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The effect of ESCOs on energy use

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  • Fang, Wen Shwo
  • Miller, Stephen M.
  • Yeh, Chih-Chuan

Abstract

Energy saving can importantly help prevent greenhouse gas emissions and, thus, climate change. Energy service companies (ESCOs) provide a crucial instrument for delivering improved energy efficiency and potentially contributing to substantial energy savings in the public and private sectors. This paper investigates empirically the effect of ESCO activities on energy use. Based on a dynamic IPAT model, using a panel data of 94 countries over the period 1981 to 2007, we provide significant evidence that ESCOs reduce energy use. This finding proves robust to different dates of the first ESCO. The negative ESCO effect increases over time. The dynamic adjustment process produces small effects in the short run, but large effects in the long run. Moreover, the long-run ESCO effect differs across the stages of development. That is, for the high- and low-income countries, the short-run ESCO effect remains negative, but the long-run effects differ, remaining negative in high-income countries, but becoming positive in low-income countries. Finally, we discuss energy policy implications.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 51 (2012)
Issue (Month): C ()
Pages: 558-568

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Handle: RePEc:eee:enepol:v:51:y:2012:i:c:p:558-568

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

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Keywords: Energy use; Energy service companies (ESCOs); Dynamic IPAT model;

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Cited by:
  1. Liddle, Brantley & Lung, Sidney, 2013. "Might electricity consumption cause urbanization instead? Evidence from heterogeneous panel long-run causality tests," MPRA Paper 52333, University Library of Munich, Germany.
  2. Akman, Ugur & Okay, Esin & Okay, Nesrin, 2013. "Current snapshot of the Turkish ESCO market," Energy Policy, Elsevier, vol. 60(C), pages 106-115.

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