An application of total-factor energy efficiency under the metafrontier framework

Abstract

As the computation of total-factor energy efficiency (TFEE) is not workable under the metafrontier framework since the metafrontier cannot fully envelope each group frontier, this research provides a new computation mode to solve this problem. Following a discussion on the methodology, we conduct empirical analysis on 28 member countries in the European Union (EU) and then divide them into Baltic sea region (BSR) countries and non-Baltic sea region (NBSR) countries for metafrontier analysis, thus contributing to the literature by presenting an available mode for TFEE analysis under the metafrontier framework. The suggested mode herein operates so successfully that all computation scores exhibit a reasonable scope. In addition, the BSR's average energy efficiency performs better than NBSR's, but the latter is still a technology exporter compared to the former. This paper summarizes the conditions for sustainable energy development: (i) set more serious energy efficiency targets; (ii) reduce primary and final energy consumptions, lower energy dependence on energy imports, and increase the share of renewable energy sources to fossil fuel energy sources; (iii) achieve a liberalized energy market; and (iv) set reasonable energy prices by levying an energy tax in order to realize effective energy consumption.