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Drivers of energy efficiency in German manufacturing: A firm-level stochastic frontier analysis

Benjamin Johannes Lutz, Philipp Massier (), Katrin Sommerfeld and Andreas Löschel ()

No 99, CAWM Discussion Papers from University of Münster, Center of Applied Economic Research Münster (CAWM)

Abstract: Increasing energy efficiency is one of the main goals in current German energy and climate policies. We study the determinants of energy efficiency in the German manufacturing sector based on official firm-level production census data. By means of a stochastic frontier analysis, we estimate the cost-minimizing energy demand function at the two-digit industry level using firm-level heterogeneity. Apart from the identification of the determinants of the energy demand function, we also analyze potential drivers of energy efficiency. Our results suggest that there is still potential to increase energy efficiency in most industries of the German manufacturing sector. Furthermore, we find that in most industries exporting and innovating firms as well as those investing in environmental protection measures are more energy efficient than their counterparts. In contrast, firms which are regulated by the European Union Emissions Trading System are mostly less energy efficient than non-regulated firms.

Keywords: Stochastic Frontier Analysis; Stochastic Demand Frontier; Energy Efficiency; Climate Policy; Manufacturing (search for similar items in EconPapers)
JEL-codes: D22 D24 L60 Q41 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-eff, nep-ene, nep-env, nep-reg and nep-res
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