Determinants of energy intensity in Russia

Abstract

In the Soviet Union energy intensity levels remained high. After the Soviet Union breakdown Russia has also been very energy intensive. Although Russia's energy intensity has fallen by nearly 41%, primary energy consumption per capita has increased by 24% since 1998. The current study aims to investigate how different determinants have contributed to the decline in Russia's energy intensity. The cointegration methodology is applied to establish the long-run relationship among the variables influencing energy intensity in Russia. The results show that energy prices and the share of non-carbohydrate energy have significant impact being negatively correlated to changes in energy intensity. A 1% increase in real crude oil price is expected to reduce energy intensity by 0.26% approximately, as well as a 1% increase of the share of alternative energy sources is expected to reduce the energy intensity by 0.86%.

The determinants of energy intensity in Indonesia

“…A 1% increase in crude oil price is expected to reduce EI by 0.07% approximately. Rudenko and Rastchetova (2018) show the effect to be 0.26 for Russia, Lin and Moubarak (2014) estimate it to be 0.916, Adom (2015a, b) find the price effect for Nigeria to be 0.383 and for South Africa to be 0.127. The relatively low oil price elasticity can be explained by the fact that Indonesia has always subsidized oil prices for domestic retail fuel consumers, with selling energy products at a discounted price well below the world market parity prices (Rafiq and Salim, 2011).…”

“…Azhgaliyeva et al (2020) argue that major determinants of country-level energy efficiency in the literature include energy prices, real GDP per capita, economic structure and trade openness. The control variables are chosen on the basis of empirical literature (Fisher-Vanden et al , 2004; Hübler and Keller, 2010; Hübler, 2011; Adom and Kwakwa, 2014; Adom, 2015b; Akal, 2016; Rudenko and Raschetova 2018), data availability and the nature of this study. We believe that the chosen variables cover the major indicators of Indonesia's energy sector, as well as the country's openness to new technologies and its financial ability to implement them.…”

“…It is plausible to form a long-run relationship between EI and its factors in a linear logarithm form. The empirical model for this study follows directly from Adom and Kwakwa (2014), Adom (2015b), Rudenko and Raschetova (2018). It is represented by Equation (1) as follows:where EI is EI, AE is a share of alternative and nuclear energy, IND is industry value-added, FDI is foreign direct investment, TR is trade openness, FIN is domestic credit to the private sector and OIL is a real price of Brent crude oil.…”

“…The value varies widely across countries, depending on the level of industrialisation, the mix of services and manufacturing and the attention paid to EI. The study of the dynamics of primary EI helps to understand how energy demand varies under conditions of significant changes in the economy's structure and public policy (Rudenko and Raschetova, 2018). Overall, finding roots of lower EI may help the countries to develop more competitive and efficient economies and achieve more sustainable economic growth.…”

“…The present study contributes to the existing research literature by examining the determinants of EI for the Indonesian case. We follow the empirical literature on the determinants of EI (Fisher-Vanden et al , 2004; Hübler and Keller, 2010; Hübler, 2011; Adom and Kwakwa, 2014; Adom, 2015b; Akal, 2016; Rudenko and Raschetova 2018). This paper contributes to the existing literature in several ways.…”