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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)

Abstract

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.

Suggested Citation

  • David I.Stern, 2010. "Modeling International Trends in Energy Efficiency and Carbon Emissions," Environmental Economics Research Hub Research Reports 1054, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:eenhrr:1054
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    References listed on IDEAS

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    3. Popp, David & Newell, Richard G. & Jaffe, Adam B., 2010. "Energy, the Environment, and Technological Change," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 873-937, Elsevier.
    4. 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.
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    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Hub Project Almost Wrapped Up
      by David Stern in Stochastic Trend on 2012-03-14 15:17:00
    2. 3. Energy Intensity is not Correlated with GDP per Capita
      by David Stern in Stochastic Trend on 2011-11-04 12:09:00
    3. Australia's 2010 Emissions Projection Released
      by David Stern in Stochastic Trend on 2011-02-09 04:54:00
    4. A Clarification, 14 Years On...
      by David Stern in Stochastic Trend on 2010-11-27 05:49:00
    5. Submitted my Main Hub Paper
      by David Stern in Stochastic Trend on 2010-08-18 18:40:00
    6. Shifts in the Composition of Output
      by David Stern in Stochastic Trend on 2010-04-22 06:23:00
    7. Innovation and Energy Efficiency
      by David Stern in Stochastic Trend on 2010-04-21 10:24:00
    8. Energy Mix and Energy Intensity
      by David Stern in Stochastic Trend on 2010-04-17 09:49:00
    9. Final Hub Report
      by David Stern in Stochastic Trend on 2010-03-26 10:16:00

    Citations

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    Cited by:

    1. Halkos, George & Paizanos, Epameinondas, 2015. "Environmental Macroeconomics: A critical literature review and future empirical research directions," MPRA Paper 67432, University Library of Munich, Germany.
    2. 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.
    3. Pillai N., Vijayamohanan & AM, Narayanan, 2019. "Energy Efficiency: A Sectoral Analysis for Kerala," MPRA Paper 101424, University Library of Munich, Germany.
    4. David I. Stern, 2010. "The Role of Energy in Economic Growth," CCEP Working Papers 0310, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.
    5. Malik, Afia, 2019. "Dynamics and Determinants of Energy Intensity: Evidence from Pakistan," MPRA Paper 103456, University Library of Munich, Germany.
    6. 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.
    7. Stern, David I., 2010. "Between estimates of the emissions-income elasticity," Ecological Economics, Elsevier, vol. 69(11), pages 2173-2182, September.
    8. Ryszard Pukala & Nadezda Kirillova & Alexey Dorozhkin, 2021. "Insurance Instruments in Estimating the Cost Energy Assets with Renewable Energy Sources," Energies, MDPI, vol. 14(12), pages 1-17, June.
    9. Nadezda Kirillova & Ryszard Pukala & Marietta Janowicz-Lomott, 2021. "Insurance Programs in the Renewable Energy Sources Projects," Energies, MDPI, vol. 14(20), pages 1-12, October.

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    More about this item

    Keywords

    Energy; efficiency; carbon; emissions; technological change; between estimator;
    All these keywords.

    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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