Abstract
This article modifies the conventional two-stage DEA model to construct an analytical model for energy-related efficiency with undesirable outputs. Our proposed model relaxes the constraint that the inputs of the second process must come from the first process. As a result, our proposed model is more flexible than the original model in terms of the application of energy-related efficiency measurement analysis, and more policy implications may thus be provided by the decomposition of efficiencies for different processes. For demonstration purposes, the proposed model is applied to measure the energy use efficiency and the economic efficiency of 28 OECD countries during 2005 to 2007. The demonstration results reveal the following three findings. First, the average values of energy use efficiency are smaller than those of the average economic efficiency during the three-year period. It is shown that the OECD countries are only interested in economic development and are not concerned about energy use efficiency. Second, a tradeoff relationship exists between energy use efficiency and economic development for the OECD countries. Third, the differences of the initial carbon dioxide (CO2) emissions from the optimal CO2 emissions as well as the average economic efficiency increase year by year. These results indicate that the OECD countries still discharge too much CO2. Finally, this article establishes a managerial decision-making matrix to divide 28 OECD countries into different positions according to their energy use and economic efficiencies, and provides improvement suggestions to policy makers.
Highlights
The Industrial Revolution facilitated national economic development and improved the material life of the people, but at a cost reflected by the excessive depletion of natural resources and a failure to protect the Earth’s environment
According to the results of the eighth and ninth columns of Table 1, Hungary, the Czech Republic and Poland are relatively inefficient in terms of their average energy use efficiency from 2005 to 2007, while Australia, the Republic of Korea and the Czech Republic are relatively inefficient in terms of their average economic efficiency from 2005 to 2007
The average values of energy use efficiency are smaller than the average economic efficiency during the three-year period
Summary
The Industrial Revolution facilitated national economic development and improved the material life of the people, but at a cost reflected by the excessive depletion of natural resources and a failure to protect the Earth’s environment. More and more scientific evidence has verified that the reason for the global warming is primarily the anthropogenic emissions of greenhouse gases. In order to reduce the impact from the global warming effect caused by greenhouse gas (GHG) emissions, many countries worldwide in 1992 signed the United Nations Framework Convention on Climate. A reduction in fossil fuel energy use would reduce GHG emissions but would be accompanied with a slowdown in economic growth as prices increase with no changes in production technology and efficiency (Yu and Choi, 1985; Tonn, 2003). The issues in how to take into consideration of both economic growth and sustainable development have caught the attention of academics in recent years (Lin et al, 2012; Liu et al, 2013)
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