IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v58y2016icp38-45.html
   My bibliography  Save this article

Energy efficiency in the manufacturing sector of the OECD: Analysis of price elasticities

Author

Listed:
  • Parker, Steven
  • Liddle, Brantley

Abstract

We examine the role prices have on energy efficiency in the OECD manufacturing sector between 1980 and 2009. We employ a two-step procedure; first, we decompose manufacturing energy intensity change into two driving effects—efficiency and structural change. The second step uses panel time series regression techniques to estimate the impacts of prices on the effects driving manufacturing energy intensity. The advantage of using these techniques is that they account for heterogeneity and cross-section dependence in the data, something recent energy intensity research has emphasised. The results from this decomposition support existing findings that efficiency is the major driver for observed reduction in energy intensity. Further, the second stage results indicate that rising prices improve efficiency; importantly these effects vary across countries.

Suggested Citation

  • Parker, Steven & Liddle, Brantley, 2016. "Energy efficiency in the manufacturing sector of the OECD: Analysis of price elasticities," Energy Economics, Elsevier, vol. 58(C), pages 38-45.
    • Handle: RePEc:eee:eneeco:v:58:y:2016:i:c:p:38-45
    DOI: 10.1016/j.eneco.2016.06.003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988316301384
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2016.06.003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lescaroux, François, 2008. "Decomposition of US manufacturing energy intensity and elasticities of components with respect to energy prices," Energy Economics, Elsevier, vol. 30(3), pages 1068-1080, May.
    2. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    3. Kapetanios, G. & Pesaran, M. Hashem & Yamagata, T., 2011. "Panels with non-stationary multifactor error structures," Journal of Econometrics, Elsevier, vol. 160(2), pages 326-348, February.
    4. James M. Griffin & Craig T. Schulman, 2005. "Price Asymmetry in Energy Demand Models: A Proxy for Energy-Saving Technical Change?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 1-22.
    5. Raymond J.G.M. Florax & Henri L.F. de Groot & Peter Mulder (ed.), 2011. "Improving Energy Efficiency through Technology," Books, Edward Elgar Publishing, number 3830.
    6. Adeyemi, Olutomi I. & Hunt, Lester C., 2007. "Modelling OECD industrial energy demand: Asymmetric price responses and energy-saving technical change," Energy Economics, Elsevier, vol. 29(4), pages 693-709, July.
    7. Mulder, Peter & de Groot, Henri L.F. & Pfeiffer, Birte, 2014. "Dynamics and determinants of energy intensity in the service sector: A cross-country analysis, 1980–2005," Ecological Economics, Elsevier, vol. 100(C), pages 1-15.
    8. Voigt, Sebastian & De Cian, Enrica & Schymura, Michael & Verdolini, Elena, 2014. "Energy intensity developments in 40 major economies: Structural change or technology improvement?," Energy Economics, Elsevier, vol. 41(C), pages 47-62.
    9. Jimenez, Raul & Mercado, Jorge, 2014. "Energy intensity: A decomposition and counterfactual exercise for Latin American countries," Energy Economics, Elsevier, vol. 42(C), pages 161-171.
    10. Wu, Yanrui, 2012. "Energy intensity and its determinants in China's regional economies," Energy Policy, Elsevier, vol. 41(C), pages 703-711.
    11. Liu, Na & Ang, B.W., 2007. "Factors shaping aggregate energy intensity trend for industry: Energy intensity versus product mix," Energy Economics, Elsevier, vol. 29(4), pages 609-635, July.
    12. M. Hashem Pesaran, 2006. "Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure," Econometrica, Econometric Society, vol. 74(4), pages 967-1012, July.
    13. Mulder, Peter & de Groot, Henri L.F., 2012. "Structural change and convergence of energy intensity across OECD countries, 1970–2005," Energy Economics, Elsevier, vol. 34(6), pages 1910-1921.
