APEC經濟體之總要素環境能源效率

全文

(1)國立交通大學經營管理研究所博士論文 No.114. APEC 經濟體之總要素環境能源效率. Total-Factor Environmental-Energy Efficiency of APEC Economies. 研究生：高志宏指導教授：胡均立教授. 中華民國九十五年七月.

(2) 國立交通大學經營管理研究所博士論文 No.114. APEC 經濟體之總要素環境能源效率 Total-Factor Environmental-Energy Efficiency of APEC Economies. 研究生：高志宏研究指導委員會：胡均立教授丁. 承教授. 楊. 千教授. 指導教授：胡均立教授. 中華民國九十五年七月.

(3) APEC 經濟體之總要素環境能源效率 Total-Factor Environmental-Energy Efficiency of APEC Economies. 研究生：高志宏. Student：Chih-Hung Kao. 指導教授：胡均立. Advisor：Jin-Li Hu. 國立交通大學經營管理研究所博士論文. A Dissertation Submitted to Institute of Business and Management College of Management National Chiao Tung University in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy in Business and Management July 2005 Taipei, Taiwan, Republic of China. 中華民國九十五年七月.

(4) A P E C 經濟體之總要素環境能源效率. 研究生：高志宏. 指導教授：胡均立教授. 國立交通大學經營管理研究所博士班. 中文摘要. 能源係人類生活中的重要元素。隨著經濟的持續發展，能源消耗亦大量增加，但能源卻有其供給上限。同時，能源的生產及消費所產生的廢氣對環境產生極大的衝擊。因此，使用能源以促進經濟發展，並兼顧環境保護的議題日漸重要，並為能源政策中重要的一環。在新燃料及替代能源具可行性及經濟性以前，為維持經濟發展需要，在制定環境能源政策上，提昇能源效率及降低二氧化碳(CO2)排放量成為兩大主軸。尤其是發展中及工業化國家，更注重這兩方面的議題。過去能源學者如Patterson (1996)及Wilson et al. (1994)曾建議能源效率應以總要素概念進行衡量，但過去文獻仍均採用部分要素指標進行環境能源效率之衡量及比較。本文嘗試使用資料包絡分析法，建構總要素資源投入減量指標，再發展出總要素環境能源指標，以探討環境能源政策中，有關節能效率及CO2減量議題，並以APEC經濟體為例進行探討。透過建構出的總要素環境能源指標與實際投入量的比較，分別就能源及CO2 ，以分析各經濟體的節能目標及CO2 減量目標。本文亦就環境能源效率與經濟發展及產業結構之關聯進行分析，同時審 i.

(5) 視APEC中主要經濟體的能源效率政策，以提供各經濟體於制定提昇能源效率及降低CO2 排放量的環境能源政策上的政策建議及方案構想。本研究分析 1991 年至 2000 年間亞太經濟合作(APEC)中 17 個經濟體的環境能源效率。名目變數均已轉換為以 1995 年為基準年的購買力(PPP)實質變數。本研究主要發現如下：(1)中國的環境能源效率最低，並在能源消耗及CO2 減量上，具有最大可減少量及比率（約 50%）。(2)香港、菲律賓及美國是APEC中最具有環境能源效率的三個經濟體，可為其他經濟體在環境能源政策上仿傚及學習的標竿。 (3)APEC經濟體的總體及個別環境經濟效率都在逐年提昇中。(4)人均節能目標與人均GDP間有倒U型的關係存在。(5)人均 CO2減量目標與人均GDP間存有環境顧志耐曲線的關係。(6)環境能源效率與服務業對 GDP的貢獻比重呈正相關。工業對GDP的貢獻比重愈高，能源使用效率愈差。發展中及新興工業國家不僅可持續投入資源以維持經濟發展，更可透過節能及CO2減量以兼顧永續發展。經由本文的研究分析，無效率的APEC經濟體在制定政策計畫時，可向有效率的經濟體已施行的政策經驗借鏡，且不會妨礙國家的經濟發展。透過APEC的跨國際合作，可減少成本並增加新政策成功的機會。. 關鍵詞：資料包絡分析法、環境能源政策、總要素能源效率、總要素節能目標、總要素二氧化碳減量目標、產業結構. ii.

