Industrial Electrification and Efficiency: Decomposition Evidence from the Korean Industrial Sector

Jiyong Park, Taeyoung Jin, Sungin Lee and Jongroul Woo
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Jiyong Park: Korea Energy Economics Institute, Ulsan 44543, Korea
Taeyoung Jin: Korea Energy Economics Institute, Ulsan 44543, Korea
Sungin Lee: Korea Energy Economics Institute, Ulsan 44543, Korea
Jongroul Woo: Energy Environment Policy and Technology, Graduate School of Energy and Environment (KU-KIST Green School), Korea University, Seoul 02841, Korea

Energies, 2021, vol. 14, issue 16, 1-18

Abstract: For this study, we conducted a decomposition analysis of industrial electricity consumption based on the logarithmic mean Divisia index approach. An empirical dataset consisting of 11 industrial sectors in Korea from 2000 to 2018 was used. The three-factor decomposition equation was extended to include four factors by decomposing the energy intensity effect into electrification and electricity consumption efficiency effects. The empirical results are summarized as follows: The increase in electricity consumption in the Korean industrial sector from 2000 to 2018 is mostly caused by the production effect. While the structure effect decreases electricity consumption, the intensity effect increases it. The key findings indicate that the hidden electrification effect can be confusing to researchers with regard to the intensity effect. The empirical evidence suggests that the intensity effect has a positive effect on electricity consumption induced by the electrification effect, although the efficiency effect continuously decreased electricity consumption. The decomposition results of some sectors show that electrification, rather than the production effect, contributed the most to the increase in electricity consumption. This implies that while replacing fuel with electricity has been successfully achieved in several sectors, there are still challenges regarding increasing energy efficiency and expanding clean electricity generation.

Keywords: industrial electricity; electricity consumption efficiency; electrification; South Korea (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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