Changes in the energy cost of goods and services of the Japanese economy

This paper analyzes changes in the energy cost of goods and service production in the Japanese economy in the decade 1975-85. It develops an input-output scheme which explicitly and exhaustively decomposes changes in a sector`s embodied energy intensity into three causative components: the effect of changes in direct energy efficiency, the effect of fuel substitution, and the effect of changes in non-energy inputs. The application of this model to the Japanese experience found that during the 1975-85 period Japan`s energy conservation efforts moved from an initial emphasis on improving direct energy input efficiency towards a stage of reducing the indirect energy requirements by shifting away from energy intensive inputs. Chemical sectors and metal product sectors led in energy cost reduction in the Japanese economy.