Energy decomposition analysis: IEA model versus other methods

In energy decomposition analysis, the International Energy Agency (IEA) model, which is based on the Laspeyres index method, is included in a recent international collaborative initiative on energy indicators for sustainable development for possible adoption [IAEA, 2005. Energy Indicators for Sustainable Development: Guidelines and Methodology. International Atomic Energy Agency, Vienna (www-pub.iaea.org/MTCD/publications/PDF/Pub1222_web.pdf)]. From an empirical analysis using the data of the United States, we found that the residual term given by the IEA model could be significant and that the estimates of the impacts of structure and intensity changes given by the model could be quite different from those given by other decomposition methods. The residual term tends to be large when changes in structure and/or energy intensity variables are significant. Since changes in these variables over time are generally larger in the developing countries than in the IEA countries, there is the question about whether the IEA model is an appropriate decomposition method for the developing countries.