Assessment of Short- and Long-Run Energy Efficiency: Evidence from 141 Countries

Abstract

Several studies have estimated the energy efficiency performance of firms, countries and regions. Recently, the efficiency literature highlighted two types of efficiencies- persistent and transient efficiency. However, several studies have failed to distinguish between these two types of efficiencies. In the light that there are no studies addressing this issue from a global perspective, this paper adopts the stochastic frontier approach and the Kumbhakar, Lien and Hardaker (KLH) model in the estimation of persistent, transient and total energy efficiency of 141 countries during the period 1980-2016. Our findings show that global energy efficiency issue is structural in nature. Increasing both transient and persistent energy efficiency will save 13% and 31% of total energy consumed, respectively. Therefore, environmental and energy security issues will profit significantly from long-term policies rather than the short-term policies. Thus, countries should focus on addressing environmental and energy issues using long-term policies.