Sources of energy productivity change in Australian sub-industries

Abstract

This paper examines the causes for the sluggishness or deterioration in energy productivity in some key sub-industries in Australia during the recent years by analysing the sources of energy productivity change in those sub-industries over the period 2003-2015. Energy productivity change is decomposed into three components attributable to technical efficiency change, technological change and changes in factor inputs (i.e., labour-energy and capital-energy ratios). The data envelopment analysis (DEA) is implemented to examine the relative contributions of the components. Empirical results show that (1) the technical efficiency change positively contributed to energy productivity change in the sub-industries; (2) decreases in technological change played the most important role in the process of energy productivity drop in the selected 8 sub-industries over the years 2003-2015; and (3) falling capital-energy and labour-energy ratios played the most important role in the process of the drop in the selected 10 sub-industries over the years 2007-2015.