(6) Total-Factor Environmental-Energy Efficiency of APEC Economies Student: Chih-Hung Kao. Advisor: Dr. Jin-Li Hu. Institute of Business and Management National Chiao Tung University. ABSTRACT Energy is one of the most important basic elements for human’s living from time immemorial. Perto-fossil fuels are limited while energy consumption and economic development are unconstrained. Meanwhile, energy production and consumption have undesirable environmental repercussions. The effects of economic growth using energy on natural and environmental resources have become a central question with the rising concern over environmental protection.. Before new and alternative fuels become. available, improving energy efficiency and reducing CO2 emissions are two necessities for an economy to design national environmental-energy policy while remaining its economic development possibilities. Although some energy scholars, such as Patterson (1996) and Wilson et al. (1994), suggested using total factor indicator to evaluate energy efficiency, the existing literature all uses partial-factor indicators to analyze environmental-energy efficiency. This study tries to use the data envelopment analysis (DEA) approach for constructing a total-factor framework which is then applied to study APEC economies. Input-reducing targets are extracted from the total-factor framework. Environmental-energy efficiency indicators are also derived from the same total-factor framework. The potential energy savings and CO2 abatement also result from the environmental-energy efficiency indicators. This study also overview the energy efficiency polices in selected APEC. iii.

(7) economies for providing policy and program ideas for reducing consumption and emission growth. Seventeen APEC economies during 1991 to 2000 are analyzed. All nominal variables are transformed into real variables by the purchasing power parity (PPP) at the 1995 price level. The DEA approach is used to construct environmental-energy efficiency indicators for APEC economies without reducing their maximum potential gross domestic productions (GDPs) in each year. The production function with inputs including labor and capital as well as energy and CO2, respectively, is analyzed, while GDP is the single output. The major findings are as follows: (1) China has the worst environmental-energy efficiency and has the largest potential energy savings and CO2 abatement almost half of its current amount. (2) Hong Kong, the Philippines, and the United States have the highest environmental-energy efficiency.. (3) The. environmental-energy efficiency generally increases for APEC economies. (4) An inverted U-shape relation exists between per capita potential energy savings and per capita GDP. (5) An Environmental Kuznets Curve (EKC) relation exists between per capita CO2 abatement target and per capita GDP.. (6) The higher value-added. percentage of GDP by the service sector has more efficient environmental-energy efficiency. The higher value-added percentage of GDP by the industry sector has more inefficient energy consumption.. Keywords: Data envelopment analysis (DEA), Environmental-energy policy, Totalfactor energy-saving target (EST), Total-factor energy-saving target ratio (ESTR), Total-factor CO2 abatement target (CAT), Industrial structure. iv.

(8) 誌謝回顧四年，一路走來，有掙扎，有自責，有痛苦，但也有歡笑，然至這一切都不比上此刻的心情如此深刻，也許這正反映著這所有學習過程中的一切情緒。今日得償獲得博士學位，首要感謝胡均立老師於就學及論文寫作期間給予的指導及協助，他亦師亦友的教學態度及溫文謙和的處事態度，讓我印象深刻。從他身上學習到的，不僅止於學問上的知識，更包括了論文的寫作能力及對待自己成品的嚴謹態度，也讓我看到身為人師的典範及立身於社會的責任及勇氣。同時要感謝博士論文指導委員會師長丁承教授與楊千教授，以及論文計畫書口試委員黃仁宏教授給予的寶貴指導及建議，使得論文研究架構更為完整。還要感謝博士口試委員林師模博士、郭憲章博士、邱俊榮博士、李育明博士及邱永和博士的精闢建議及意見，使得論文內容及結構得以更為完善及充實。還要感謝與我同屆的博士班同學們、所上蕭慧娟小姐及林育萍小姐，你們的友誼、勉勵及協助是我在就讀期間所得到最珍貴的財產。此外，所有在我論文寫作期間曾經鼓勵及協助我的朋友們實在太多，無法一一列舉，謹在此獻上我最誠摯的感謝。最後，我要將博士學位的成果獻給我最敬愛的父母親，感謝他們的養育及栽培，還有他們的包容及支持，沒有他們，絕沒有今天的我，我如果有一點的成就，都是他們賜與我的。拿到博士學位，並不是一個結束，而是一個新的開始：開始一個新的人生歷程及處習態度。高志宏謹致中華民國 95 年 8 月 8 日. v.

