Energy Efficiency in OECD Countries: A DEA Approach

Filip Fidanoski,Violeta Cvetkoska,Kiril Simeonovski

doi:10.3390/en14041185

Filip Fidanoski, Violeta Cvetkoska + Show 1 more

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https://doi.org/10.3390/en14041185

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Abstract

This paper deals with energy efficiency examined through an integrated model that links energy with environment, technology, and urbanisation as related areas. Our main goal is to discover how efficiently developed countries use primary energy and electricity (secondary energy). We additionally want to find out how the inclusion of environmental care and renewable energy capacity affects efficiency. For that purpose, we set up an output-oriented BCC data envelopment analysis that employs a set of input variables with non-negative values to calculate the efficiency scores on minimising energy use and losses as well as environmental emissions for a sample of 30 OECD member states during the period from 2001 to 2018. We develop a couple of baseline models in which we find that countries have mean inefficiency margins of 16.1% for primary energy and from 10.8 to 13.5% for electricity. The results from the extended models show that taking care about environment does not affect efficiency in general, while the reliance on energy produced from renewable sources does slightly reduce it.

Highlights

Energy in its etymological meaning denotes “activity” and it is properly defined as the capacity for taking action or working
Our study of energy use and economic development reveals that OECD member states with higher nominal GDP per capita, in general, use primary energy and electricity more efficiently
We find that the sampled countries on average have an inefficiency margin of 16.1% for primary energy use and from 10.8 to 13.5% for electricity use

Summary

Introduction

Energy in its etymological meaning denotes “activity” and it is properly defined as the capacity for taking action or working. The concept occupies an important place as an input in virtually every production process, impacting economic activity and contributing to economic development. In this light, efficient energy use means to produce at lower cost or of greater value, which implies that energy efficiency is extremely relevant in the economic analysis of growth and development. An important aspect of economic development is the notion of sustainability that has gained momentum in the past decade, and in this regard, energy use should be put into function of sustaining the ecosystem services that the economies depend on—that is to say, it is necessary to take care of the environment as a related area and make use of the renewable sources of energy production.

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