Journals A-Z
All Subjects
Free Journals
sciepub.com
American Journal of Energy Research
ISSN (Print): 2328-7349 ISSN (Online): 2328-7330 Website: https://www.sciepub.com/journal/ajer Editor-in-chief: Apply for this position
Open Access
Journal Browser
Go
Issue 1, Volume 2
Article Metrics
  • 23963
    Views
  • 18149
    Saves
  • 9
    Citations
  • 39
    Likes
Export Article
American Journal of Energy Research. 2014, 2(1), 9-17
DOI: 10.12691/ajer-2-1-2
Open AccessArticle

Energy Efficiency with Undesirable Output at the Economy-Wide Level: Cross Country Comparison in OECD Sample

Nevzat Simsek1,

1Department of Economics, Dokuz Eylul University, Izmir, Turkey and Department of Economics, Hoca Ahmet Yesevi International Turkish-Kazakh University, Turkestan, Kazakhstan

Pub. Date: February 16, 2014
View Full Text Full Text PDF (367 KB) Full Text ePUB(900 KB)

Cite this paper:
Nevzat Simsek. Energy Efficiency with Undesirable Output at the Economy-Wide Level: Cross Country Comparison in OECD Sample. American Journal of Energy Research. 2014; 2(1):9-17. doi: 10.12691/ajer-2-1-2

Abstract

Measuring the environmental efficiency of countries is important in the climate change process. The aim of this paper is to measure the energy efficiency of OECD countries with undesirable output. For this purpose, the Bad Output index (non-radial and non-oriented, CRS) developed by Tone (2001) is used in order to obtain the efficiency scores for the period 1995-2009. In this paper, I focus on the production process where labour, capital stock (mostly omitted in such papers), and energy consumption are inputs, GDP is a desirable output and CO2 emission is an undesirable output. To see the energy inefficiencies separately, if there are any, energy input is considered as three separate variables in the model. For this purpose, oil and natural gas consumption are incorporated as one input. Hydropower and nuclear are incorporated as another input. Coal is the third input. An important contribution of this paper is to use various proxy variables for the capital stock. Determining the reasons of these inefficiencies is important for these countries. But modelling the factors behind these inefficiencies is the subject of another paper.

Keywords:
energy efficiency environmental efficiency Bad Output model DEA climate change sustainable development

Creative CommonsThis work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

Figures

Figure of 1

References:

[1]  Ang, B.W. (2006) ‘Monitoring changes in economy-wide energy efficiency: from energy–GDP ratio to composite efficiency index’, Energy Policy, Vol. 34, pp.574-582.
 
[2]  Azadeh, A., Amalnick, M. S., Ghaderi, S. F. and Asadzadeh, S. M. (2007) ‘An integrated DEA PCA numerical taxonomy approach for energy efficiency assessment and consumption optimization in energy intensive manufacturing sectors’, Energy Policy, Vol. 35, pp. 3792-3806.
 
[3]  Azadeh, A., Ghaderi, S. F. and Asadzadeh, S. M. (2008), ‘Energy efficiency modeling and estimation in petroleum refining industry - a comparison using physical data’, Paper presented at the International Conference on Renewable Energies and Power Quality (ICREPQ'11), Santander, 12-14 March 2008.
 
[4]  Bagdadioglu, N., Price, C. M. W. and Weyman-Jones, T. G. (1996) ‘Efficiency and ownership in electricity distribution: a non parametric model of the Turkish experience’, Energy Economics, Vol. 18, pp.1-23.
 
[5]  Banker, R. D., Charnes, R. F. and Cooper, W. W. (1984), ‘Some models for estimating technical and scale inefficiencies in data envelopment analysis’, Management Science, Vol. 30, pp.1078-1092.
 
[6]  Battese, G.E. and Coelli, T.J. (1995), ‘A model for technical inefficiency effects in a stochastic frontier production function for panel data’, Empirical Economics, Vol. 20, pp.325-332.
 
[7]  Bosseboeuf, D., Chateau, B., and Lapillonne, B. (1997), ‘Cross-country comparison on energy efficiency indicators: the on-going European effort towards a common methodology’, Energy Policy, Vol. 25, pp.673-682.
 