(9) Table of Contents. 中文摘要............................................................................................................................i ABSTRACT....................................................................................................................iii 誌謝................................................................................................................................... v Table of Contents ...........................................................................................................vi List of Tables ................................................................................................................viii List of Figures.................................................................................................................ix List of Abbreviations ...................................................................................................... x Chapter 1 Introduction................................................................................................... 1 1.1 Research motivation............................................................................................ 1 1.2 Research purpose ................................................................................................ 3 1.3 Organization of the dissertation .......................................................................... 5 Chapter 2 Environmental-Energy Policy ..................................................................... 7 2.1 Energy efficiency ................................................................................................ 7 2.2 CO2 emissions..................................................................................................... 9 2.3 APEC economies .............................................................................................. 12 2.4 Energy consumption and CO2 emissions status in APEC economies .............. 16 2.5 Overview of energy efficiency policies in selected APEC economies............. 18 2.5.1 Energy efficiency policies in developed APEC economies................... 19 2.5.1.1 The industrial sector.................................................................... 19 2.5.1.2 The residential and commercial sector ....................................... 20 2.5.1.3 The transport sector..................................................................... 21 2.5.2 Energy efficiency policies in selected APEC non-OECD economies ... 22 2.5.2.1 Chile............................................................................................ 22 2.5.2.2 China ........................................................................................... 22 2.5.2.3 Hong Kong.................................................................................. 23 2.5.2.4 South Korea ................................................................................ 24 2.5.2.5 Mexico ........................................................................................ 24 2.5.2.6 The Philippines ........................................................................... 25. vi.

(10) 2.5.2.7 Taiwan......................................................................................... 25 2.5.3 Remarks on energy efficiency policies in selected APEC economies... 26 2.6 DEA studies considering energy and CO2 emissions ....................................... 27 Chapter 3 Research Design .......................................................................................... 31 3.1 Production model .............................................................................................. 31 3.2.1 Partial-factor energy efficiency indicator .............................................. 33 3.2.1 Total-factor energy efficiency indicator ................................................ 36 3.2.3 Wilcoxon signed rank test...................................................................... 42 3.2.4 Analysis of panel data............................................................................ 44 3.2.5 Hausman test.......................................................................................... 45 3.3 Analysis process................................................................................................ 46 3.4 Data description ................................................................................................ 49 Chapter 4 Empirical Analysis...................................................................................... 55 4.1 Energy-saving targets for APEC economies..................................................... 55 4.2 CO2 abatement targets for APEC economies.................................................... 59 4.3 Relation between EST and GDP for APEC economies.................................... 63 4.5 Comparison to partial-factor indicators ............................................................ 65 4.4.1 Comparison to partial-factor energy efficiency ..................................... 65 4.4.2 Comparison to partial-factor CO2 intensity ........................................... 66 Chapter 5 Concluding Remarks .................................................................................. 71 References...................................................................................................................... 75 Appendix........................................................................................................................ 84 Curriculum Vitae .......................................................................................................... 87. vii.

(11) List of Tables Table 1. Energy efficiency policies in the industrial sector, developed APEC economies ....................................................................................................... 19. Table 2. Energy efficiency policies in the residential and commercial sector, developed APEC economies .......................................................................... 20. Table 3. Energy efficiency policies in the transport sector, developed APEC economies ....................................................................................................... 21. Table 4. Summary of energy efficiency policies in Taiwan......................................... 26. Table 5. Average annual amounts and growth rates of real GDP, real capital, labor, and energy consumption (1991-2000)............................................................ 52. Table 6. Percentage in total energy consumption and CO2 emissions of APEC economies in 1991, 1995, and 2000 ............................................................... 53. Table 7. Correlation Coefficients between inputs and the output for APEC economies ........................................................................................................................ 54. Table 8. Summary of ESTR for each APEC economy (1991-2000) ........................... 55. Table 9. Energy-saving target for each APEC economy (1991-2000)......................... 57. Table 10 Per capita energy-saving targets for each APEC economies (1991-2000) .... 58 Table 11 Summary of CATR for each APEC economy (1991-2000)........................... 59 Table 12 CO2 abatement target for each APEC economy (1991-2000)........................ 61 Table 13 Per capita CO2 abatement targets for each APEC economies (1991-2000)... 62 Table 14 Relation between per capita energy-saving target and per capita GDP for APEC economies (random-effects panel data model estimation).................. 63 Table 15 Relation between per capita CO2 abatement target and per capita GDP for APEC economies (random-effects panel data model estimation).................. 64 Table 16 Energy intensity for each APEC economies (1991-2000) ............................. 66 Table 17 CO2 intensity for each APEC economies (1991-2000) .................................. 67 Table 18 Relation among ESTR and industrial structure indicators for APEC economies (random-effects panel data model estimation) ............................. 68 Table 19 Relation among CATR and industrial structure indicators for APEC economies (random-effects panel data model estimation) ............................. 70. viii.

