DRIVERS OF ENERGY INTENSITY IN PAKISTAN: AN ASSESSMENT USING INDEX DECOMPOSITION METHODS

Faisal Mehmood Mirza Mirza, Nishat Fatima


DOI: http://dx.doi.org/10.22555/pbr.v17i4.551

Abstract


We employ index decomposition techniques to decomposeaggregate energy consumption into energy intensity, efficiency andstructural change indices for Pakistan. Data suggests that energyinefficiencies play a prominent role in increasing energy intensitywhile structural changes cause small reduction in intensity index.Partial adjustment model was applied to investigate underlying forcesof energy intensity and its components. Results illustrate that energyprices and capital-labor ratio have significant effect in reducing energyintensity through efficiency channel whereas; income predominantlyincreases energy intensity through inefficient energy use. Extensivepolicy intervention is required through implementing energy intensityreduction targets for efficient energy use.

Keywords


Index Decomposition, energy intensity, energy efficiency, structural change, Pakistan

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