Sectoral Changes in Energy Use in Australia: An Input-Output Analysis

Abstract

After the oil price shock, no systematic energy economic study has been undertaken in Australia to investigate the pattern and the extent of energy use by different sectors of the economy. Although the Department of Energy and Resources (1987) has shown the energy use by sectors and fuel types during the period 1973-74 to 1984-85, the findings show only the direct energy use, having no reflection on indirect energy use. That is, the amount of energy embodied in non-energy inputs used as intermediate inputs in the production process was not considered. Direct energy use may decrease due to rises in energy prices but it could happen at a cost of increased indirect energy use. In this situation, treatment of a sector as either a heavy energy user or an energy saver, from its apparent energy intensity value could be misleading from the policy point of view. This study was undertaken with the objective to investigate to what extent the total changes in energy use in Australia during the period 1974 to 1980 were technology induced and demand induced. The main factors considered here were to investigate the changes in the overall energy use resulting from the (i) substitution of one type of energy input for another; (ii) substitution among non-energy inputs; and (iii) changes in the size and mix of final demand. Input-output methods were used to identify the technology and the demand induced changes in energy use. ... The findings of the study indicated that the indirect changes in energy use were more profound than the direct changes and offset direct negative changes in energy use. The technology induced changes in energy use were positive. Two major determinants of changes in indirect energy use, namely, the changes in energy intensiveness of direct inputs and a changing efficiency in energy output were identified. The demand induced changes, especially the demand mix, were negative for most of the sectors while the total demand induced changes were positive. The demand induced changes were greater than the technology induced changes.