The convergence of U.S. state-level energy intensity

This study extends a neoclassical growth model to include the accumulation of physical capital and energy consumption within a panel of fifty states (plus the District of Columbia) in the U.S. The theoretical model allows us to examine the implications for convergence in economic growth and energy intensity. From the theoretical model, we formulate an empirical approach using a dynamic panel model that is estimated using a general method of moments framework to test the conditional rates of convergence. The empirical results indicate convergence in energy intensity, and our estimates accurately predict both the growth in and convergence of energy intensity across our entire sample. Consistent with other findings in the literature, our results imply that energy use, over the past four decades, plays a small and positive role in state-level, per capita economic growth and convergence. Based on these results, we discuss policy implications for state-level income growth and energy consumption.     

Revisiting energy efficiency fundamentals

Energy efficiency is a central target for energy policy and a keystone to mitigate climate change and to achieve a sustainable development. Although great efforts have been carried out during the last four decades to investigate the issue, focusing into measuring energy efficiency, understanding its trends and impacts on energy consumption and to design effective energy efficiency policies, many energy efficiency-related concepts, some methodological problems for the construction of energy efficiency indicators (EEI) and even some of the energy efficiency potential gains are often ignored or misunderstood, causing no little confusion and controversy not only for laymen but even for specialists. This paper aims to revisit, analyse and discuss some efficiency fundamental topics that could improve understanding and critical judgement of efficiency stakeholders and that could help in avoiding unfounded judgements and misleading statements. Firstly, we address the problem of measuring energy efficiency both in qualitative and quantitative terms. Secondly, main methodological problems standing in the way of the construction of EEI are discussed, and a sequence of actions is proposed to tackle them in an ordered fashion. Finally, two key topics are discussed in detail: the links between energy efficiency and energy savings, and the border between energy efficiency improvement and renewable sources promotion.     

Revisiting CO2 emissions convergence in G18 countries

This study revisits whether CO₂ emissions converge in G18 countries over the period of 1950–2013. To work on this empirical analysis, we employ a more powerful quantile unit root test with per capita CO₂ emissions. While conventional unit root tests fail to reject convergence in CO₂ emissions in these G18 countries, quantile unit root test results demonstrate CO₂ emissions converged in 5 of these G18 countries (i.e., Australia, Brazil, Canada, Germany, and India). Our empirical results have important policy implications for the governments of G18 countries to direct efficient and effective energy policies to reduce the CO₂ emissions.     

OECD energy intensity

This paper focuses on several different measures of Organisation of Economic Co-operation and Development (OECD) countries?? energy intensity levels, plots their trends, applies a number of techniques to determine whether those intensities are converging, explores the importance of that convergence, and estimates the future steady-state or long-run distribution of energy intensity for the OECD. The paper finds that OECD energy intensity typically is declining, and a number of parametric and nonparametric methods indicate a strong degree of convergence. However, convergence is conditioned on country specific factors since differences in individual energy/GDP ratios persist. These findings suggest limits to the general decline in developed country energy intensity.     

Revisiting the case for intensity targets: Better incentives and less uncertainty for developing countries

In the debate on post-Kyoto global climate policy, intensity targets, which set a maximum amount of emissions per GDP, figure as prominent alternative to Kyoto-style absolute emission targets, especially for developing countries. This paper re-examines the case for intensity targets by critically assessing several of its properties, namely (i) reduction of cost-uncertainty, (ii) reduction of ‘hot air’, (iii) compatibility with international emissions trading, (iv) incentive to decouple carbon emissions and economic output (decarbonization), and, (v) use as a substitute for banking/borrowing. Relying on simple analytical models, it is shown that the effect on cost-uncertainty is ambiguous and depends on parameter values, and that the same holds for the risk of ‘hot air’; that the intensity target distorts international emissions trading; that despite potential asymmetries in the choice of abatement technology between absolute and intensity target, the incentive for a lasting transformation of the energy system is not necessarily stronger under the latter; and, finally, that only a well-working intensity target could substitute banking/borrowing to some extent—but also vice versa. Overall, the results suggest that due to the increased complexity and the potentially only modest benefits of an intensity target, absolute targets remain a robust choice for a cautious policy maker.     

