An Analysis of the Rapid Growth in Japanese Energy Demand Since 1987

Abstract

The purpose of this paper is to identify the sources of the rapid growth in energy demand in Japan that has occurred since 1987. The analysis focuses on sectoral demands. In the industrial sector changes in total final energy consumption are broken down into three components, those brought about by energy conservation, those resulting from changes in the mix of industrial output and those brought about by changes in the overall level of industrial activity. Changes in the industrial demand for purchased electric power are similarly decomposed into four components. In the residential, commercial and transportation sectors the demands for individual categories of end-use energies are related to a series of relevant variables in a multiple linear regression framework. The estimated parameters are then used to decompose changes in consumption that occurred in 1987and 1988 into separate components caused by different factors. The paper concludes with some brief comments on the likelihood that the trends reported on in this paper will continue.