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%.