Extended Yearly LMDI Approaches: A Case Study of Energy Consumption

Although the logarithmic mean Divisia index (LMDI) approach has been widely used in the field of energy and environmental research, it has a shortcoming. Since the LMDI approach only focuses on the base year and reporting year, in situations in which the research period is long, the annual changes during the research period may be difficult to capture. In particular, if there were huge fluctuations in the indicators (such as the energy consumption and carbon emissions) or their drivers during the middle of a research period, a substantial amount of information about the fluctuations will be ignored. Therefore, we propose four extended yearly LMDI approaches, including pure LMDI, weighted LMDI, comprehensive LMDI, and scenario LMDI approaches to better capture fluctuations and compensate for the original LMDI approach's shortcomings. Additionally, we found that there are mathematical relationships among the four extended LMDI approaches. We further compare these four approaches' advantages, disadvantages, and applicable situations and analyze a case study on China's energy consumption based on the four proposed approaches.