The effect of ECSOs on energy use

WenShwo Fang, Stephen Miller and Chih-Chuan Yeh
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Chih-Chuan Yeh: The Overseas Chinese University

No 2012-13, Working papers from University of Connecticut, Department of Economics

Abstract: Energy saving can importantly help prevent greenhouse gas emissions and, thus, climate change. Energy service companies (ESCOs) provide a crucial instrument for delivering improved energy efficiency and potentially contributing to substantial energy savings in the public and private sectors. This paper investigates empirically the effect of ESCO activities on energy use. Based on a dynamic IPAT model, using a panel data of 94 countries over the period 1981 to 2007, we provide significant evidence that ESCOs reduce energy use. This finding proves robust to different dates of the first ESCO. The negative ESCO effect increases over time. The dynamic adjustment process produces small effects in the short run, but large effects in the long run. Moreover, the long-run ESCO effect differs across the stages of development. That is, for the high- and low-income countries, the short-run ESCO effect remains negative, but the long-run effects differ, remaining negative in high-income countries, but becoming positive in low-income countries. Finally, we discuss energy policy implications.

Keywords: Energy use; Energy service companies (ESCOs); Dynamic IPAT model (search for similar items in EconPapers)
JEL-codes: O13 Q43 Q55 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2012-08
New Economics Papers: this item is included in nep-ene and nep-env
Note: Stephen M. Miller is corresponding author
References: View references in EconPapers View complete reference list from CitEc
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Published in Energy Policy, December 2012

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Journal Article: The effect of ESCOs on energy use (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:uct:uconnp:2012-13

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