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Modeling International Trends in Energy Efficiency and Carbon Emissions


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  • David I.Stern

    (Arndt-Corden Division of Economics, Crawford School of Public Policy, The Australian National University)


This study uses a stochastic production frontier to model trends in energy efficiency over time in a panel of 85 countries. No a priori structure is imposed on technological change over time though differences in the level of technology across countries are modeled as a stochastic function of explanatory variables. These variables are selected on the basis of a literature survey and theoretical model of the choice of energy efficiency technology. An improvement in a country’s energy efficiency is measured as a reduction in energy intensity while holding constant the input and output structure of that economy. The country using the least energy per unit output, ceteris paribus, is on the global best practice frontier. The model is used to derive decompositions of energy intensity and carbon emissions and to examine the whether there is a convergence across countries. I find that energy efficiency rises with increasing general total factor productivity but is also higher in countries with more undervalued exchange rates in PPP terms. Higher fossil fuel reserves are associated with lower energy efficiency. Energy efficiency converges over time across countries and technological change was the most important factor mitigating the global increase in energy use and carbon emissions due to economic growth.

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Bibliographic Info

Paper provided by Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University in its series Environmental Economics Research Hub Research Reports with number 1054.

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Date of creation: Mar 2010
Date of revision:
Handle: RePEc:een:eenhrr:1054

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Keywords: Energy; efficiency; carbon; emissions; technological change; between estimator;

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  1. David Popp & Richard G. Newell & Adam B. Jaffe, 2009. "Energy, the Environment, and Technological Change," NBER Working Papers 14832, National Bureau of Economic Research, Inc.
  2. van Zon, Adriaan & Yetkiner, I. Hakan, 2003. "An endogenous growth model with embodied energy-saving technical change," Resource and Energy Economics, Elsevier, vol. 25(1), pages 81-103, February.
  3. Lopez, Ramon & Mitra, Siddhartha, 2000. "Corruption, Pollution, and the Kuznets Environment Curve," Journal of Environmental Economics and Management, Elsevier, vol. 40(2), pages 137-150, September.
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Blog mentions

As found by, the blog aggregator for Economics research:
  1. Hub Project Almost Wrapped Up
    by David Stern in Stochastic Trend on 2012-03-14 10:17:00
  2. 3. Energy Intensity is not Correlated with GDP per Capita
    by David Stern in Stochastic Trend on 2011-11-04 07:09:00
  3. Australia's 2010 Emissions Projection Released
    by David Stern in Stochastic Trend on 2011-02-08 22:54:00
  4. A Clarification, 14 Years On...
    by David Stern in Stochastic Trend on 2010-11-26 23:49:00
  5. Submitted my Main Hub Paper
    by David Stern in Stochastic Trend on 2010-08-18 13:40:00
  6. Shifts in the Composition of Output
    by David Stern in Stochastic Trend on 2010-04-22 01:23:00
  7. Innovation and Energy Efficiency
    by David Stern in Stochastic Trend on 2010-04-21 05:24:00
  8. Energy Mix and Energy Intensity
    by David Stern in Stochastic Trend on 2010-04-17 04:49:00
  9. Final Hub Report
    by David Stern in Stochastic Trend on 2010-03-26 05:16:00
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Cited by:
  1. Stern, David I. & Jotzo, Frank, 2010. "How ambitious are China and India's emissions intensity targets?," Energy Policy, Elsevier, vol. 38(11), pages 6776-6783, November.
  2. David I. Stern, 2010. "The Role of Energy in Economic Growth," CCEP Working Papers 0310, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
  3. Lin, Boqiang & Yang, Lisha, 2013. "The potential estimation and factor analysis of China′s energy conservation on thermal power industry," Energy Policy, Elsevier, vol. 62(C), pages 354-362.
  4. Stern, David I., 2010. "Between estimates of the emissions-income elasticity," Ecological Economics, Elsevier, vol. 69(11), pages 2173-2182, September.


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