Energy Intensity: A Decomposition Exercise for Pakistan

Since the recent energy crises, the research in this strand has increased considerably. A variety of its dimensions have been examined in the literature. For instance, higher energy prices; instability in the supplies of its various components; its rapid depletion and global warming are some of its dimensions, which have been the focus of discourse among both researchers and policy-makers. Equally, energy intensity measuring the energy consumption to GDP ratio has been an important component of energy policies [Ang (2004); Liu and Ang (2007); Jimenez and Mercado (2013)]. In particular, there is a special focus on sorting out the contribution of energy efficiency— ratio of sectoral specific energy consumption to sectoral GDP—to alienate the impact of efficiency on energy intensity from other relevant factors. This is because energy efficiency is recognised as one of the most cost-effective strategies to address crosscutting issues of energy security, climate change and competitiveness [IDB (2012)]. Consequently, the information regarding energy intensity, its efficiency or activity aspects are useful tools for policy decisions and evaluation and are regularly in practice in most of the advanced countries