(12) List of Figures. Figure 1 Research flow chart .......................................................................................... 6 Figure 2 APEC member economies.............................................................................. 13 Figure 3 Organizational structure of APEC.................................................................. 15 Figure 4 Production model for evaluating energy efficiency ....................................... 31 Figure 5 Production model for evaluating CO2 abatement target................................. 32 Figure 6 DEA representation of ‘best practice’, target, radial adjustment, and input slacks .............................................................................................................. 39 Figure 7 Environmental Kuznets curve ........................................................................ 65. ix.

(13) List of Abbreviations. CAT. CO2 abatement target. CATR. CO2 abatement target ratio. CO2. Carbon dioxide. CRS. Constant returns to scale. DEA. Data envelopment analysis. EKC. Environmental Kuznets curve. EST. Energy-saving target. ESTR. Energy-saving target ratio. GDP. Gross domestic product. GHG. Greenhouse gases. IRT. Input-reducing target. IRTR. Input-reducing target ratio. Mt-C. Millions tons of carbon. Mtoe. Millions of tons of oil equivalent. OECD. Organization for Economic Cooperation and Development. OTE. Overall technical efficiency. PTE. Pure technical efficiency. SE. Scale efficiency. t-C. Tons of carbon. TFCE. Total-factor CO2 abatement efficiency. TFEE. Total-factor energy efficiency. TFIE. Total-factor input efficiency. toe. Tons of oil equivalent. VRS. Variable returns to scale. x.

(14) Chapter 1 Introduction. 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. unprecedented economic development.. The revolution has sparked. 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.. 1.

(15) 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. 2.

(16) 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 3.

(17) 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. 4.

(18) 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.. 5.

(19) 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 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. Chapter 5 Concluding Remarks. Figure 1 Research flow chart. 6.

(20) Chapter 2 Environmental-Energy Policy. In recent decades, the concerns of environmental pollution and natural resource consumption have become more important in parallel to rapid world economic growth. Energy is required in all production process and fossil fuels have been a key energy carrier since the Industrial Revolution. Combustion of fossil fuels causes emissions of CO2, a substance that is associated with global warming (Lindmark, 2004). There are existed several possibilities to reduce the CO2 emissions of an economy, the most habitual ones from macroeconomic perspective being: (i) reduction of economic output (GDP), (ii) reduction of the energy intensity of the economic production or (iii) reduction of the CO2 intensity of the energy production (Kaivo-oja and Luukkanen, 2004). The first option is usually not interesting for the policymakers. So the key question in this study is how energy efficiency can be developed and how many CO2 emissions can be reduced without reducing economic output. 2.1 Energy efficiency Worldwide energy consumption has risen 30% in the last 25 years. Industrialized economies consume about four times more than the world average. As economic growth is being pursued in economies such as China, India, and Brazil, the energy consumption is expected to increase further (Lopes et al., 2005). Fastdeveloping economies and fast-growing energy consumption definitely add pressure to petro-fossil fuels’ depletion.. Meanwhile, energy is a key issue in the. considerations of the World Summit on Sustainable Development and the Johannesburg Summit 2002 brochure notes that: “Governments, business and communities need to improve energy efficiency while expanding access to energy sources around the world. Most importantly, the energy sources employed in all regions must be economically viable, socially acceptable and environmentally sound.”. 7.

