Energy Demand, Structural Change and Trade: A Decomposition Analysis of the Danish Manufacturing Industry

This paper examines the relation between trade patterns and energy consumption in manufacturing industries. An input-output decomposition method is used to decompose the change in industrial energy consumption for Denmark into six components, of which three are trade-related. Trade-induced changes in energy consumption have important implications for issues such as international distribution and regulation of energy consumption and emissions. It is shown that a structural change in foreign trade patterns can increase domestic energy demand. This is contrary, however, to what might be expected for a small industrialized country, which is presumed to export products that intensively use inputs of skilled manpower as well as research and development. Finally, calculations carried out at different levels of aggregation are compared. The findings here demonstrate the importance of large variations in energy intensities among subsectors for the calculation results.