Technology invention and adoption in residential energy consumption: A stochastic frontier approach

In this paper we analyse the electricity consumption of a set of four traditional ‘white goods’ in a panel of ten EU countries observed over the period 1995–2013 with the aim of disentangling the amount of technical efficiency from overall energy saving using a stochastic frontier approach. The efficiency trend is modelled as a function of energy efficiency policies and innovation dynamics that combines invention and adoption processes using specific patents weighted by granular production data and worldwide bilateral import flows. Our model also accounts for potential endogeneity arising when innovation processes and economic growth are considered. With this replicable approach, the stochastic frontier framework allows for explicit modelling of innovation processes. Our results show that the efficiency component is related to changes in the energy efficient technological content of appliances. The ‘international’ component represents a predominant share of technological advancement and exerts a significant influence on the transient efficiency. Our evidence calls for an active role to be played by policy makers in focusing on innovation and trade policies in order to achieve more ambitious energy efficiency targets.     

Energy conversion efficiency of trout and sea bass production in the Black Sea,Turkey

This study examined the current energy balance, energy conversion efficiency, and farm-level efficiency of trout and sea bass production in the Black Sea of Turkey. Using a structured survey, we collected data from nine monoculture trout farms and five polyculture trout and sea bass farms during the 2005–2006 production season. Energy values were calculated using energy equivalents of the inputs and outputs for the farms. Data envelopment analysis was used to calculate farm-level efficiency. The total energy use per cubic meter was 46.57 MJ for trout production and 87.13 MJ for sea bass production. The main energy inputs were feed and diesel oil for both trout and sea bass production. Indirect energy use was dominant in trout production, while direct energy use was more common in sea bass production. The energy input-to-output ratio of trout production was higher than that of sea bass production. Sea bass production was more economically energy efficient compared to trout production. The allocative and economic energy efficiencies for trout and sea bass production were 0.788 and 0.881, respectively. For both types of farms, the most discriminative variable affecting economic efficiency was operator experience. Increasing focus on product distribution costs could decrease total energy costs by approximately 12%.     

An empirical analysis of petroleum demand for Indonesia: An application of the cointegration approach

This paper uses selection criteria from various models in a bounds testing approach to cointegration to estimate the price and income elasticities of demand for total petroleum products (gasoline and diesel) and gasoline share in total products in Indonesia. The results suggest that both total products and gasoline share estimates are more responsive to changes in income than changes in the real price of petroleum products. These results have important policy implications as they suggest that policy makers may need to use market-based pricing policies and other policies such as public enlightenment in addition to regulations like minimum energy efficiency standards to promote efficiency and conservation and curb the rising consumption of petroleum products in Indonesia.     

Analyzing carbon pricing policies using a general equilibrium model with production parameters estimated using firm data

Policy simulation results of Computable General Equilibrium (CGE) models largely hinge on the choices of substitution elasticities among key input factors. Currently, most CGE models rely on the common elasticities estimated from aggregated data, such as the GTAP model elasticity parameters. Using firm level data, we apply the control function method to estimate CES production functions with capital, labor and energy inputs and find significant heterogeneity in substitution elasticities across different industries. Our capital-labor substitution elasticities are much lower than the GTAP values while our energy elasticities are higher. We then incorporate these estimated elasticities into a CGE model to simulate China's carbon pricing policies and compare with the results using GTAP parameters. Our less elastic K-L substitution leads to lower base case GDP growth, but our more elastic energy substitution lead to lower coal use and carbon emissions. In the carbon tax policy exercises, we find that our elasticities lead to easier reductions in coal use and carbon emissions.     

Energy conservation policies for builders' purchases of domestic appliances

The author argues that policy makers should become more interested in the impact which ‘imposed choice’ purchases of energy using equipment by builders have on residential sector energy consumption. Canadian data suggest that builder purchases account for 48% of the annual energy consumption attributable to all purchases of furnaces and space heating equipment, water heaters, and major kitchen and laundry appliances. In this article an analysis is presented of the information inputs and intervention possibilities available to policy makers interested in encouraging the specification and purchase by builders of more energy efficient equipment.     

The energy–GDP nexus; addressing an old question with new methods

This paper reassesses the causal relationship between per capita energy use and gross domestic product, while controlling for capital and labour (productivity) inputs in a panel of 30 OECD countries over the past 40 years. The paper uses panel unit root and cointegration testing and specifies an appropriate vector error correction model to analyse the nexus between income and energy use. In doing so we contribute to an old debate using modern tools that shed a new light. There is some evidence that over the very short-run bidirectional causality exists. Our results also show a strong unidirectional causality running from capital formation and GDP to energy usage. In the long run the reverse causality, found in recent work, is lost. We then show that we can reproduce these earlier results in our data if we reproduce a slightly misspecified model for the Engle–Granger two-step procedure used in these earlier papers. Our findings thus imply that results are very sensitive to model misspecification and careful testing of specifications is required. Our results have some strong policy implications. They suggest that policies aimed at reducing energy usage or promoting energy efficiency are not likely to have a detrimental effect on economic growth, except over the very short run.     