    14. Wan, Jun & Baylis, Kathy & Mulder, Peter, 2015. "Trade-facilitated technology spillovers in energy productivity convergence processes across EU countries," Energy Economics, Elsevier, vol. 48(C), pages 253-264.
    15. Shahiduzzaman, Md. & Alam, Khorshed, 2013. "Changes in energy efficiency in Australia: A decomposition of aggregate energy intensity using logarithmic mean Divisia approach," Energy Policy, Elsevier, vol. 56(C), pages 341-351.
    16. Pesaran, M. Hashem & Smith, Ron, 1995. "Estimating long-run relationships from dynamic heterogeneous panels," Journal of Econometrics, Elsevier, vol. 68(1), pages 79-113, July.
    17. Dermot Gately & Hiliard G. Huntington, 2002. "The Asymmetric Effects of Changes in Price and Income on Energy and Oil Demand," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 19-55.
    18. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
    19. Peter Mulder & Henri L.F. de Groot, 2011. "Energy-Productivity Performance Across 14 OECD Countries: The Role of Energy-Extensive Sectors," Chapters, in: Raymond J.G.M. Florax & Henri L.F. de Groot & Peter Mulder (ed.), Improving Energy Efficiency through Technology, chapter 3, Edward Elgar Publishing.
    20. Hillard G. Huntington, 2006. "A Note on Price Asymmetry as Induced Technical Change," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 1-8.
    21. Ang, B. W., 2004. "Decomposition analysis for policymaking in energy:: which is the preferred method?," Energy Policy, Elsevier, vol. 32(9), pages 1131-1139, June.
    22. Gustavo A. Marrero & Francisco J. Ramos-Real, 2013. "Activity Sectors and Energy Intensity: Decomposition Analysis and Policy Implications for European Countries (1991–2005)," Energies, MDPI, vol. 6(5), pages 1-20, May.
    23. Ang, B. W., 2005. "The LMDI approach to decomposition analysis: a practical guide," Energy Policy, Elsevier, vol. 33(7), pages 867-871, May.
    24. Ma, Chunbo & Stern, David I., 2008. "China's changing energy intensity trend: A decomposition analysis," Energy Economics, Elsevier, vol. 30(3), pages 1037-1053, May.
    25. Liddle, Brantley, 2010. "Revisiting world energy intensity convergence for regional differences," Applied Energy, Elsevier, vol. 87(10), pages 3218-3225, October.
    26. Markus Eberhardt, 2012. "Estimating panel time-series models with heterogeneous slopes," Stata Journal, StataCorp LP, vol. 12(1), pages 61-71, March.
    27. Gilbert E. Metcalf, 2008. "An Empirical Analysis of Energy Intensity and Its Determinants at the State Level," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 1-26.
    28. Gale A. Boyd and Joseph M. Roop, 2004. "A Note on the Fisher Ideal Index Decomposition for Structural Change in Energy Intensity," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 87-102.
    29. Markus Eberhardt & Francis Teal, 2013. "No Mangoes in the Tundra: Spatial Heterogeneity in Agricultural Productivity Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(6), pages 914-939, December.
    30. Peter Mulder, 2015. "International Specialization, Structural Change and the Evolution of Manufacturing Energy Intensity in OECD Countries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    31. Hillard G. Huntington, 2010. "Structural Change and U.S. Energy Use: Recent Patterns," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 25-40.
    32. Eberhardt, Markus & Bond, Stephen, 2009. "Cross-section dependence in nonstationary panel models: a novel estimator," MPRA Paper 17692, University Library of Munich, Germany.
    33. Sue Wing, Ian, 2008. "Explaining the declining energy intensity of the U.S. economy," Resource and Energy Economics, Elsevier, vol. 30(1), pages 21-49, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ajayi, V. & Reiner, D., 2018. "European Industrial Energy Intensity: The Role of Innovation 1995-2009," Cambridge Working Papers in Economics 1835, Faculty of Economics, University of Cambridge.
    2. Jimenez, Raul & Mercado, Jorge, 2014. "Energy intensity: A decomposition and counterfactual exercise for Latin American countries," Energy Economics, Elsevier, vol. 42(C), pages 161-171.
