Multi-level decomposition of ASEAN urbanization effects on energy

Purpose – The connection between urbanization and energy consumption in the context of cross-country and cross-sector analyses is poorly understood, especially in the Association of South East Asian (ASEAN). This paper aims to present the first extensive multi-level analysis of the relationship between urbanization and energy consumption in ASEAN countries from 1995 to 2013.

Design/methodology/approach – The multi-level (across country and sector) index decomposition method is used to analyze urbanization, energy mix, energy intensity and activity effects on energy demand. Urbanization is measured by two representative factors, name the urban population and the number of nonagriculture workers.

Findings – Despite the decreasing rate of urbanization, its effect on energy consumption has played the most important role since 2000. Since then, the effect has continued to increase at the national and sectoral levels across the whole region. The strongest urbanization impacts are encountered in the residential sector, followed by transportation and industrial sectors with much weaker effects in the commercial sector.

The way in which urbanization impacts energy consumption depends strongly on the income level of the country studied. Practical implications – The results provide quantitative relationships between urbanization and energy demand. For example, if the urban population and the non-agriculture workers decreased by 0.1 per cent per year, this would reduce energy demand by 1.4 per cent and 2.6 per cent per year respectively.

Originality/value – This contribution provides detailed quantitative insights into the relationships between urbanization and energy demand at sectoral, national and international levels, which are invaluable for policymakers in the region.