[8]  Chang, C. C. and Luh, Y. H. (1999), ‘Efficiency change and growth in productivity: the Asian growth experience’, Journal of Asian Economics, Vol. 10, pp.551-570.
 
[9]  Charnes, A., Cooper, W. W. and Rhodes, E. (1978), ‘Measuring the efficiency of decision making units’, European Journal of Operational Research, Vol. 3, pp.392-444.
 
[10]  Chien, T. and Hu, J. L. (2007), ‘Renewable energy and macroeconomic efficiency of OECD and non-OECD economies’, Energy Policy, Vol. 35, pp.3606-3615.
 
[11]  Chung, Y.H., Färe, R. and Grosskopf, S. (1997), ‘Productivity and undesirable outputs: a directional distance function approach’, Journal of Environmental Management, Vol. 51, pp.229-240.
 
[12]  Cooper, W. W., Seiford, L. M. and Tone, K. (1999), Data Envelopment Analysis: A Comprehensive Text with Models, Applications, References and DEA-Solver Software, Kluwer Academic Publishers, Hingham, MA, USA.
 
[13]  Debreau, G. (1951), ‘The coefficient of resource utilization’, Econometrica. Vol. 19, pp.273-290.
 
[14]  Duro, J. A., Alcántara, V. and Padilla, E. (2010), ‘International inequality in energy intensity levels and the role of production composition and nergy efficiency: an analysis of OECD countries’, Ecological Economics, Vol. 69, pp.2468-2474.
 
[15]  Färe R., Grosskopf, S., Norris, M. and Zhang, Z. (1994), ‘Productivity growth, technical progress, and efficiency change in industrialized countries’, American Economic Review. Vol. 84, pp.66-83.
 
[16]  Färe, R. and Grosskopf, S. (2004), ‘Modeling undesirable factors in efficiency evaluation: comment’, European Journal of Operational Research, Vol. 157, pp.242-245.
 
[17]  Färe, R., Grosskopf, S. and Tyteca, D. (1996), ‘An activity analysis model of the environmental performance of firms-application to fosil fuel-fired electric utilities’, Ecological Economics, Vol. 18, pp.161-175.
 
[18]  Färe, R., Grosskopf, S., Lovell, C. A. K. and Pasurka, C. (1989), ‘Multilateral productivity comparisons when some outputs are undesirable: a nonparametric approach’, The Review of Economics and Statistics, Vol. 71, pp.90-98.
 
[19]  Farrell, M. J. (1957), ‘The measurement of productive efficiency’, Journal of the Royal Statistical Society, Vol. 120, pp.253-290.
 
[20]  Freeman, S. L., Niefer, M. J. and Roop, J. M. (1997), ‘Measuring industrial energy intensity: practical issues and problems’, Energy Policy, Vol. 25, pp.703-714.
 
[21]  Geller, H., Harrington, P. A., Rosenfeld, H., Tanishima, S. and Unander, F. (2006), ‘Policies for increasing energy efficiency: thirty years of experience in OECD countries’, Energy Policy, Vol. 34, pp.556-573.
 
[22]  Grösche, P. (2008), ‘Measuring residental energy efficiency improvement with DEA’, Ruhr Economic Papers 60.
 
[23]  Hall, R. E. and Jones, C. I, (1999), ‘Why do some countries produce so much more output per worker than others?’, NBER Working Papers, 6564, National Bureau of Economic Research, Inc.
 
[24]  Hu, J. L. and Kao, C. H. (2007), ‘Efficient energy-savings targets for APEC economies’, Energy Policy, Vol. 35, pp.373-382.
 
[25]  Hu, J. L. and Wang, S. C. (2006), ‘Total-factor energy efficiency of regions in China’, EnergyPolicy, Vol. 34, pp.3206-3217.
 
[26]  Hubbard, R. G. (1998), ‘Capital market imperfections and investment’, Journal of Economic Literature. Vol. 36, pp.193-225.
 
[27]  Kamps, C. (2006), ‘New estimates of government net capital stocks for 22 OECD countries 1960-2001’, IMF Staff Papers 53.
 
[28]  Koopmans, T. C. (1951), ‘An analysis of production as an efficient combination of activities’, in Koopmans, T. C. (Ed.): Activity Analysis of Production and Allocation, Proceeding of a Conference, pp.33-97, John Wiley and Sons Inc., London.
 