    3. Mulder, Peter & de Groot, Henri L.F., 2012. "Structural change and convergence of energy intensity across OECD countries, 1970–2005," Energy Economics, Elsevier, vol. 34(6), pages 1910-1921.
    4. Löschel, Andreas & Pothen, Frank & Schymura, Michael, 2015. "Peeling the onion: Analyzing aggregate, national and sectoral energy intensity in the European Union," Energy Economics, Elsevier, vol. 52(S1), pages 63-75.
    5. Liddle, Brantley & Sadorsky, Perry, 2020. "How much do asymmetric changes in income and energy prices affect energy demand?," The Journal of Economic Asymmetries, Elsevier, vol. 21(C).
    6. Wan, Jun & Baylis, Kathy & Mulder, Peter, 2015. "Trade-facilitated technology spillovers in energy productivity convergence processes across EU countries," Energy Economics, Elsevier, vol. 48(C), pages 253-264.
    7. Ma, Ben, 2015. "Does urbanization affect energy intensities across provinces in China?Long-run elasticities estimation using dynamic panels with heterogeneous slopes," Energy Economics, Elsevier, vol. 49(C), pages 390-401.
    8. Karimu, Amin & Brännlund, Runar & Lundgren, Tommy & Söderholm, Patrik, 2017. "Energy intensity and convergence in Swedish industry: A combined econometric and decomposition analysis," Energy Economics, Elsevier, vol. 62(C), pages 347-356.
    9. Selien De Schryder and Gert Peersman, 2015. "The U.S. Dollar Exchange Rate and the Demand for Oil," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    10. Voigt, Sebastian & De Cian, Enrica & Schymura, Michael & Verdolini, Elena, 2014. "Energy intensity developments in 40 major economies: Structural change or technology improvement?," Energy Economics, Elsevier, vol. 41(C), pages 47-62.
    11. Lanzafame, Matteo & Nogueira, Reginaldo, 2013. "Inflation targeting and interest rates," MPRA Paper 46153, University Library of Munich, Germany.
    12. Thai-Ha Le & Youngho Chang & Donghyun Park, 2019. "Economic development and environmental sustainability: evidence from Asia," Empirical Economics, Springer, vol. 57(4), pages 1129-1156, October.
    13. Philip Kerner & Torben Klarl & Tobias Wendler, 2021. "Green Technologies, Environmental Policy and Regional Growth," Bremen Papers on Economics & Innovation 2104, University of Bremen, Faculty of Business Studies and Economics.
    14. Hernandez-Vega, Marco, 2019. "Estimating Capital Flows To Emerging Market Economies With Heterogeneous Panels," Macroeconomic Dynamics, Cambridge University Press, vol. 23(5), pages 2068-2088, July.
    15. Tajudeen, Ibrahim A. & Wossink, Ada & Banerjee, Prasenjit, 2018. "How significant is energy efficiency to mitigate CO2 emissions? Evidence from OECD countries," Energy Economics, Elsevier, vol. 72(C), pages 200-221.
    16. Wang, Jianda & Dong, Kangyin & Hochman, Gal & Timilsina, Govinda R., 2023. "Factors driving aggregate service sector energy intensities in Asia and Eastern Europe: A LMDI analysis," Energy Policy, Elsevier, vol. 172(C).
    17. Akbar Ullah & Karim Khan & Munazza Akhtar, 2014. "Energy Intensity: A Decomposition Exercise for Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 53(4), pages 531-549.
    18. Nin Pratt, Alejandro & Falconi, César & Ludeña, Carlos E. & Martel, Pedro, 2015. "Productivity and the Performance of Agriculture in Latin America and the Caribbean: From the Lost Decade to the Commodity Boom," IDB Publications (Working Papers) 7306, Inter-American Development Bank.
    19. Peter Mulder, 2015. "International Specialization, Structural Change and the Evolution of Manufacturing Energy Intensity in OECD Countries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    20. Mulder, Peter & de Groot, Henri L.F., 2013. "Dutch sectoral energy intensity developments in international perspective, 1987–2005," Energy Policy, Elsevier, vol. 52(C), pages 501-512.

    More about this item

    Keywords

    Manufacturing energy efficiency; Structural change; Index number decomposition; Heterogeneous panel methods; Cross-sectional dependence;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:58:y:2016:i:c:p:38-45. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.