Energy intensity in the Lithuanian manufacturing sector

Abstract

There is major concern with Lithuania’s industrial development because its manufacturing structure is increasingly dependent on the consumption of energy. In spite of the Lithuanian energy intensity decrease more than 35 percent in the last decade, the energy required to produce a unit of output in Lithuania twice exceeds the average of the European Union countries. This paper investigates the energy intensity from a production theoretic framework and uses annual data of 1998- 2011 to measure energy intensity in the Lithuanian manufacturing sector. The investigation compares energy intensity in manufacturing across different activities, based on several models. The results of the research show considerable variation in energy intensity across the activities. Based on energy intensity ratio, the Lithuanian manufacturing activities are classified into three categories, such as high energy- intensive, moderate energyintensive and low energy- intensive. The research reveals a strong and negative interrelationship between intensity of energy consumption and manufacturing production. Over a period of 1998-2011, the contribution of high energy-intensive industries to total manufacturing value added was increasing and amounted to 30 percent at the end of 2011. F inally, the research provides insights, that restructuring of the activities from energy intensive industries towards more technologically advanced ones might potentially lead to higher energy efficiency and it could be one of the most important routes to sustainable development.