Understanding Cross-Economy Dynamics of Energy Efficiency: Driving Factors and Stylized Patterns

Yang Liu () and Sheng Zhong ()
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Yang Liu: African Development Bank
Sheng Zhong: Energy Studies Institute, National University of Singapore

Chapter Chapter 1 in Energy Efficiency Financing and Market-Based Instruments, 2021, pp 3-24 from Springer

Abstract: Abstract Energy plays a key role in economic development. Improving energy efficiency through the use of financing instruments requires a thorough understanding of energy efficiency dynamics. This study investigates the driving factors of energy efficiency that are necessary for decision makers to focus on, and characterizes the long-run tendency of energy efficiency. This is based on a dataset covering 59 major economies in the world from 2000 to 2017. First, this chapter adopts an index decomposition approach to quantify the driving factors. The results show an overall improvement in energy efficiency between 2000 and 2017, which is driven by a technology-led efficiency effect as well as an economic structure effect, despite the heterogeneity across economies. Second, the transition matrix approach based on the Markov chain is employed to explore the steady state distribution of energy efficiency, in which around 21.23% of sample economies would stay at levels lower than the world average. The results suggest the persistent gap in energy efficiency across economies and highlight the importance of energy efficiency financing for those economies in which energy efficiency is low ranking or deteriorates, which are mostly emerging Asian economies.

Keywords: Energy efficiency; Decomposition; Transition matrix; Convergence (search for similar items in EconPapers)
JEL-codes: O13 Q01 Q56 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:eclchp:978-981-16-3599-1_1

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DOI: 10.1007/978-981-16-3599-1_1

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