[29]  Lo, S. F. and Lu, W. M. (2009), ‘An integrated performance evaluation of financial holding companies in Taiwan’, European Journal of Operational Research, Vol.198, pp.341-350.
 
[30]  Mandal, S. K. and Madheswaran, S. (2009), ‘Efficiency in presence of undesirable output: an application of data envelopment analysis (DEA) to Indian cement industry’, Institute for Social and Economic Change (ISEC) Working Paper no. 235.
 
[31]  Mukherjee, K. (2008), ‘Energy use efficiency in U.S. manufacturing: a nonparametric analysis’, Energy Economics, Vol. 30, pp.76-96.
 
[32]  Onut, S. and Soner, S. (2006), ‘Energy efficiency assessment for the Antalya region hotels in Turkey’, Energy and Buildings, Vol.38, pp.964-971.
 
[33]  Patterson, M. G. (1996), ‘What is energy efficiency? concepts, indicators and methodological issues’, Energy Policy, Vol. 24, pp.377-390.
 
[34]  Phylipsen, G. J. M. (Dian), Blok, K. and Bode, J.W. (2002), ‘Industrial energy efficiency in the climate change debate: comparing the US and major developing countries’, Energy for Sustainable Development, Vol.6, pp.30-44.
 
[35]  Price, L., Phylipsen, G. J. M. and Worrell, E. (2000a), Energy Use and Carbon Dioxide Emissions in the Steel Sector in Key Developing Countries: Preliminary Sector Analysis, Lawrence Berkeley National Laboratory.
 
[36]  Price, L., Phylipsen, G. J. M. and Worrell, E. (2000b), Energy Use and Carbon Dioxide Emissions in the Cement Sector in Key Developing Countries: Preliminary Sector Analysis, Lawrence Berkeley National Laboratory.
 
[37]  Reddy, B. S. and Ray, B. K. (2010), ‘Decomposition of energy consumption and energy Intensity in Indian manufacturing industries’, Energy for Sustainable Development, Vol. 14, pp.35-47.
 
[38]  Stern, N. (2007), The Economics of Climate Change: The Stern Review, Cambridge University Press, Cambridge.
 
[39]  Tone, K. (2001), ‘A slacks-based measure of efficiency in data envelopment analysis’, European Journal of Operational Research, Vol. 130, pp.498-509.
 
[40]  Tyteca, D. (1997), ‘Linear programming models for the measurement of environmental performance of firms — concepts and empirical results’, Journal of Productivity Analysis, Vol. 8, pp.183-197.
 
[41]  Xu, X. P. and Liang, L. (2007), ‘Energy efficiency and productivity of China: compared with other countries’, in Shi, Y., van Albada, G.D. and Dongarra, J. (Ed): Computational Science-ICCS 2007, 7th International Conference Part III, Beijing, pp.988-991, China, May 27-30,.
 
[42]  Yang, H. (2010), Carbon Reduction Potential, and Economic Development in the People’s Republic of China, A Total Factor Production Model, Asian Development Bank, Philippines.
 
[43]  Zaim, O. (2004), ‘Measuring environmental performance of state manufacturing through changes in pollution intensities: a DEA framework’, Ecological Economics, Vol. 48, pp.37-47.
 
[44]  Zhou, P. and Ang, B. W. (2008), ‘Linear programming models for measuring economy-wide energy efficiency performance’, Energy Policy, Vol. 36, pp.2911-2916.
 
[45]  Zhou, P., Ang, B. W. and Poh, K. L. (2008a), ‘A survey of data envelopment analysis in energy and environmental studies’, European Journal of Operational Research, Vol. 189, pp.1-18.
 
[46]  Zhou, P., Ang, B. W. and Poh, K. L. (2008b), ‘Measuring environmental performance under different environmental DEA technologies’, Energy Economics, Vol. 30, pp.1-14.
 
[47]  Zofio, J. L. and Prieto, A. M. (2001), ‘Environmental efficiency and regulatory standards: the case of CO2 emissions from OECD industries’, Resource and Energy Economics, Vol. 23, pp.63-83.
 
Manuscript template