Impact of heat and electricity consumption on energy intensity: A panel data analysis

This study investigated the impact of heat and electricity consumption, two forms of final energy consumption, on energy intensity. Because existing literature is exclusively focused on the socioeconomic factors affecting energy intensity rather than energy consumption, this study used forms of final energy consumption to explain energy intensity. Three models were used to widen the scope of the empirical analysis performed herein. For the preliminary analysis, cross-section dependence, unit root, and homogenous slope tests were conducted. The test results indicate that the relationships among the variables should be determined using an estimator that can process cross-section dependence and heterogeneous panel slope. The cointegration test results indicate that the common correlated effects mean group (CCEMG) and augmented mean group (AMG) estimators can be used to derive the required cointegrating equations. The results provided by the CCEMG and AMG estimators are consistent, demonstrating that the heat mix decreases energy intensity while heat and electricity consumption themselves increase the energy intensity. The results also indicate that although the use of renewable energy increases primary energy consumption, renewable heat expansion decreases the energy intensity by creating new markets to produce value-added. Therefore, the expansion of renewable heat is recommended.