensity measure. We show that the traditional energy intensity measure has serious flaws. The traditional measure overestimates actual energy intensity before the mid-1980s and largely underestimates afterwards. It is found that aggregate energy intensity has risen remarkably from 1991 to 2001. The main cause of this rise is the rapid rise in energy intensity in manufacturing and energy sectors.