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Do undesirable output and environmental regulation matter in energy efficiency analysis? Evidence from Indian Cement Industry

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  • Mandal, Sabuj Kumar

Abstract

Energy use in the production of desirable output often results in the generation of undesirable emission with detrimental impact on the environment, and whose disposal is frequently monitored by public authorities. Previous studies, however, paid little attention to undesirable output and environmental regulation related to its disposal while estimating energy use efficiency. Analysis of energy efficiency ignoring undesirable output could result in biased estimates of efficiency. Thus the aim of this paper is to estimate energy use efficiency in the presence of energy related undesirable emission by taking Indian cement industry as a suitable context of my analysis. Depending on the presence and absence of undesirable output and environmental regulation, three measures of efficiency have been estimated at the state level from 2000-01 to 2004-05 by applying Data Envelopment Analysis. Energy efficiency is defined as the ability of the producer to reduce the energy input to the largest extent possible, conditional on the given level of output and non-energy inputs. Empirical results reveal that energy efficiency estimates are biased if only desirable output is considered. Results also demonstrate that environmental regulation has a reinforcing effect on energy use efficiency.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 38 (2010)
Issue (Month): 10 (October)
Pages: 6076-6083

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Handle: RePEc:eee:enepol:v:38:y:2010:i:10:p:6076-6083

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Web page: http://www.elsevier.com/locate/enpol

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Keywords: Energy use efficiency Undesirable output Data envelopment analysis;

References

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Citations

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Cited by:
  1. Jin, Jingliang & Zhou, Dequn & Zhou, Peng, 2014. "Measuring environmental performance with stochastic environmental DEA: The case of APEC economies," Economic Modelling, Elsevier, vol. 38(C), pages 80-86.
  2. Wang, H. & Zhou, P. & Zhou, D.Q., 2013. "Scenario-based energy efficiency and productivity in China: A non-radial directional distance function analysis," Energy Economics, Elsevier, vol. 40(C), pages 795-803.
  3. Oggioni, G. & Riccardi, R. & Toninelli, R., 2011. "Eco-efficiency of the world cement industry: A data envelopment analysis," Energy Policy, Elsevier, vol. 39(5), pages 2842-2854, May.
  4. Wang, Ke & Wei, Yi-Ming & Zhang, Xian, 2013. "Energy and emissions efficiency patterns of Chinese regions: A multi-directional efficiency analysis," Applied Energy, Elsevier, vol. 104(C), pages 105-116.
  5. Chen, Chien-Ming, 2013. "A critique of non-parametric efficiency analysis in energy economics studies," Energy Economics, Elsevier, vol. 38(C), pages 146-152.
  6. Leleu, Hervé, 2013. "Shadow pricing of undesirable outputs in nonparametric analysis," European Journal of Operational Research, Elsevier, vol. 231(2), pages 474-480.
  7. Ansari, Nastaran & Seifi, Abbas, 2013. "A system dynamics model for analyzing energy consumption and CO2 emission in Iranian cement industry under various production and export scenarios," Energy Policy, Elsevier, vol. 58(C), pages 75-89.
  8. Zhou, Yan & Xing, Xinpeng & Fang, Kuangnan & Liang, Dapeng & Xu, Chunlin, 2013. "Environmental efficiency analysis of power industry in China based on an entropy SBM model," Energy Policy, Elsevier, vol. 57(C), pages 68-75.

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