Energy and CO2 emissions efficiency of major economies: A non-parametric analysis

Abstract

Excessive energy consumption and carbon dioxide emissions are long lasting issues and need continuous research to improve efficiency evaluation and performance monitoring of economies. The static and dynamic aspects of efficiency need to be dealt with simultaneously to thoroughly analyze the performance of economies. This paper aims at conducting a static and dynamic analysis of energy and CO2 emissions efficiency of major economies. In this paper, we applied slacks based model of Tone (2001) with the treatment of undesirable output in objective function and constraint assuming free disposability of undesirable output and built a dashboard. The results can be summarized by saying that the larger economies with intensive production strategy, larger secondary industry, and weaker carbon tax laws are more likely to be inefficient. China, India, and Russia have the greatest potential for improvement in both energy efficiency and carbon dioxide emissions efficiency. The suggested dashboard has the ability to dig out the potential for efficiency improvement of countries like the USA, which mostly appear at the efficient frontier with other techniques. Concluding it can be suggested that economies in lower ranks of dashboard need stricter policy measures to cut energy consumption, carbon dioxide emissions and encourage a shift from fossil fuels to other renewable resources of energy.