A futuristic view of energy saving and related energy rebound effect in Bangladesh using complete decomposition model (CDM)

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1 BCSIR Avalable onlne at Bangladesh J. Sc. Ind. Res. 47(3), , 2012 BANGLADESH JOURNAL OF SCIENTIFIC AND INDUSTRIAL RESEARCH E-mal: A futurstc vew of energy savng and related energy rebound effect n Bangladesh usng complete decomposton model (CDM) S. Khosruzzaman a, M. A. Asgar b, M. A. Asgar c,k. M. R. Rahman d and S. Akbar e a Insttute of Natural Scences, Natonal Unversty, Gazpur, Bangladesh., b Uttara Unversty, Dhaka, Bangladesh c East-West Unversty, Dhaka, Bangladesh d Bangladesh Atomc Energy Commsson, Dhaka, Bangladesh Abstract In ths paper Complete Decomposton Model s used to compute the future energy savng pattern from the dfference of the 'trend' and 'real' values of energy consumpton. The 'trend' s defned as a sum of actvty effect and the energy use n the base year. The 'real' s defned as a sum of energy consumpton n the base year and the change n energy consumpton due to the actvty effect, structural effect and ntensty effect. Ths analyss s carred out n respect of Bangladesh for the perod The economc sectors that are taken n to account are agrculture, ndustry and servce. The futurstc vew shows that Bangladesh can save about MTOE n agrculture sector and MTOE from servce sector. On the other hand, ndustry sector, whch s accounted for 58% of the total energy consumpton, faled to save energy, rather the country consumed 227 MTOE more energy than usual. The energy rebound effect that reles upon the actvty effect and structural effect has also been estmated to examne the energy uses pattern of these sectors. The aggregate energy rebound effect was found to be 1480 MTOE, of whch actvty effect and structural effect contrbute 91.21% and 8.78% respectvely. Key Words: Complete Decomposton Method, Energy savng, Energy rebound effect, Bangladesh. Introducton The decomposton method s an effectve tool for energy demand analyss and also for energy and envronmental descrpton (Ang, 2000). Ths approach takes nto account the relatonshp between energy consumpton n dfferent sectors of economc actvty and energy-related economy. It gves a dfferental and quanttes vew of the mplementaton of energy conservaton measures. The forefront study of the applcaton of the decomposton of energy conservaton was presented by others (Sun 2003). However, most of the studes were lmted to two economc dmensons such as energy ntensty and GDP. We have extended the method to analyze the energy savng of dfferent economc sectors of Bangladesh projected over the perod Energy savng reflects the effects of technologcal progress and structural changes of an economy. Energy savng ndcates the total reducton of energy use f the overall economc actvty remans unchanged. If the effectveness of producton technology ncreases, energy savng takes place. Agan, f the share of a sector of the total producton volume decreases, energy savng may also occur. Energy savng also takes nto account the structural shft such as the shft towards the use of servces nstead of energy commodtes (Punyong, 2008). The energy rebound effect captures the development that takes place f technologcal change s not drectly ncluded. It s the calculaton of a sector's response n terms of energy consumpton to the development of the value added plus the structural effect. The energy rebound effect s a reflecton of the ndrect effect of technologcal development on energy use nsofar as technologcal development ncreased economc growth accompaned as structural shft n the economy. In ths study, the three dmenson complete decomposton model was formulated to analyze the energy savng and energy rebound effect of dfferent sector n Bangladesh. The study analyzed data of the perod , as an attempt to assess the extent of the acclamed success n Bangladesh. *Correspondng author. E-mal: skzaman1971@ yahoo.com

