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| Between 1989-90 and 2005-06, final energy consumption in Australian industries analysed in this report increased by 48 per cent. This study decomposed the changes in energy use over time into an activity effect, a structural effect and a real intensity effect. Overall, sectoral activity was found to be the largest contributor to the growth in energy consumption. Without changes in real energy intensity and sectoral structure, final energy consumption would have increased by 62 per cent. A change in the sectoral structure, from relatively more energy intensive industrial activities to less intensive services activities, contributed to a 14 per cent reduction in energy used. However, real energy intensity has contributed to less than 1 per cent of the increase in final energy consumption. The analysis highlights differences in trends in energy intensity across sectors. A reduction in real energy intensity in the manufacturing, services and construction sectors contributed to a 9 per cent reduction in energy used. However, this reduction in energy consumption was offset by higher energy intensity in the agriculture and mining sectors. A reduction in the output of the agriculture sector because of the severe droughts of 1994-95 and 2002-03, without apparent changes in energy consumption, was the main reason underlying an increase in real energy intensity in this sector. Similarly, declining ore grades, the need to access deeper deposits and significant increases in the liquefaction of natural gas have contributed to an increase in real energy intensity in the mining sector. This report also highlights the lack of availability of more disaggregated data on energy used to produce goods and services in Australian industry. As identified, improvements in energy intensity can only be reliably measured at the level of individual production processes or plants. In the absence of detailed data at that level, changes in the product-mix or production processes within each subsector are not captured. One of the advantages of the factorisation method adopted in this report is in providing a consistent trend to monitor the progress of energy intensity at the sectoral level, where data are available. These trends are comparable over time and provide valuable guidance to policy-makers. However, a lack of additional explanatory variables in this study, which have a major influence on the incentives to undertake energy intensity improvements means strong conclusions cannot be drawn about the factors underlying the intensity trends presented in this report. Future research should be focussed on providing a clearer understanding of the reasons behind some of the key changes in energy intensity trends identified. |
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