Empirical considerations on the reciprocal relationship between energy efficiency and leading variables: New evidence from OECD countries

Abstract

OECD countries are aware of the need to transform the energy sector for green growth. As energy requirements are estimated to increase by 80% by 2050, humanity must develop the ability to produce more with less energy. In this regard, both economic and environmental benefits can be achieved by increasing energy efficiency, which is why it is important to study the determinants of energy efficiency. The aim of this study is to provide new insights into the link between energy efficiency and various leading factors such as GDP, industrial structure, carbon emissions, renewable energy, human capital and green innovation. To this end, the study analyzes 27 OECD countries for the period 2000 to 2019 using the novel half panel jackknife estimator and various panel data methods. The findings of the study show that renewable energy and human capital increase energy efficiency, while economic growth and carbon emissions decrease. However, industrial structure and green innovation do not have a statistically significant effect on energy efficiency. Based on the outcomes, OECD countries are recommended to promote human capital development and renewable energy rather than regulating industrial structure and increasing investment in green innovation to improve energy efficiency.