2 314 A futurstc vew of energy savng and related energy rebound 47(3) 2012 Materals and Methods We have used the avalable up-to-date data from dfferent natonal and nternatonal sources lke Bangladesh Bureau of Statstcs (BBS), Bangladesh Power Development Board (BPDB), Petrobangla, Asan Development Bank (ADB), and the World Bank (WB), etc. The annual data of Gross Domestc Product (GDP) s converted nto US$ at the rate of The GDP and commercal energy consumpton of 2007 are consdered as base values. In 2008, the GDP growth rate was 5.2% and t s consdered at 10% n Ths s the proposed futurstc goal of the present government as documented n electon manfesto and expressed n vson 2021.The contrbuton of agrculture, ndustral and servce sector GDP are 22%, 28% and 50% respectvely n 2007 (BBS, ). Ths fgure wll ncrease to 13%, 45% and 42% respectvely n In 2008, the energy growth rate was 8% and t wll rse to 9.5% n 2030 (BBS, ). The contrbuton of commercal energy consumpton n agrculture, ndustral and servce sector are 11%, 46% and 43% respectvely n 2007 (BBS, ). Ths fgure rose to 5%, 62% and 33% respectvely n The energy co-effcent was 1.53 n 2007 and ths fgure s estmated to be 0.95 n The Complete Decomposton Method was used to construct the energy savng model n dfferent sector. The model starts wth GDP-related energy ntensty, E t s the sum of sector's energy consumpton E t : E t = Σ E t (1) Where s the ndex of sector. The total energy consumpton E t s a functon of three varables: 1) LEVEL OF OUTPUT, A t, whch measures aggregate sectoral actvty ether n economc or physcal unts and conssts of sectoral nputs: A t = Σ A t (2) 2) ENERGY INTENSITY OF SECTORS, I t, defned as sectoral energy consumpton E t per unt of actvty A t : I t = E t / A t (3) 3) STRUCTURAL PARAMETER, S t, defnng the share of sectors n the aggregate sectoral output n the year t: S t = A t / A t (4) The followng equatons decompose total energy consumpton nto the terms of actvty, structure and energy ntensty: Et = Σ (A t X S t X I t ) (5) = Σ (A t X [A t /A t ] X [E t /A t ]) (6) In the decomposton approach, changes n energy consumpton between the base year and year t can be dvded nto actvty, ntensty and structure effects: ΔE ot = E t - E o (7) = Σ (A t X S t X I t ) - Σ (A o X S o X I o ) = GDP effect + S effect + I effect (8) Where, GDP effect, S effect and I effect represents actvty effect, structural effect and ntensty effect respectvely. Followng the decomposton method (Sun. 1998, Sun. 2001) these three effects can be decomposed as below. Actvty effect (GDP effect ) =Σ (Δ A t S o I o ) + (1/2)ΣΔA t (S o ΔI t + ΔS t I o ) + (1/3)Σ (ΔA t ΔS t ΔI t ) (9) Structural effect (S effect ) =Σ(A o ΔS t I o ) + (1/2)ΣΔS t (A o ΔI t + ΔA t I o ) + (1/3)Σ (ΔA t ΔS t ΔI t ) (10) And Intensty effect (I effect ) =Σ (A o S o ΔI t ) + (1/2)Σ ΔI t ( A o ΔS t +ΔA t S o ) + (1/3)Σ (ΔA t ΔS t ΔI t ) (11) Here, E t, E 0 = Total energy used n year t and 0 (base year) I o +ΔI t, I o = energy ntensty of sector n year t and 0, respectvely S o + ΔS t, S o = output share of sector n year t and 0 A o + ΔA t, A o = level of aggregated actvty n year t and 0 ΔA t = A t - A 0 ΔS t = S t - S o and ΔI t = I t - I o From equaton (7), the 'real' energy consumpton n the year t can be expressed as. Real = E t =ΔE ot + E o (12) The GDP effect s used to predct the 'trend' of the energy consumpton n year t as n the followng equaton.

