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The effect of ECSOs on energy use

  • WenShwo Fang

    (Feng Chia University)

  • Stephen M. Miller

    (University of Nevada, Las Vegas and University of Connecticut)

  • Chih-Chuan Yeh

    (The Overseas Chinese University)

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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File URL: http://web2.uconn.edu/economics/working/2012-13.pdf
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Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2012-13.

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Length: 39 pages
Date of creation: Aug 2012
Date of revision:
Publication status: Published in Energy Policy, December 2012
Handle: RePEc:uct:uconnp:2012-13
Note: Stephen M. Miller is corresponding author
Contact details of provider: Postal: University of Connecticut 365 Fairfield Way, Unit 1063 Storrs, CT 06269-1063
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Web page: http://www.econ.uconn.edu/

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