Decomposing the change in energy consumption in China's nonferrous metal industry: An empirical analysis based on the LMDI method

Abstract

This paper explores the salient factors driving the changes in energy consumption in China's nonferrous metal industry during the 2000–2014 period. We employ the logarithmic mean Divisia index (LMDI) method to decompose the change in energy consumption into the energy structure effect (ΔEES), the energy intensity effect (ΔEEI), the industrial structure effect (ΔES), the labour productivity effect (ΔEG) and the industrial scale effect (ΔEL). The main results revealed the following: (1) from 2000 to 2014, China's nonferrous metal industry's energy consumption increased by approximately 69.08 million tons of coal equivalent (tce); (2) ΔEG increased energy consumption in all years and was the largest contributor to the increase in energy consumption (followed by ΔEL), whereas ΔEEI was the dominant factor in reducing energy consumption over the same period, accounting for 104.07% of the change in the absolute value of total energy consumption; and (3) ΔEES and ΔES contributed 0.24% and 1.45% to the change, respectively. At present, the decline in ΔEEI cannot completely offset the increases resulting from the other four effects. This paper then provides several policy recommendations based on these results.