1.1 Research motivation
Energy is one of the most important basic elements for human’s living from time immemorial. In the last two centuries, thanks to scientific progress, the energy constraint has progressively loosened to improve greatly the energy efficiency from petro-fossil fuels including coal, oil, and gas. The revolution has sparked unprecedented economic development. However, perto-fossil fuels are limited while energy consumption and economic development are unconstrained.
Meanwhile, energy production and consumption have undeniable environmental repercussions. The effects of economic growth using energy on natural and environmental resources have become a central question with the rising concern over environment preservation. “Sustainable development” becomes an important policy target for every country. Ever since the Kyoto Protocol became effective in February 2005, the production and consumption of fossil fuels has been a focal point of energy policy in many economies including developed and developing ones.
The energy system plays a central role in the interrelated economic, social, and environmental aims of sustainable human development (WCED, 1987).
For achieving sustainable development, energy policy relies on three main aspects (Jean-Baptiste and Ducroux, 2003):
1. Energy conservation: improved energy efficiency and energy saving.
2. Carbon waste management: reducing the emissions of greenhouse gases (GHG).
3. Evolution of the energy mix: replacement of high carbon fuels (coal, oil) by lower carbon content hydrogenated fuels (natural gas), and greater reliance on non-carbon dioxide (non-CO2) emitting energies like hydropower, nuclear, wind, biomass, and solar.
Before new and substitute fuels become available, improving energy saving and reducing CO2 emissions are two musts in order to make economic growth possible and achieve sustainable development. Despite the continuing policy interest and the very many reports and books written on the topic of targets on saving energy saving and reducing CO2 emissions, little attention has been given to set the “real” target considering the effects of complements or substitutes with other factors.
The commonly used indicator of energy inefficiency is the energy intensity as a direct ratio of the energy input to GDP. However, there has been widespread criticism of using energy intensity for measuring energy efficiency (Patterson, 1996).
Energy is the prime source of value, because other factors of production such as labor and capital cannot do without energy (Ghali and El-Sakka, 2004). The use of the energy (in)efficiency indicator in conjunction with labor and capital can provide useful insights into whether or not energy inputs act as complements or substitutes to other inputs (Patterson, 1996). At the same situation, according to the Kyoto Protocol, the targets to reduce GHG emissions are the certain percent from 1990 level. Those targets result from negotiation and compromise instead of a rational model or a scientific approach. Many people worry that the extremely reducing emissions will limit economic growth.
Given the limited availability of economically viable alternative energy sources, reducing total domestic energy use and total CO2 emissions without reducing economic growth is important issues for economies all over the world. Considering environmental-energy policies, energy saving target (EST) and CO2 abatement target (CAT) are hence important for all economies. Therefore, effective and rational indicators of EST and CAT resulting from a scientific model considering other factors should be further studied. According to these indicators, energy policy makers can measure and evaluate the real energy efficiency and CO2 intensity and
really coordinate the development of energy, environment, and economy for economies.
Asia-Pacific Economic Cooperation (APEC) economies include the fastest economies in the world and have attracted the most foreign capital, technology, as well as managerial know-how during the past 20 years. Fast-developing economies definitely add pressure to petro-fossil fuels’ depletion and CO2 abatement. In the period from 1980 to 2000, primary energy supply average 2.2% growth per annum, in contrast with 3.5% growth in real GDP over the same period. CO2 emissions from fuel combustion grew by 2.0% per annum from 1992 to 2000 (APEC, 2002).
Growth in energy consumption, particularly in industrializing Asia, is being driven by rising incomes and higher standards of living. Income and energy use levels in economies such as China and Indonesia are still very low compared to the APEC average. Therefore, energy consumption growth in Asia, excluding Japan, will continue at a brisk pace for many years to come. In recent years, APEC has been promoting energy efficiency as a way of reducing or minimizing energy consumption without sacrificing quality of life in the Asia-Pacific region (APERC, 2001). Therefore, finding efficient ESTs and CATs s without reducing the potential maximum economic outputs has become a very important issue for APEC economies.
1.2 Research purpose
The main interest of this study is to address the issues related to the analysis of energy efficiency and CO2 intensity and the potential application and strengths of DEA in assessing the targets of energy saving and CO2 abatement for APEC economies. This study can provide additional suggestions for energy and environment policies of APEC economies.
The first purpose of this study is to establish a common methodology for constructing input-reducing efficiency indicators based on DEA approach to analyze APEC economies. Through the DEA model, we can provide the relative
comparison base for the input usage efficiencies of APEC economies considering different inputs. The result can provide the real ‘best practices’ among APEC economies.
The second purpose is to construct environmental-energy efficiency indicators for the whole economy of APEC member economies based in the above methodology. Through the results of DEA, we can construct total-factor environmental-energy efficiency indicators of APEC economies. The environmental-energy efficiency indicators are more efficient than the traditional partial-factor indicators.
The third purpose develops economic energy savings and CO2 abatement potentials in APEC economies for environmental-energy policies. We can calculate the EST from the results of DEA for every APEC economy. The EST can present the possible energy savings without reducing the maximum potential economic outputs and provide some suggestions about the energy policy for APEC economies, and CAT means the target of CO2 abatement without reducing real economic growth.
The forth purpose is to identify and produce an overview of successful energy efficiency policies and programs in APEC economies. According the best practice, EST, and CAT resulted from DEA approach, the policy-makers in the inefficient APEC economy can learn and transfer the experts and technologies from efficient economies to improve environmental-energy efficiency.
The fifth purpose concerns the relation among environmental-energy efficiency, income level, and industry structure. Environmental-energy efficiency is influenced by industrialization and economic income level. This study use panel data approach to analyze the environmental-energy efficiency to compare with income level and the industry structure, respectively. The results will provide policy suggestions for the policy-makers of APEC economies to evaluate and identify their policies and programs according their income level, and to improve their environmental-energy efficiency by adjusting their industry structure.
1.3 Organization of the dissertation
This dissertation is organized as follows and shown as Figure 1: Chapter 1 presents the motives and purposes of the study, and introduces the structure of this study. Chapter 2 discusses the issues of environmental-energy policies among APEC economies and prior literatures related this study. Chapter 3 proposes a research design that includes the explanation how to construct the total-factor model based on DEA to construct the input-reducing efficiency. Environmental-energy efficiency indicators, including EST and CAT, are then calculated. Summary statistics of the empirical data also are shown in this chapter. Chapter 4 presents and discusses the empirical results. Finally, Chapter 5 concludes this dissertation.
Chapter 1 Introduction y Research motivation y Research purpose
y Organization of the dissertation
Chapter 2
Environmental-Energy Policy y Energy efficiency
y CO2 emissions y APEC economies
y Energy and CO2 emissions status in APEC economies
y Overview of energy efficiency policies in selected APEC economies y DEA studies considering energy and CO2 emissions
Chapter 3 Research Design y Production model y Methods
y Analysis Process y Data description
Chapter 5 Concluding Remarks
Chapter 4 Empirical Analysis y Energy saving targets for APEC economies y CO2 abatement targets for APEC economies
y Relation between EST and GDP for APEC economies y Relation between EST and GDP for APEC economies y Comparison to partial-factor indicators
y Relation among ESTR and industrial structure indicators y Relation among ESTR and industrial structure indicators
Figure 1 Research flow chart