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Modeling international trends in energy efficiency

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  • Stern, David I.

Abstract

I use a stochastic production frontier to model energy efficiency trends in 85 countries over a 37-year period. Differences in energy efficiency across countries are modeled as a stochastic function of explanatory variables and I estimate the model using the cross-section of time-averaged data, so that no structure is imposed on technological change over time. Energy efficiency is measured using a new energy distance function approach. The country using the least energy per unit output, given its mix of outputs and inputs, defines the global production frontier. A country's relative energy efficiency is given by its distance from the frontier—the ratio of its actual energy use to the minimum required energy use, ceteris paribus. Energy efficiency is higher in countries with, inter alia, higher total factor productivity, undervalued currencies, and smaller fossil fuel reserves and it converges over time across countries. Globally, technological change was the most important factor counteracting the energy-use and carbon-emissions increasing effects of economic growth.

Suggested Citation

  • Stern, David I., 2012. "Modeling international trends in energy efficiency," Energy Economics, Elsevier, vol. 34(6), pages 2200-2208.
  • Handle: RePEc:eee:eneeco:v:34:y:2012:i:6:p:2200-2208
    DOI: 10.1016/j.eneco.2012.03.009
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    More about this item

    Keywords

    Energy; Efficiency; Carbon emissions; Technological change; Between estimator; Stochastic frontier;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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