What should we expect from innovation? A model-based assessment of the environmental and mitigation cost implications of climate-related R&D

This paper addresses two basic issues related to technological innovation and climate stabilization objectives: can innovation policies be effective in stabilizing climate? To what extent can innovation policies complement carbon pricing (taxes or permit trading) and improve the economic efficiency of a mitigation policy package? To answer these questions, we use an integrated assessment model with multiple externalities and an endogenous representation of the technical progress in the energy sector. We evaluate a range of innovation policies, both as stand-alone and in combination with other mitigation policies. Our analysis indicates that innovation policies alone are unlikely to stabilize global concentration and temperature. As for the benefits of combining climate and innovation policies, we find efficiency gains of 10% (6 USD Trillions in net present value terms) for a stringent climate policy, and 30% (3 USD Trillions) for a milder one. However, such gains are reduced when more plausible (sub-optimal) global innovation policy arrangements are considered.     

Changing Sunshine: Analyzing the dynamics of solar electricity policies in the global context

Although solar costs have been dropping in recent years, solar power is still more expensive than conventional and other renewable energy options, and in most applications solar power still needs continuing government policy support. However, the need to achieve multiple objectives and ensure sufficient political support for solar power makes it difficult for policy makers to design an optimal solar power policy. The dynamic and uncertain nature of the solar industry, combined with the constraints imposed by broader economic, political and social conditions further complicates the task of policy making. In this paper, we present a framework to critically analyze the objectives behind different country policies, how factors such as macro-economic conditions and development paradigms affect the policy outcomes and finally, how these outcomes affect the overall cost reduction of solar energy. We find that while the extent of cost reduction through creation of large demand remains to be seen, it is essential for governments to provide adequate support for leapfrog RD&D, and exploit real comparative advantages across countries for effective solar cost reduction. Policy makers need to optimally design their policies by balancing national objectives and paying capacity with the global objective of solar power cost reduction in order to realize its full potential.     

Tyrannies of thrift: Governmentality and older,low-income people’s energy efficiency narratives in the Illawarra,Australia

Social scientists are arguing that energy policies should pay more attention to everyday life to address energy efficiency. Scholars are now positing that energy policy needs to move beyond essentialised understandings of people positioned as the problem and seek to involve household members as part of the solution. Joining this conversation, we explore the energy narratives of low-income people aged 60 years and over, living in private sector housing. Participants shared their energy efficiency stories during focus groups conducted in the Illawarra, Australia. The paper explores how Foucault's concept of governmentality may help inform energy efficiency programs by paying close attention to the way in which individual energy choices made under certain circumstances create who an individual becomes. Learning from participants, our governmentality analysis revealed the tyrannies of thrifty domestic energy conduct. We illustrate our argument drawing on the examples of practices relating to clothing and lighting. We outline how governmentality analysis can be used by researchers, policy makers and practitioners to assist people to safely negotiate energy efficiency in their domestic lives.     

Energy efficiency policy impact in India: case study of investment in industrial energy efficiency

The objective of this paper is to identify the effectiveness of energy policy and capital investment in energy efficiency technologies in the industrial sector in India. Indian energy policies relating to industrial energy efficiency over the past 25 years are briefly reviewed, and a comparison study of these energy efficiency policies and strategies in India and China has been carried out. Interviews were conducted with a number of government policy-making institutions and a national industrial development bank. The accounts of 26 industrial enterprises which applied and used a loan of the Asian Development Bank were audited for data collection. Field-visits to seven industrial entrepreneurs were undertaken in a case study. Methodologies used in this study include documentation, cross-country reviews on energy policies, questionnaire design and distribution in the industrial sector, and on-site auditing of energy efficiency technologies. This paper concludes that current energy policies and strategies in India need further improvement to promote energy efficiency investment and energy efficiency technology development in the industrial sector. This paper will interest those policy makers and industrial entrepreneurs who are willing to finance energy efficiency projects and improve energy efficiency in the industrial sector.     