An optimization model for regional renewable energy development

This research effort details the modeling component of a comprehensive decision support system for energy planning that allows for combining existing electricity generating capabilities with increased use of renewable energy sources. It focuses on energy planning at the regional level, and it is illustrated by applying it to the greater southern Appalachian mountains of the eastern United States: a region that was chosen for analysis not only due to its heavy dependence on coal for electricity, but also because of its potential for increased use of wind and solar power. The paper specifically discusses the development of a multi-objective linear programming (MOLP) model that can be used to determine the optimal mix of renewable energy sources and existing fossil fuel facilities on a regional basis. This model allows a decision maker to balance annual generation costs against the corresponding greenhouse gas emissions, and it provides significant support for implementing a variety of different policy analyses.     

Substitution possibilities and determinants of energy intensity for China

This paper measures technological change, factor demand and inter-factor and inter-fuel substitutability measures for China. We use individual fuel price data and a two-stage approach to estimate total factor cost functions and fuel share equations. Both inter-factor and inter-fuel substitution elasticities are calculated and the change in energy intensity is decomposed into its driving forces. The results suggest that energy is substitutable for capital regionally and for labor nationally. Capital substitutes for energy more easily than labor does. Energy intensity changes vary by region but the major drivers seem to be “budget effect” and the adoption of energy-intensive technologies, which might be embodied in high-level energy-using exports and sectors, capital investment and even old technique and equipment imports. Whether the trend in rising energy intensity continues will be significant for China and the rest of the world.     

Analysis of energy intensity trend as a tool for long-term forecasting of energy consumption

The paper presents retrospective developments of energy intensity of the world economy differentiated by regions and their levels of economic development. The analysis has revealed the persistent decreasing trend in energy intensity across all the macro-regions and most countries, showing diversity of its course regarding both the starting point and rate of energy intensity reduction. Based on the time series, it has been shown that energy intensity of an economy is best described by an exponential trend, indicating a fairly uniform decline in energy efficiency in the economies. A power index of the exponential equation is one of the critical parameters characterizing reduction rate of energy intensity—the index of energy intensity reduction (IEIR). The authors have proposed an approach to measuring beta-convergence in time series of energy intensity, substantiating thereby convergence of economies. A comprehensive analysis of the time series and trend model served as a basis for prediction of variation in energy intensity of economies of the macro-regions for the period until 2040, which also included its quality and rationale verification. It has been shown that the trend method can be successfully applied to forecasting energy intensity developments to economically developed regions, whereas for developing countries such a forecast is less reliable. In these conditions, a comprehensive use of the trend model and the convergence model is necessary. The forecast of changes in energy intensity of the world economies grouped into macro-regions until 2040 has shown that the economically developed countries of Europe will remain to be the energy efficiency leaders until the mid-twenty-first century. The energy intensity indicators for less developed regions will gradually converge in their domain; yet, they are not expected to reach the level of the economically developed countries by 2040.     

Global overview of industrial energy intensity

Given the need to reduce the CO₂ emissions coming from the manufacturing sector, it is important, for planning purposes, to know which countries and which manufacturing sub-sectors have the greatest potential for reducing energy use. Using data from the International Atomic Energy Agency and the United Nations Industrial Development Organization, the authors estimate trends in global decoupling of energy use and manufacturing value added, compare energy-use intensity in six country groups and estimate the potential for reducing energy use and CO₂ emissions under two scenarios and compare selected sub-sector energy intensity and estimate the potential for reducing energy use CO₂ emissions. The comparison of energy intensities across country groups and among countries suggests that there still remains significant potential to reduce energy use and associated CO₂ emissions. The analysis of four sub-sectors in developing and transition economies also shows similar but varied potential for reducing energy use and associated CO₂ emissions.     

