Decomposition analysis is applied to provide an industrial energy efficiency metric.
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The activity refactorisation approach to decomposition analysis is explored.
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Physical and monetary measures of output are combined in this approach.
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Data availability can often be a barrier to this form of analysis.
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Recommendations are made for improving national datasets to track efficiency.
Abstract
Decomposition analysis can provide a useful efficiency metric for the industrial sector, it does so by separating the influence of changes in energy intensity from structural and activity changes. The activity refactorisation (AR) approach to decomposition analysis offers a potentially improved methodology, with a better correlation to real efficiency improvements. This is achieved through combining monetary and physical output data. Here the AR approach is compared to other methodologies for the United Kingdom industrial sector over the period 1997–2012. Even with limited availability of physical output data the AR approach was found to provide significantly different results to those obtained using only monetary output measures. When monetary output was the sole measure of activity, intensity (efficiency) improvements were overestimated. It is recommended that physical output data is supplied alongside energy demand and monetary output data in national accounts to better track efficiency improvements and allow such improved metrics to feed into decarbonisation policy discussions.