Implications of local lifecycle analyses and low carbon fuel standard design on gasohol transportation fuels

State and regional policies, such as low carbon fuel standards (LCFSs), increasingly mandate that transportation fuels be examined according to their greenhouse gas (GHG) emissions. We investigate whether such policies benefit from determining fuel carbon intensities (FCIs) locally to account for variations in fuel production and to stimulate improvements in FCI. In this study, we examine the FCI of transportation fuels on a lifecycle basis within a specific state, Minnesota, and compare the results to FCIs using national averages. Using data compiled from 18 refineries over an 11-year period, we find that ethanol production is highly variable, resulting in a 42% difference between carbon intensities. Historical data suggests that lower FCIs are possible through incremental improvements in refining efficiency and the use of biomass for processing heat. Stochastic modeling of the corn ethanol FCI shows that gains in certainty due to knowledge of specific refinery inputs are overwhelmed by uncertainty in parameters external to the refiner, including impacts of fertilization and land use change. The LCA results are incorporated into multiple policy scenarios to demonstrate the effect of policy configurations on the use of alternative fuels. These results provide a contrast between volumetric mandates and LCFSs.     

Environmental cost-effectiveness of bio diesel production in Greece: Current policies and alternative scenarios

Following European Directive 2003/30/EC, the Greek Government adapted legislation that introduces and regulates the bio diesel market. The implemented quota scheme allocates the country's annual, predetermined, tax exempt production of bio diesel to industries based on their ability to meet several criteria. A number of bio diesel supply chain stakeholders have criticized this policy for being efficiency-robbing and vague. This paper uses 2007 data from energy crop farms and three bio diesel-producing companies in order to assess these criticisms. We study the economic and environmental aspects of the currently adopted policy and compare them to three alternative scenarios. We conclude that such criticisms have a merit and that policy makers need to reconsider their alternative options regarding the promotion of bio diesel in transport. Permission of sales directly to local consumers and promotion of forward integration by farmers are efficiency enhancing and environment-friendly means of promoting the use of bio diesel in transport.     

Modelling the economics of farm-based anaerobic digestion in a UK whole-farm context

Anaerobic digestion (AD) technologies convert organic wastes and crops into methane-rich biogas for heating, electricity generation and vehicle fuel. Farm-based AD has proliferated in some EU countries, driven by favourable policies promoting sustainable energy generation and GHG mitigation. Despite increased state support there are still few AD plants on UK farms leading to a lack of normative data on viability of AD in the whole-farm context. Farmers and lenders are therefore reluctant to fund AD projects and policy makers are hampered in their attempts to design policies that adequately support the industry. Existing AD studies and modelling tools do not adequately capture the farm context within which AD interacts. This paper demonstrates a whole-farm, optimisation modelling approach to assess the viability of AD in a more holistic way, accounting for such issues as: AD scale, synergies and conflicts with other farm enterprises, choice of feedstocks, digestate use and impact on farm Net Margin. This modelling approach demonstrates, for example, that: AD is complementary to dairy enterprises, but competes with arable enterprises for farm resources. Reduced nutrient purchases significantly improve Net Margin on arable farms, but AD scale is constrained by the capacity of farmland to absorb nutrients in AD digestate.     

Explaining the non-implementation of health-improving policies related to solid fuels use in South Africa

In 1998, the South African government developed an energy policy that focused on a pro-poor agenda. Its objectives included addressing the health impacts of solid fuel use in households. Fourteen years later, and with household electrification at over 80%, millions still use solid fuels and yet ambitious policy objectives to address this situation are not being met. Using three theoretical frameworks; institutional capacity, policy inheritance and the symbolic use of policy, this paper analyses the reasons why household energy policy objectives related to solid fuels and health, as stated in the 1998 South African energy policy, have not been implemented. The results of the analysis show that the symbolic use of policy, including meanings of objects used for meeting policy objectives is the most critical explanation. The paper illustrates that political and historical contexts are critical to understanding policy outcomes in developing and transition countries which often experience tensions between implementing what may seem as objective policies, and that matches their political and historical experiences and aspirations. We recommend that policy analysts in the energy sector complement currently common methods to include political contexts of policy development and implementation in order to better understand why policy makers chose to implement certain policies over others.     

Energy utilization in maize production

Average physical inputs in maize cultivation in three districts of Haryana (North India) have been transformed into energy units and compared with the energy outputs of grain and byproducts. The chief inputs were in the form of farm yard manure (FYM), traditional farm equipment, tractor and fuel, followed by irrigation and chemical fertilizers. Detailed data of physical inputs were collected from 31 individual farm units of Ambala district, ranging from 0.41 to 3.24 ha. Six of these farms showed extremes of size, tractor use, fertilizer application, FYM inputs, irrigation, as well as yields of grain and byproducts. Data from these farms were analysed in terms of energy utilization. Energy use efficiency ranged from 0.06 to 0.28 for grain and from 0.29 to 1.16 for total produce. The data suggest that grain production can be increased and energy utilization improved by minimizing the use of FYM and by increased use of chemical fertilizers and irrigation.     

