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

In: Energy Efficiency Financing and Market-Based Instruments

Author

Listed:
  • Yang Liu

    (African Development Bank)

  • Sheng Zhong

    (Energy Studies Institute, National University of Singapore)

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.

Suggested Citation

  • Yang Liu & Sheng Zhong, 2021. "Understanding Cross-Economy Dynamics of Energy Efficiency: Driving Factors and Stylized Patterns," Economics, Law, and Institutions in Asia Pacific, in: Yang Liu & Farhad Taghizadeh-Hesary & Naoyuki Yoshino (ed.), Energy Efficiency Financing and Market-Based Instruments, chapter 0, pages 3-24, Springer.
    • Handle: RePEc:spr:eclchp:978-981-16-3599-1_1
    DOI: 10.1007/978-981-16-3599-1_1
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    More about this item

    Keywords

    Energy efficiency; Decomposition; Transition matrix; Convergence;
    All these keywords.

    JEL classification:

    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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