Investigating the Driving Forces of Energy Intensity Change in Malaysia 1991-2010: A Structural Decomposition Analysis

• Main Authors: Azlina Abdullah, Hussain Ali Bekhet
• Format: Article
• Language: English
• Published: EconJournals 2019-06-01
• Series: International Journal of Energy Economics and Policy
• Online Access: https://www.econjournals.com/index.php/ijeep/article/view/7793

<p>This research investigates the changes in Malaysia’s energy intensity from 1991 to 2010 using structural decomposition analysis. Energy mix,<br />sectoral energy efficiency, production structure, final demand structure, and final demand components factors are analysed. Results show that energy<br />intensity has increased, and the responsible factors of this change were production structure, final demand structure, and sectoral energy efficiency.<br />Further, this increase was offset by the negative effect of the change in final demand components owing to smaller positive net exports (due to a larger<br />increase in imports compared with the increase in exports) plus with lower investment in 2010 compared with 1991. In addition, energy mix change<br />also has contributed to energy intensity decline but at a minimal extent. The prominent effect of the production structure factor can be explained by<br />the industrialisation occurring in the country. The economic plans, which, among others, promote several energy intensive industries, had dampened<br />energy efficiency initiatives. Policy suggestions are proposed to reduce the energy intensity of Malaysia.</p><p><strong>Keywords:</strong> Energy Intensity, Energy Efficiency, Structural Decomposition Analysis, Input-output Model, Malaysia</p><p><strong>JEL Classifications:</strong> C67, O44, Q43</p><p>DOI: <a href="https://doi.org/10.32479/ijeep.7793">https://doi.org/10.32479/ijeep.7793</a></p>