Multiplicative structural decomposition analysis of energy and emission intensities: Some methodological issues

Structural decomposition analysis (SDA) has been a popular tool for studying a country's energy or emission performance. At the same time, there has been an increasing use of intensity indicators, such as energy consumption and carbon emissions per unit of economic output, in energy and emission performance reporting. The ratio change of an energy or emission intensity indicator can be more conveniently handled in the multiplicative form. In the context of multiplicative SDA of intensity indicators, this study investigates three specific methodological issues. The first is about sub-aggregate decomposition which provides detailed results at the sectoral/regional level to explain the observed aggregate intensity change. The second is the possible linkages between multiplicative SDA and additive SDA when studying changes in an intensity indicator over time. Arising from the convergence between SDA and index decomposition analysis (IDA) in application, the third issue is about the conceptual and empirical linkages between these two decomposition analysis techniques in the multiplicative form. A better understanding of these three issues will help to promote the use of multiplicative SDA of intensity indicators. A case study that looks into China's energy intensity change from 2007 to 2012 is presented.