Manufacturing energy use in OECD countries: decomposition of long-term trends

In this paper we examine manufacturing energy use in 13 OECD countries over the period 1971-1995. We describe changes in aggregate energy intensity using the Adaptive Weighting Divisia decomposition method. We contrast the development in the periods after the oil price shocks of 1973 and 1979 with the period of relatively stable energy prices after the oil price crash of 1986. The results show that manufacturing output grew in most countries, pushing up energy use. The share of electricity increased in almost every sector, while there was a clear trend away from oil and coal towards natural gas. Changes in the structure of output drove up energy use between 1973 and 1994 in some countries and down in others. Changes in energy intensities had a profound and downward effect on manufacturing energy use in all countries. However, contrasting the period after oil prices fell in 1986 with earlier years we see that for most countries the rate of energy intensity decline slowed slightly but did not reverse with falling prices. In a few countries efficiency improvements continued to have a strong effect. This suggests that even without higher prices improvements of energy efficiency seems to take place. (C) 2000 Published by Elsevier Science Ltd. All rights reserved.