Industrial energy consumption and pollutant emissions: Combined decomposition of relative performance and absolute changes

Sicen Liu, Xiaodong Chen, Zhiyang Shen*, Tomas Baležentis*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    4 Citations (Scopus)

    Abstract

    Combined decomposition of relative productivity growth and absolute changes in input/output variables helps to identify the driving forces of energy conservation and emission reduction. This paper proposes a framework based on the Luenberger productivity indicator (LPI) and the logarithmic mean Divisia index (LMDI) approach to analyze the energy–economy–environment nexus. The empirical case of the China's industrial sector for 2006–2014 is analyzed. Following this approach, we present a variable-specific decomposition framework which attributes the overall productivity change and its sources to individual input/output variables. Empirically, we examine the relationships between the productivity growth and energy consumption within the LPI–LMDI framework across China's province-level regions. The results show important spatial variation in the productivity measures. The LPI–LMDI decomposition implies that the industrial energy consumption increased with productivity growth appearing as the only mitigating factor. As regards the industrial SO2 emission, the individual productivity growth effect and the efficiency change effect remained as suppressing factors for emission abatement. These results can be used for evidence-based decision making.

    Original languageEnglish
    Pages (from-to)3454-3469
    Number of pages16
    JournalBusiness Strategy and the Environment
    Volume31
    Issue number7
    DOIs
    Publication statusPublished - Nov 2022

    Keywords

    • Luenberger productivity indicator
    • energy consumption
    • industrial sector
    • logarithmic mean Divisia index
    • pollutant emissions

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