Dynamics of final sectoral energy demand and aggregate energy intensity

This paper proposes a regional and sectoral model of global final energy demand. For the main end-use sectors of consumption (industrial, commercial and public services, residential and road transportation), per-capita demand is expressed as an S-shaped function of per-capita income. Other variables intervene as well, like energy prices, temperatures and technological trends. This model is applied on a panel of 101 countries and 3 aggregates (covering the whole world) and it explains fairly well past variations in sectoral, final consumption since the beginning of the 2000s. Further, the model is used to analyze the dynamics of final energy demand, by sector and in total. The main conclusion concerns the pattern of change for aggregate energy intensity. The simulations performed show that there is no a priori reason for it to exhibit a bell-shape, as reported in the literature. Depending on initial conditions, the weight of basic needs in total consumption and the availability of modern commercial energy resources, various forms might emerge.     

Northeast Asia regional energy infrastructure proposals

Economic growth in the countries of Northeast Asia has spurred a massive increase in the need for energy, especially oil, gas, coal, and electricity. Although the region, taken as a whole, possesses financial, technical, labor, and natural resources sufficient to address much of the region's needs now and into the future, no one country has all of those attributes. As a result, over the past two decades, there has been significant interest in regional proposals that would allow sharing of resources, including infrastructure to develop and transport energy resources from the Russian Far East to South Korea, China, and Japan, and cooperation on energy-efficiency, renewable energy, and the nuclear fuel cycle as well. In this article we review some of these proposals, identify some of the factors that could contribute to the success or failure of infrastructure proposals, and explore some of the implications and ramifications of energy cooperation activities for energy security in the region.     

Environment-adjusted regional energy efficiency in Taiwan

This study applies the four-stage DEA procedure to calculate the energy efficiency of 23 regions in Taiwan from 1998 to 2007. After controlling for the effects of external environments, only Taipei City, Chiayi City, and Kaohsiung City are energy efficient. Note that Kaohsiung City reaches the efficiency frontier due to the adjustment via partial environmental factors such as higher education attainment and transport vehicles. We also find a worsening trend for Taiwan’s energy efficiency. Not only is there a gap of energy efficiency between Taiwan’s metropolitan areas and the other regions, but the gap has also widened in recent years. Those inefficient counties should be given priority and the savings potential. Except for road density, the evidence indicates that each environmental factor has partial incremental effects on input slacks. As more cars and motorcycles are unfavorable externalities affecting partial energy efficiency, the central government should help local governments retire inefficient old motor vehicles, encourage energy-saving vehicle models, and provide convenient mass transportation systems. Besides, people with higher education cause industrial energy inefficient in Taiwan. The conscious of effective energy saving is necessary to schools, communities, and employee accordingly.     

Government expenditure and energy intensity in China

The recent economic stimulus package of China has raised growing concern about its potential impact on energy demand and efficiency. To what extent does such expansion of government expenditure influence energy intensity? This question has not been well answered by the previous research. Using provincial panel data, this paper provides some evidence of a link between government expenditure and energy intensity in China. The empirical results demonstrate that the expansion of government expenditure since Asian financial crisis has exerted a significant influence on energy intensity. An increase in government expenditure in China leads to an increase in energy intensity. Further analysis compares such relationships in different economic situations. The comparison shows that such positive effect of government expenditure remains significant after the alteration in economic situation. Therefore, the results suggest introducing some measures to consolidate China's existing gains in energy efficiency. The analysis also explains why the downward trend in energy intensity is reversed in China since 2002.     