3 Khosruzzaman, Asgar, Asgar, Rahman and Akbar 315 Trend = GDP effect + E o (13) Energy savng s defned as the dfference between Trend and Real. Thus, ψ = Real - Trend =ΔE ot + E o - GDP effect - E o =ΔE ot - GDP effect = GDP effect + S effect + I effect - GDP effect = S effect + I effect (14) Energy savng s acheved only f ψ <0, whch ndcates that the actual ncrease of energy consumpton (real) s less than what should have, otherwse, resulted from the growth of the economy (trend). Ths condton mples that the energy consumpton has been comparatvely reduced (saved), whch s the ndcator of the success of the energy conservaton plan. In contrast, f ψ >0, energy savng s not achevable. The energy savng model (ψ ) can be wrtten as, ψ =S effect + I effect = Σ (A o ΔS t I o ) + (1/2) Σ ΔS t (A o ΔI t +ΔA t I o ) + (1/3) Σ (ΔA t ΔS t ΔI t ) + Σ (A o ΔS o ΔI t ) + (1/2) Σ ΔI t (A o ΔS t + ΔA t ΔS o ) + (1/3) Σ (ΔA t ΔS t ΔI t ) = Σ(A o ΔS t I o ) + (1/2) ΣΔS t (A o ΔI t + ΔA t I o ) +Σ(A o S o ΔI t ) + (1/2) Σ ΔI t (A o ΔS t + ΔA t S o ) + (2/3) Σ (ΔA t ΔS t ΔI t ) (15) Energy savng appears mathematcally n these models as a negatve value of ψ. Thus the negatve values have S effect and I effect, represent the savng caused by the change of the respectve dmensons. Malaska et al. n 1999 proposed a group of metrcs n order to relate the decomposton analyss to matters of sustanablty. Demateralzaton of energy producton, mmateralzaton of consumpton and rebound effect are mportant factors n shapng sustanable energy. We have analyzed the energy rebound effects of dfferent sectors based upon Malaska's approach (Malaska et al., 1999). The equaton for energy sustanablty (Es) can be presented n the followng matrx form Where, E De s demateralzaton, E Sa s mmateralzaton (energy savng) and E Re s energy rebound effect From solved of above matrx we get Here, E De = Demateralzaton = - I effect E Sa = Immateralzaton =Energy savng = - (I effect +S effect ) E Re =Energy Rebound effect = S effect + GDP effect (16) The equaton (16) s used n energy rebound effect calculaton. Results and Dscussons As the ndustral sector consumes the major amount of energy and contrbutes to the economc development substantally, energy conservaton actvtes have targeted ths sector. Energy consumpton n ths sector durng was MTOE (see Table I). It accounted for 58% of the total energy consumpton. Hence, energy conservaton n ths sector s vtal. Emphass wll be placed on analyzng energy savng n ths partcular sector. Durng the perod we observed that energy savng occurred n agrculture sector, of whch MTOE of energy savng was due to structural changes (S effect ), and MTOE of energy savng was due to ntensty changes (I effect ) as shown n Table II. The agrculture sector, however, faled to save energy n every year. In Table II t s found that trend value s greater than real value, that s, the value of s less than zero (trend of graph s decreasng), whch s the condton for energy savng as shown n Fgure 1. Energy savng dd not occur n ndustral sector as shown n Table III. Durng the perod 2008 to 2030 the extra energy consumpton (227 MTOE) n ndustry sector came from structural change (S effect ) and ntensty change (I effect ) wth amounts of MTOE and -4.6 MTOE respectvely. In Table III t s found that 2007 to 2030 the real value s grater

4 316 A futurstc vew of energy savng and related energy rebound 47(3) 2012 Table I: Energy consumpton, GDP and energy ntensty n Bangladesh (BBS, ) Bangladesh EC (MTOE) GDP (mll. US$) I (KGOE/US$) Agrculture sector EC (MTOE) GDP (mll. US$) I (KGOE/US$) Industry sector EC (MTOE) GDP (mll. US$) I (KGOE/US$) Servce sector EC (MTOE) GDP (mll. US$) I (KGOE/US$) Table II: Energy savng n agrculture sector Year Actvty Structural Intensty Del Eot Real Energy.. Trend energy. Energy savng Effect (MTOE) Effect (MTOE) Effect (MTOE) (MTOE) consm (MTOE) consm (MTOE) (MTOE) than trend value whch s an unsatsfactory condton of energy savng. Punyong 2008, stated that the energy savng n Tha ndustry was KTOE (over consumpton nstead of savng) durng the perod 1998 to Energy consumpton n servce sector durng the perod 2007 to 2030 was MTOE (see Table I). It accounted for 35.4% of the total energy consumpton. Durng the perod we observed that energy savng occurred n servce sector, of whch MTOE of energy savng was due

5 Khosruzzaman, Asgar, Asgar, Rahman and Akbar 317 Fg. 1: Sector wse energy savng to structural changes (S effect ), and extra energy (36.72 MTOE) came from ntensty changes (Ieffect) as shown n Table IV. In Table IV t s found that trend value s greater than real value, that s, the value of ψ s less than zero (trend of graph s decreasng), whch s the condton for energy savng as shown n Fgure 1. The analyss shows that, durng the perod , the total energy savng ndcator n Bangladesh was MTOE (postve value means over-consumpton nstead of savng). Ths ndcator when resolved nto three sectors namely agrculture, ndustry and servce respectvely, ther correspondng values turns out to be MTOE, MTOE and MTOE respectvely. Snce the energy consumed by the agrculture sector was only 9.8% of the total energy consumpton, ts contrbuton to the energy savng s mnmal. In our prevous analyss t was found that durng the perod of 1990 to 2007 only agrculture saves energy, on the other hand ndustry and servce sectore faled to save energy. Durng the perod 2008 to 2030 the extra- Table III: Energy savng n Industral sector Year Actvty Structural Intensty Del Eot Real Energy.. Trend energy. Energy savng Effect (MTOE) Effect (MTOE) Effect (MTOE) (MTOE) consm (MTOE) consm (MTOE) (MTOE)

