Role of renewable, non-renewable energy consumption and carbon emission in energy efficiency and productivity change: Evidence from G20 economies

Abstract

The challenge of achieving sustainable economic development with a secure environmental system is a global challenge faced by both developed and developing countries. Energy Efficiency (EE) is crucial in achieving sustainable economic growth while reducing ecological impacts. This research utilizes the Slack-Based Measure Data Envelopment Analysis (SBM-DEA) and the Malmquist-Luenberger Index (MLI) method to evaluate EE and productivity changes from 1995 to 2020 across G20 countries. The study uses four different input–output bundles to gauge the impact of renewable and non-renewable energy consumption and carbon emissions on EE and productivity changes. The study results show that including renewable energy consumption improves the average EE from 0.783 to 0.8578, but energy productivity declines from 1.0064 to 0.9988. Incorporating bad output (carbon emissions) in the estimation process enhances renewable EE and productivity change, resulting in an average EE of 0.6678 and MLI of 1.0044. Technological change is identified as the primary determinant of energy productivity growth in scenarios 1 and 2, while technical efficiency determines energy productivity change in scenarios 3 and 4. The Kruskal-Wallis test reveals a significant statistical difference between the mean EE and MLI scores of G20 countries.