Capital-labour-energy substitution in a nested CES framework: A replication and update of Kemfert (1998)

The ease with which firms can substitute away from energy to other inputs is an important determining factor in the costs of climate change mitigation policies. Climate policy simulation models usually represent this substitutability by using the Constant Elasticity of Substitution (CES) function with parameter values often taken from econometric studies. Hence, the accuracy of the estimated substitution parameters has a strong influence on the validity of the climate policy simulation. In this article, we attempt to replicate the results presented in a widely cited article in this field: Kemfert (1998) (‘Estimated substitution elasticities of a nested CES production function approach for Germany’, Energy Economics, 20, 249–264). We first use the data and software reported in that article and compare our results with those reported in the original study. We then test the same data and a new, more recent, data set on German industrial data with an improved econometric approach. Despite applying various approaches and modifications, we are not able to replicate the results in Kemfert (1998). We furthermore conclude that the data sets that are typically used to estimate nested CES functions often have too few observations and too little independent variation of the explanatory variables to obtain reliable estimates when using a direct non-linear approach.     

Estimating the potential for electricity savings in households

Improving efficiency in the use of energy is an important goal for many nations since end-use energy efficiency can help to reduce CO₂ emissions. Furthermore, since the residential sector in industrialised countries requires around one third of the end-use electricity, it is important for policy makers to estimate the scope for electricity saving in households to reduce electricity consumption by using appropriate steering mechanisms. We estimate the level of technical efficiency in the use of electricity using data from a Swiss household survey. We find an average inefficiency in electricity use by Swiss households of around 20 to 25%. Bottom-up economic-engineering models estimate the potential in Switzerland to be around 15%. In this paper we use a sub-vector input distance frontier function based on economic foundations. Our estimates lie at the upper end of the electricity saving potential estimated by the afore-mentioned economic-engineering approach.     

A model for improving energy efficiency in industrial motor system using multicriteria analysis

In the last years, several policies have been proposed by governments and global institutions in order to improve the efficient use of energy in industries worldwide. However, projects in industrial motor systems require new approach, mainly in decision making area, considering the organizational barriers for energy efficiency. Despite the wide application, multicriteria methods remain unexplored in industrial motor systems until now. This paper proposes a multicriteria model using the PROMETHEE II method, with the aim of ranking alternatives for induction motors replacement. A comparative analysis of the model, applied to a Brazilian industry, has shown that multicriteria analysis presents better performance on energy saving as well as return on investments than single criterion. The paper strongly recommends the dissemination of multicriteria decision aiding as a policy to support the decision makers in industries and to improve energy efficiency in electric motor systems.     

Examining the role of energy efficiency and non-economic factors in energy demand and CO2 emissions in Nigeria: Policy implications

This paper examines the role of energy efficiency and non-economic factors such as consumers' preferences, lifestyles and values (which have hitherto been ignored) in energy demand and CO₂ emissions modelling for Nigeria. We use a structural time series model to estimate various energy demand and CO₂ intensity models that take account of the aforementioned factors. We adopt preferred models from these estimates to analyse how energy demand and CO₂ emissions in Nigeria might evolve by generating three different future scenarios to 2025. We find energy efficiency and non-economic factors to influence energy demand and CO₂ emissions. The long-run income and price elasticities obtained differ significantly from those in existing studies that have ignored these salient factors. In a business-as-usual scenario, the results indicate that energy demand will continue to grow. Consequently, present policies do not sufficiently mitigate aggregate CO₂ emissions in Nigeria. The lesson for policy makers is that the extant policies introduced to restrain CO₂ emissions (from a production perspective) have to be combined with new policies that influence consumers' lifestyles and behaviours, develop energy efficient technologies and apply low tariffs on imported energy efficient appliances, to drive down CO₂ emissions from a consumption perspective.     

Linking historic developments and future scenarios of industrial energy use in the Netherlands between 1993 and 2040

Monitoring energy efficiency improvements is essential for policy evaluation and for future policy making. We estimate the annual energy efficiency improvements achieved in six Dutch industry sectors between 1993 and 2008 by using a bottom-up model. This model incorporates the production data and specific energy consumption values of 122 products. We estimate annual energy efficiency improvements of 1.0 % per annum (p.a.) for the total industry (excluding non-energy use); even though the results are subject to uncertainties due to errors in the energy statistics, we consider them as strong indication that Dutch industry needs to reinforce its efforts in energy efficiency. Based on historical achievements between 1989 and 2008, Business as Usual (BaU) scenarios project annual improvement potentials of 0.6–1.8 % p.a. until 2040. Based on literature review, this study estimates that implementing energy saving technologies can accelerate energy efficiency improvements to 2 % p.a. and beyond. Efficient combined heat and power technologies could increase these potentials further. These are beyond the historical achievements and BaU scenario projections. New policies will be required for technology development which ensures continuous energy efficiency improvements. The findings of this paper need to be extended by continuous monitoring and more scenario analyses with improved data.