Evaluating renewable energy consumption efficiency and impact factors in Asia-pacific economic cooperation countries: A new approach of DEA with undesirable output model

Abstract

Balancing economic growth with environmental protection is a global priority. Both developed and developing nations face the challenge of optimizing renewable energy use to achieve sustainable development while minimizing ecological harm. This study employs the Data Envelopment Analysis (DEA) model, incorporating undesirable output, to assess the efficiency of renewable energy consumption across 21 member countries of the Asia-Pacific Economic Cooperation (APEC) from 2011 to 2020. The main variables include foreign direct investment, total energy consumption, total renewable energy capacity as inputs, and gross domestic product growth and greenhouse gas emissions as desired outputs. Results reveal varying levels of renewable energy consumption efficiency, with Brunei, Japan, South Korea, and Hong Kong exhibiting the highest efficiency, while Russia, China, and Vietnam demonstrate the lowest. Notably, developed nations display greater efficiency in utilizing renewable energy compared to their developing counterparts. Moreover, optimizing foreign direct investment, renewable energy consumption, and total renewable energy capacity can enhance overall energy efficiency. By leveraging empirical evidence and estimation techniques, the study provides actionable recommendations for policymakers, emphasizing the pivotal role of financial development and green finance initiatives in promoting sustainable energy development across APEC member countries.