(21) Given the limited availability of economically viable alternative energy sources, reducing total domestic energy use without reducing economic growth is an important issue for economies all over the world (de Nooij et al., 2003). Therefore, before new and substitute fuels become available, improving energy efficiency and energy saving is a must in order to make economic growth possible. However, many people worry that drastic savings in energy will hamper economic growth. Therefore, finding efficient energy saving target (EST) without reducing the potential maximum economic growth has become a very important issue. Ever since the Kyoto Protocol became effective in February 2005, reducing the consumption of fossil fuels has been a focal point of environmental policy in many economies including developed and developing ones (de Nooij et al., 2003). The energy system plays a central role in the interrelated economic, social, and environmental aims of sustainable human development (WCED, 1987). Energy issues must be integrated with environmental management to achieve sustainable development, especially for fast-developing economies.. Energy efficiency. improvement is the key to sustainable energy management. For example, European Union estimates that realizing 10% to 20% of efficiency potential in the European use of electricity would save 10 to 20 billion European Currency Unit (ECU) annually in term of fossil fuels use. In Malaysia, it is expected that aggressive deployment of energy efficiency could save about US$1.38 billion by 2015 (Keong, 2005). The economic energy efficiency potentials of various industries range from 2% to 18% in the United States in 2010, 5% to 40% in China in 2010, and 2.2% to 28.5% in Thailand 2005 (WEC et al., 2000). Hu and Wang (forthcoming) also indicate that China can improve its energy efficiency in various regions without reducing its potential economic growth. These studies also show that developing economies have more energy efficiency potentials than developed ones. Patterson (1996) indicates that the importance of energy efficiency as a policy objective is linked to commercial, industrial competitiveness and energy security. 8.

(22) benefits, as well as increasingly to environmental benefits such as reducing CO2 emissions. Energy efficiency is a generic term, and there is no one unequivocal quantitative measure of ‘energy efficiency’. In general, energy efficiency refers to using less energy to produce the same amount of services or useful outputs. On the other hand, since energy consumption is responsible for roughly 90% of CO2 emissions, energy efficiency indicators can also be used for environmental monitoring. Energy efficiency studies are not only for the purpose of reducing energy use for economic reasons but also for environmental protection, through reduction of CO2 emissions. Energy efficiency improvements are an important tool for mitigating GHG emissions (APERC, 2001). 2.2 CO2 emissions Energy consumption in economic sectors is directly linked with CO2 emissions. Expanding economic activities impose the greenhouse effect at local and global levels.. However, the relation between economic growth and environmental. degradation has been widely debated since the late 1960s (Lindmark, 2004). One line of argumentation has stressed that economic growth leads to degradation of the environment, a view that was brought forward in the Limits to Growth study (Meadows et al., 1972, 1992). As a reaction to these conclusions, economists have argued in favor of growth as a precondition for an improved environment (for instance, Beckerman, 1975). Since the 1992 Rio summit, a new clean production paradigm, defined by environmental programs of the United Nations and Organization for Economic Cooperation and Development (OECD), is becoming widespread.. This new. paradigm augments the old reactive one, based on assimilation capacity, critical loads, and control – end of the pipe – solutions, taking into account new principles that add an additional parameter to the production/consumption system: the explicit consideration of environmental protection at all stages. This new clean production strategies approach is based on the principles of precaution, prevention, and. 9.

(23) integration, i.e. the effects of hazard displacement (Hirschhorn et al., 1993). The principle of prevention states that future technology developments should reduce potential pollution emissions and thus, the risk of environmental damage at source (Zofío and Prieto, 2001). The issue of global warming is becoming a major and unavoidable element of world energy policy. The United Nations Convention on Climate Change marked the first step towards an international determination to limit releases of GHG. In December 1997, 39 developed economies signed the Kyoto Protocol to curb the emissions of GHG including CO2, methane, nitrous oxide, hydro-fluorocarbons, perfluorocarbons, and sulphur hexafluoride. The largest contributor to the greenhouse effect is CO2 emissions.. In 1995, it accounted for about 82% of total GHG. emissions from developed economies whereas methane was 12% and nitrous oxide about 4% (UNEP, 1999). The emissions of the other three remaining gases are less than 2%. Therefore, reducing CO2 emissions has been a focal point of energy and environmental policy in many economies. As rising atmospheric concern about global warming and dependence on fossil fuels grows, the search for reducing carbon dioxide emissions becomes a matter of widespread attention. Considering the present 85% share of the world energy supplied by fossil fuels, and knowing the time needed for new energy systems to penetrate to their market potential, capturing and sequestering CO2 appears as an efficient response to the CO2 problem. Moreover, in the long term, CO2 sequestration will allow us to keep on exploiting the large coal and natural gas reserves that represents a substantial share of the world available energy sources (Jean-Baptiste and Ducroux, 2003). Although there was general agreement about the need to control emissions, lots of problems arise when fixing reduction commitments. The main problem is to establish the targets of emissions limitations for different economies. While rich economies fear the dangers to economic growth of limiting their emissions, poor economies argue the great inequality in the distribution of CO2 emissions across. 10.

