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LMDI Decomposition of Energy Intensity: Application To Ukraine

In the world today, energy efficiency plays a key role in economic development of the countries. Over the period of 2013-2017 the energy intensity of economic entities in Ukraine decreased by 64.9 % or 0.0174 kgoe/UAH. However, its level is one of the highest in the world. The objective of this article is to reveal the main factors, which affect this tendency. In order to do this the decomposition analysis is used through the application of the Logarithmic Mean Divisia Index (LMDI-I) method. This paper uses both additive and multiplicative models to identify the impact degree, which the structure and energy intensity of economic sectors (namely industry, transport, service sector, agriculture and others) have on the overall energy intensity of economic entities. The results indicate that in the period under review the sectoral energy intensity factor has the greatest influence on the total energy intensity, whereas the impact of the economic structure is insignificant.