Key Determinants of Energy Intensity and Greenhouse Gas Emission Savings in Commercial and Public Services in the Baltic States

The improvement of energy efficiency (EE) and growing consumption of renewable energy sources (RES) in the commercial and public services sector are playing important roles in seeking to pursue sustainable development in the Baltic States and contributing to the transition to a low-carbon economy. This paper provides findings from a detailed analysis of energy intensity trends in economic sectors from 2005 to 2022 in three countries, considering the role of transformations in the energy and climate framework of the European Union (EU). Based on the Fisher Ideal Index application, the different contributions from improving EE and structural changes are revealed. The dominant role of EE improvements in energy savings is identified in Estonia and Lithuania, and structural changes are dominant in Latvia. Changes in energy-related greenhouse gas (GHG) emissions in the commercial and public services sector and the main determinants of their reduction are examined. Based on applying the Kaya identity and the logarithmic mean Divisia index (LMDI) method, decreasing energy intensity is the most important determinant in all three countries. Due to the different extents of RES deployment, their role was very important in Estonia and Latia but was less effective in Lithuania. Reduction in emission intensity has the largest impact in Latvia. The GHG emissions decreased by 34.1% in Estonia, 17.5% in Latvia, and 16.7% in Lithuania. The results confirm the need for new policies, implementation of relevant EE measures, and the growing contribution from RES in Latvia and Lithuania.