Energy Efficiency in the Manufacturing Sector of the OECD: Comparative Analysis of Price Elasticities in the Intensive and Extensive Sectors

44 Pages Posted: 21 Apr 2015

See all articles by Steven Parker

Steven Parker

Victoria University - Victoria University of Technology

Brant Liddle

Independent

Date Written: April 19, 2015

Abstract

Energy intensity in the OECD manufacturing sector has been falling since the oil crises in the 1970s. Studies in energy intensity identified that spatial considerations are important, and there exists a great deal of heterogeneity in energy intensities amongst countries and sectors. This paper further explores these recent findings in the OECD manufacturing sector. In this paper industrial energy intensity is decomposed to identify which drivers, technological efficiency or structural change, were contributing to that change. Then applying recent panel time series techniques, which account for heterogeneity and cross-section dependence, estimate the impacts of prices on the factors driving industrial energy intensity. The results from this decomposition tend to support existing findings that the technological efficiency effect is the major driver for reduction in energy intensity. Also the results generally indicated that there is little difference between the intensive and extensive sector efficiencies, with both moving in tandem contributing to improved energy use. Further, the estimation results indicate that rising prices does lead to improved efficiency; however the effects are varied across countries and sectors.

Keywords: industrial energy efficiency, index number decomposition, time series panel data

JEL Classification: C33, Q41, Q43

Suggested Citation

Parker, Steven and Liddle, Brant, Energy Efficiency in the Manufacturing Sector of the OECD: Comparative Analysis of Price Elasticities in the Intensive and Extensive Sectors (April 19, 2015). USAEE Working Paper No. 15-207, Available at SSRN: https://ssrn.com/abstract=2596253 or http://dx.doi.org/10.2139/ssrn.2596253

Steven Parker

Victoria University - Victoria University of Technology ( email )

P.O. Box 14428
Melbourne, Victoria 8001
Australia

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