Offshore wind energy in the world context

The interest for the exploitation of the offshore wind energy is growing in Europe, where man land use is very high resulting in strong limitation to the installation of onshore wind farms. The today offshore operating wind power is 12 MW, with two wind farms in Denmark and one in Netherlands; it starts to be significant (0.6%) in terms of the onshore power, 2000 MW in Europe.In the world the onshore installed wind power is exceeding 4000 MW, but not so much up to now has been done on the offshore area outside Europe.The European four years experience on the prototypical offshore wind farms looks significantly promising and suggests to promote a similar approach in many densely populated coastal countries in the world with high electricity demand.Results of studies are presented on the offshore wind potential in the European countries and of the tentative evaluation for the Mediterranean basin, and the seas of USA and China. A review is made of the offshore applications, particularly for the Nothern European seas.Economy and environmental trends are illustrated in parallel to those of maturing offshore technology. It is suggested to prepare an action plan to promote the development of the offshore applications in the world context.     

The world distribution of commercial energy consumption

Inequality in the world distribution of income has been widely studied. A related problem is the worldwide maldistribution of per capita energy consumption. This article examines trends in the international distribution of energy use over the period 1950–1975. Lorenz curves are used to show that during this 25-year period inequalities in energy consumption have decreased slowly. Most of this redistribution has however occurred among countries in the top 30% of energy consumers. Of the remaining countries only China has significantly increased its per capita consumption. If China is excluded 60% of the world's population accounts for only 10% of total world consumption. This imbalance has remained unaltered since 1950.     

Promoting regional energy co-operation in South Asia

Energy is a key ingredient of the socio-economic development of any region. South Asia is not only one of the fastest growing regions in the world; it is also one of the poorest, which thus puts energy at the very heart of the development process in the region. This paper looks at the challenges faced by the South Asia sub-region for economic co-operation (SASEC) comprised of Bangladesh, Bhutan, India and Nepal, and also at the role of greater regional energy co-operation therein. The region is characterized by pressures of growing economies and increasing population. While the per capita energy consumption is one of the lowest in the world, energy intensity continues to be very high. A large portion of the population lacks access to modern sources of energy and depends on traditional sources that are not only inefficient but also have severe health and environmental problems associated with them. Increasing oil import dependency and huge investment needs for energy market development pose a further challenge. The region has a good resource potential and tremendous scope for energy co-operation, which can play a key role in addressing many of these energy security concerns and in putting it on the path of sustainable development. It is ironic that the record in the area has been so limited and that too in the most basic form of co-operation, i.e. bilateral arrangements between countries. This paper puts forth a multi-pronged strategy for sub-regional energy co-operation encompassing softer options aimed at confidence building to more substantial and larger scale co-operation efforts. Delays in decision making to ensure stronger and mutually beneficial co-operation efforts are associated with high costs not only to the energy sector but also for the entire development agenda. With the precarious energy situation in the region and unprecedented increases in international oil prices seen in recent times, it is high time for policy makers, financing institutions, NGOs and the civil society to push for a greater integration of the SASEC energy sector.     

Reconciling energy efficiency and energy intensity metrics: an integrated decomposition analysis

We develop and illustrate a method for reconciling index decomposition analysis of energy intensity with physically based, sector-specific energy efficiency indicators. Decomposition analysis of individual sector intensity contributions to total energy intensity is nested within the higher-order decomposition analysis of E/GDP such that the contribution of energy efficiency gains to changes in total energy intensity can be determined. Energy, economic and physical activity data for Canada for the period 1995–2010 are used to illustrate the method. Intrasector structural factors were found to be both positive and negative and to be significant contributors to energy intensities in both the business and household sectors. In aggregate, intrasectoral structural change offset energy efficiency gains and put upward pressure on (E/GDP) between 1995 and 2010 but was three times smaller than the offsetting decline in E/GDP due to intersectoral structural change. The method can be used for assessing the contribution of energy efficiency to sector energy intensities; for placing energy efficiency policies in the larger context of the other factors that determine an economy’s energy intensity and greenhouse gas emissions; for identifying non-efficiency policy targets for improving energy productivity; and for increasing the sophistication of forecasting and scenario analysis of future levels and patterns of fuel and electricity consumption and related greenhouse gas emissions.