LMDI Decomposition

Log-Mean Divisia Index (LMDI) Decomposition is a quantitative technique for attributing changes in an aggregate indicator — most commonly energy consumption or CO₂ emissions — to its underlying driving factors, such as activity level, structural mix, and intensity. Introduced in its definitive practical form by B. W. Ang in 2005, LMDI builds on Divisia index theory and uses the logarithmic mean as a weighting function to achieve a mathematically perfect, residual-free decomposition.