Combining physical and economic output data to analyse energy and CO2 emissions trends in industry

Index decomposition analysis based on economic output is frequently employed to provide an indication of energy intensity trends in industry. Additionally, composite energy efficiency indicators, calculated using physical output, are used to give a more accurate view of energy efficiency progress. Both approaches are commonly presented in one study but often with a different mathematical basis for each. This may lead to inconsistent results. We demonstrate using practical case studies that when all physical and economic output data are available for industry sub‐sectors, these can be combined in a single decomposition analysis that provides an energy efficiency indicator based on physical production and an indicator of the influence of structural change based on value added. Using the same methodology for both results ensures that the results are consistent and provides insights into the effects of changing prices of goods on aggregate energy intensity. In the case studies examined, falling unit values of industrial goods produced over time tend to increase the energy intensity of industry.