Abstract
Using the stochastic frontier analysis (SFA) model, this research measures total-factor energy efficiency (TFEE) and disaggregate input efficiency for 10 countries across the Baltic Sea from 2004 to 2014. Real capital, labor, energy use, and carbon dioxide (CO2) are input variables, real gross domestic product (GDP) is the output variable, and renewable energy consumption and urban population are the environmental variables. The results provide not only the TFEE scores, in which statistical noise is considered, but also the determinants of inefficiency, which show the following. (i) Norway, Sweden, Finland, and Latvia perform better with respect to energy efficiency than other countries in the Baltic Sea Region. (ii) Interestingly, the average energy use efficiency scores from 2004 to 2014 in the 10 Baltic countries exhibit a gradual upward trend except for 2009. (iii) For the inefficiency estimates, higher renewable energy consumption and urban population correspond to higher TFEE scores.
Highlights
The importance of the green economy and sustainable development in policy discussions has grown immensely in recent years [1]
Becoming a low carbon economy is a policy goal formulated by both the European
This study finds that the higher the urban population rate is, the greater are the total-factor energy efficiency (TFEE) scores, which is consistent with previous research on western countries, whereby energy efficiency in an urban area is relatively higher than that in a rural area due to the use of public transportation [47]
Summary
The importance of the green economy and sustainable development in policy discussions has grown immensely in recent years [1]. Becoming a low carbon economy is a policy goal formulated by both the European. A proper transition towards a low carbon economy is needed in order to tackle challenges, such as climate change mitigation and adaptation, energy supply, as well as the sustainable use of resources. The Baltic Sea countries are intimately bound up with the European Union (EU) since eight out of 11 of them are EU members. Any EU policy affects the Baltic Sea region [4], which covers highly developed countries such as Denmark, Germany, and Sweden and the emerging economies of Poland, Estonia, Lithuania, and Latvia. Countries in the Baltic Sea region vary under their social, economic, and historic contexts, while some in this region suffer the problems of energy use and environmental pollution.
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