Comparing ODEX with LMDI to measure energy efficiency trends

This paper examines the effectiveness of ODEX in measuring energy efficiency improvements by comparing it to an alternative proxy for energy efficiency, namely an index of energy intensity with structural effects removed, calculated using the Logarithmic Mean Divisia (LMDI) decomposition technique. Both approaches are subjected to tests to determine their accuracy, using the industry sector in Ireland as a case study. While the LMDI performs better than ODEX, the results yielded by both in their chained forms are influenced by fluctuations in the data used to calculate them. A method is proposed to quantify the effects of fluctuations on the results. For Irish industry data, these effects are found to be significant. It is recommended that the effects of data fluctuations be evaluated when calculating a chained top-down indicator to measure energy efficiency.

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