Analysis of energy intensity in Japan

Abstract

This study discusses the causes of the increase in Japan's energy intensity, defined as energy consumption divided by GDP, since the early 1990s. The significant reduction in Japan's energy intensity ceased in the early 1980s and has even slightly increased since the early 1990s, indicating that Japan seemingly stopped taking aggressive action to improve energy use. However, further analysis at prefecture level and sector level provides additional insight on energy intensity trends. To analyze the causes of the increase in Japan's energy intensity, energy intensity is decomposed into energy efficiency (improvements in energy efficiency) and energy activity (structural changes from the secondary sector to the tertiary sector of the economy). Our result indicates that the non-uniform energy intensity trends between prefectures are attributed to a high variability in energy efficiency. At sector level, we estimate the income elasticity of energy consumption in each sector and find that a structural change in energy consumption behaviors occurred in all sectors at different time points. The industrial sector and commercial sector became less energy efficient after 1981 and 1988, respectively, which is presumably responsible for the deterioration of Japan's energy intensity since the early 1990s.