Highlighting the Factors of Energy Intensity Change in Malaysia: Input-Output Approach

Abstract

This study aims to investigate the changes in Malaysia’s energy intensity during the 1991-2010 period. This study analyses the energy intensities for the three sub-periods of 1991-2000, 2000-2005 and 2005-2010 using the structural decomposition analysis. The analysis investigates five contributing factors for energy intensity change. They are the energy mix, sectoral energy efficiency, production structure, final demand structure and final demand components factors. The results indicate that the energy intensity has increased sharply during the first sub-period, decreased in the second sub-period and decreased again in the third sub-period but only at a minimal level. The final demand structure factor was the most prominent factor resulted in the changes of energy intensities during the first and second sub-periods. On the other hand, the final demand components factor showed its dominant role over the other factors for the decline in energy intensity during the third sub-period. Several policy implications are discussed based on the findings of this study.