Decomposition of Energy Intensity Behavior: By Concentrating on Institutional and Economic Infrastructures

This paper is analyzing the main factor that drives behavior of energy intensity in some countries during 2000-2015 by using decomposition approach and concentrating on Institutional and Economic Infrastructures. A sample of countries including UK, Germany, Japan, Turkey, Saudi Arabia, Iran, China and Russia is selected and classified in three classes; the first class countries have high level of economic openness and institutional quality. The second class has the middle levels of economic openness and institutional quality. The third class have a low level of economic openness and institutional quality.
The findings show that countries with high levels of economic openness and institutional quality mainly have a low level of energy intensity. Also, the results of energy intensity decomposition by Fischer Ideal Index indicate that in the first class countries (UK, Germany and Japan) the main factor driving the changes in energy intensity, is efficiency improvement. By contrast, the second class (Turkey, Saudi Arabia) and the third class (Iran, China and Russia) have a different behavior of energy intensity: In Turkey, improvement of energy efficiency is dominant factor for driving energy intensity, but in Saudi Arabia, the structural changes by type of energy-intensive activities deactivate the efficiency effect. Moreover, in Iran and Russia, the main driver of energy intensity is the existence of inefficiency. while in China that is experienced a declining trend in energy intensity, the improving of efficiency is dominant effect.
JEL Classification: Q49، Q43