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The separation of impacts on energy use from changes in activity, structure and
intensity is critical for policy analysis, as most energy-related policies target energy
intensities and efficiencies, often by promoting new technologies. Accurately tracking
changes in intensities helps measure the effects of these new technologies. To separate
the effect of various components over time, a factoral decomposition is used where
changes in energy use in a sector are analysed using the following equation:
E = A
∑
j
S
j
* I
j .
(A3.1)
In this decomposition,
E
represents total energy use in a sector;
A
represents overall sectoral activity (e.g. value added in manufacturing);
S
j
represents sectoral structure or mix of activities within a sub-sector
j (e.g.
shares of output by manufacturing sub-sector
j); and
I
j
represents the energy intensity of each sub-sector or end-use
j (e.g. energy
use/real US dollar value added),
where the index
j denotes sub-sectors or end uses within a sector as shown in the
second column in Table A3.1.
If indices for the changes in each of these components over time are established, they
can be thought of as ‘all else being equal’ indices. They describe the evolution of
energy use that would have taken place if all but one factor had remained constant at
their base year (
t=0) values.
3
From this the
activity effect can be calculated as the relative impact on energy use that
would have occurred between year
t=0 and year
t if the structure and energy
intensities for a sector had remained fixed at base-year values while aggregate activity
had followed its actual development:
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