Energy Efficiency: Indicator, Estimation, and a New Idea

Ku-Hsieh Chen, Jen-Chi Cheng, Joe-Ming Lee, Liou-Yuan Li and Sheng-Yu Peng
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Ku-Hsieh Chen: Department of Applied Economics and Management, National Ilan University, Yilan City, Yilan County 260, Taiwan
Jen-Chi Cheng: Department of Economics, Wichita State University, Wichita, KS 67260, USA
Joe-Ming Lee: Department of Applied Economics, Fo-Guang University, Jiaoxi Township, Yilan County 262, Taiwan
Liou-Yuan Li: Department of International Business Administration, Rajamangala University of Technology Thanyaburi Pathum Thani 12110, Thailand
Sheng-Yu Peng: Investment Office of Yilan Science Park, Hsinchu Science Park Bureau, Ministry of Science and Technology Hsinchu City, Hsinchu City 300, Taiwan

Sustainability, 2020, vol. 12, issue 12, 1-19

Abstract: Energy efficiency has long been an important issue to the global economic and political theaters; however, searching for an effective and concise measure for efficiency remains a contentious and intriguing topic. There are two obvious flaws with the commonly used metrics in existing literature. First, there is a sense of confusion and misunderstanding between the definitions of energy efficiency and efficacy. As a result, the formulae and methods for measuring efficiency are often the subject of criticism. Second, even if the definition of efficiency is clear, the method of estimation can be quite cumbersome, making it difficult to comprehend or implement. This study attempts to address these two issues. With an OECD comparative dataset, it first presents the contradiction between efficiency and efficacy, explains the loss of effectiveness with the existing measurements, and then proposes a new and easy-to-use method for gauging energy efficiency, so that the succinctness and robustness of the measurement can be re-established. The paper serves as a guide to those who are interested in the controversial issues related to measuring energy efficiency. Both practitioners and policy makers will find an easy and reliable tool from this paper for measuring energy efficiency.

Keywords: energy; energy efficiency; energy efficacy; energy consumption; stochastic frontier (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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