Assessing drivers of economy-wide energy use and emissions: IDA versus SDA

Abstract

Index decomposition analysis (IDA) and structural decomposition analysis (SDA) are analytical techniques that have been extensively used by researchers to study drivers of changes in energy consumption and energy-related emissions for energy and climate policy assessment and development. We compare the two techniques from the methodological and application viewpoints and with specific reference to economy-wide analysis where the overlap between the two is the greatest. Our study brings up to date several previous studies and provides a detailed assessment of the post-2010 developments. In addition, a framework for additive and multiplicative decomposition methods is presented, specific application in policy analysis is discussed with representative examples given, and the selection between the two techniques is described. Despite the differences between the two techniques in terms of origin, there has been some convergence in their application in some specific areas. However, even if the same dataset is used, application of the two techniques will lead to different numerical results due to underlying differences in some core concepts and the meanings of the drivers of change defined. A good understanding of these similarities and differences will help researchers in making sound judgment in their adoption and implementation in policy studies.