6 318 A futurstc vew of energy savng and related energy rebound 47(3) 2012 Table IV: Energy savng n Servce sector Year Actvty Structural Intensty Del Eot Real Energy.. Trend energy. Energy savng Effect (MTOE) Effect (MTOE) Effect (MTOE) (MTOE) consm (MTOE) consm (MTOE) (MTOE) Table V: Aggregated energy savng Year Energy savng n agr. Energy savng n ndustry. Energy savng n servce Aggregate energy savng (MTOE) (MTOE) (MTOE) (MTOE)

7 Khosruzzaman, Asgar, Asgar, Rahman and Akbar 319 energy consumpton ( MTOE) n Bangladesh came from Structural change (S effect ) and ntensty changes (I effect ) have values MTOE and MTOE respectvely. The energy rebound effect, whch s the combned result of actvty effect and structural effect, s found to ncrease n agrculture, ndustry and servce sector as shown n Fgure 2. In agrculture sector rebound effect ncreased by 25.6 fold n 2030, compared to that n 2008 (Table VI). Agan, rebound effect ncreased by 262 fold and 135 fold n ndustry and servce sector respectvely n 2030 compared to The aggregate rebound effects ncreased by fold n the tmeperod of 2008 to 2030 of whch actvty effect contrbutes MTOE and structural effect contrbutes Table VI: Aggregate energy rebound effect Fg. 2: sector wse energy rebound effect Year Energy rebound Energy rebound Energy rebound Aggregated effect n Agr. effect n Ind. effect n Servce Energy rebound effect (MTOE) (MTOE) (MTOE) (MTOE)

8 320 A futurstc vew of energy savng and related energy rebound 47(3) MTOE respectvely. From rebound effect analyss t s found that the technologcal development has ncreased n ndustry and servce sector rather than agrculture sector and our structure of economy s shftng from agrculture to ndustry, but wth no good effect n respect of energy savng. The reason s that there have been more structural changes than new nnovatons n ndustres. Concluson Ths paper presents a detaled analyss of energy savng and energy rebound effect n Bangladesh. It can be concluded that, 1) In the tme perod of 2008 to 2030, energy savng occurred n agrculture sector of an amount MTOE. 2) Energy savng dd not happen n ndustral sector. Extra energy consumpton (227 MTOE) n ndustry sector came from structural change (S effect ) and ntensty change (I effect ) wth amount of MTOE and MTOE respectvely. 3) Energy savng occurred n servce sector. Durng the perod 2008 to 2030 the energy consumpton ( MTOE) n servce sector came from structural change (S effect ) and ntensty change (I effect ) wth amount of MTOE and MTOE respectvely. 4) The aggregate energy savng n Bangladesh was MTOE n the tme perod of 2008 to The postve value ndcates the over-consumpton nstead of savng whch s the general characterstc of nfrastructure buldng perod. 5) The aggregated rebound effects ncreased by fold n the tme perod of 2008 to 2030 of whch actvty effect contrbutes MTOE and structural effect contrbutes MTOE respectvely. From rebound effect analyss t s found that the technologcal development has ncreased n ndustry and servce sector rather than agrculture sector and our structure of economy s shftng from agrculture to ndustry, but wth no good effect n respect of energy savng. The reason s that there have been more structural changes than new nnovatons n ndustres. It appears that as n most developng countres there has been more stress on admnstratve measures for structural changes than scentfc and technologcal nnovatons n ndustres, whch we consder to be the man barrers to energy savng through greater effcency. References Ang, BW and Zhang FQ (2000). A survey of ndex decomposton analyss n energy and envronmental studes, Energy, 25: Bangladesh Bureau of Statstcs (BBS) Statstcal pocketbook of Bangladesh. Mnstry of Fnance and Plannng, Govt. of the People's Republc of. Bangladesh, Dhaka. Malaska P, Luukkanen J and Kavo-oja J (1999). Decomposton method n sustanablty analyss. FUTU- Publcatons 3/99. Turku School of Economcs and Busness Admnstraton. Fnland Futures Research Centre. Turku. Punyong K, Taweekun J and Prasertsan S (2008). Evaluaton of energy savng n Tha ndustry by 3-D decomposton method. Asan J. Energy Envron. 9(1 &2): Sun JW (2003). Demateralzaton n Fnnsh energy use, , Energy Economcs, 25: Sun JW (2001). Energy demand n the ffteen European Unon countres by 2010 a forecastng model based on the decomposton approach. Energy, 26: Sun JW (1998). Change n energy consumpton and energy strength: A complete decomposton model, Energy Econ. 20: Receved : 17 May 2010; Revsed : 14 June 2010; Accepted: 25 Aprl 2011