Decomposition effects of energy and co₂ intensities in the Nigerian economy: A logarithmic mean weight divisia index (LMDI) analysis.

Abstract

This paper investigates CO2 intensity changes from energy use in the Nigerian economy for a period of 39 years (1981-2019) using the Logarithmic Mean weight Divisia Index (LMDI). The respective contribution and the impacts of different factors such as activity effects, conversion efficiency, intensity of energy, fuel mix, among others on the aggregate carbon emission changes in the economy has been examined bearing in mind the poor electricity supply experienced over the years. The investigation was undertaken in four periods and the outcomes revealed that energy use and CO2 emission have increased to some extent. The analysis shows that carbon emissions decreased most between 1981 and 1989 as a result of a decrease in energy intensity and substitution/fuel mix changes. There was considerable increase in intensities from 1990 upwards, thereby neutralising the benefits experienced in the first period. Increased energy intensity, inadequate electricity supply as well as a switch over to high carbon-emitting fuels were principal factors that fuelled the increase. Given the trends in the decomposition, it is important to promote cleaner fuels and improve energy efficiency in order to decrease Nigeria’s energy intensity and carbon emissions overall contributions in the coming years.