A comparative study of energy and carbon efficiency for emerging countries using panel stochastic frontier analysis

Abstract

The demand for energy has been increasing significantly worldwide. Consequently, carbon emissions have accelerated, since energy usage involves carbon dioxide. Given that the available energy has quantitative restriction feature, efficient usage of energy becomes crucial. Energy efficiency is expected to improve over time with technological advancements. However, the adoption of low-carbon energy technology caused by the growing concern about carbon emissions may actually offset energy efficiency, owing to the higher cost compared with traditional energy methods. We conducted a stochastic frontier analysis to examine energy efficiency in the views of both economic and ecological aspect view during 1995-2016 for 21 emerging countries selected from Morgan Stanley Capital International, using energy consumption, economic complexity index and the other factors of production based on the Cobb-Douglas production function. Mexico was identified as one of the most energy-efficient countries; however, Mexico could not be classified as real energy efficient, as it demonstrated the highest carbon inefficiency level. We also categorized countries demonstrating increased economic energy efficiency and decreased carbon inefficiency as frontier country, and identified six such countries.