(24) economies in current and past emissions for not limiting their development possibilities with mitigation policies. The different relative responsibilities of the inhabitants of different economies and groups of economies and the problems generated by this inequality constitute fundamental features to be taken into account in the negotiations among economies on the actions for mitigating the emissions of GHG. As the consideration of economic growth and climate policy, the USA proposal was to establish heterogeneous targets of emissions limitations while the EU proposal was to establish as large a homogeneous reduction as possible at least for the USA, Japan, and the EU for the Kyoto Protocol (Bengochea-Morancho et al., 2001). Finally, the Kyoto Protocol (1997) set a specific timetable for each economy under the Convention on Climate Change, with a view to reducing their overall emissions of such gases by at least 5 percent below 1990 levels in the commitment period 2008 to 2012. The European Union, United States, Canada, and Japan could reduce their emissions relative to 1990 levels by 8%, 7%, 6%, and 6%, respectively. Only three economies (Island, Australia, and Norway) are allowed to increase their emissions relative to 1990 levels by 10%, 8%, and 1%, respectively.. Russia,. Ukraine, and New Zealand may keep their emissions at the 1990 level. The rest of the industrialized economies are required to reduce their emissions 6% to 8% from 1990 levels in the 2008 to 2012 period. Especially, the developing economies were not given any specific reduction commitments in the Kyoto Protocol. However, the reduction is compared to the levels of 1990, which is the base year for the Kyoto Protocol, during the first commitment period 2008 to 2012. The targets somewhat come from negotiation and compromise.. The targets might. mislead the country’s policy and limit the economic growth and the ability of competition. That maybe is the reason that the USA do not want to ratify the Protocol until some of the lesser-developed economies (particularly China, India, and Brazil) agree to curb their emissions.. 11.

(25) The inequality in the distribution of CO2 emissions across economies is one of the most relevant issues for the design of global climate policies. While rich economies fear the dangers to economic growth of limiting their emissions, poor economies argue the great inequality in current and past emissions for not limiting their development possibilities with mitigation policies. The different relative responsibilities of the inhabitants of different economies and groups of economies and the problems generated by this inequality constitute fundamental features to be taken into account in the negotiations among economies on the actions for mitigating the emissions of GHG. 2.3 APEC economies Asia-Pacific Economic Cooperation (APEC) was established in 1989 to further enhance economic growth and prosperity for the region and to strengthen the AsiaPacific community. APEC is the premier forum for facilitating economic growth, cooperation, trade and investment in the Asia-Pacific region. APEC is the only inter governmental grouping in the world operating on the basis of non-binding commitments, open dialogue and equal respect for the views of all participants. Unlike the WTO or other multilateral trade bodies, APEC has no treaty obligations required of its participants. Decisions made within APEC are reached by consensus and commitments are undertaken on a voluntary basis. APEC has 21 members referred to as ‘member economies’ - which account for approximately 40% of the world's population, approximately 56% of world GDP and about 48% of world trade. It also proudly represents the most economically dynamic region in the world having generated nearly 70% of global economic growth in its first 10 years. APEC's 21 member economies as seen in Figure 2 are: Australia, Brunei Darussalam, Canada, Chile, People's Republic of China, Hong Kong, China, Indonesia, Japan, Republic of Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, The Republic of the Philippines, The Russian Federation, Singapore, Taiwan, Thailand, United States of America, and Viet Nam.. 12.

(26) Taiwan. Note: (1) The color represents the participation year of the economy. (2) Source: APEC Secretariat, 2005.. Figure 2 APEC member economies APEC member economies work together in order to sustain this economic growth through a commitment to open trade, investment, and economic reform. By progressively reducing tariffs and other barriers to trade, APEC member economies have become more efficient and exports have expanded dramatically. A highlight of APEC's achievements in the first 10 years: y Exports increased by 113% to over US$2.5 trillion. y Foreign direct investment grew by 210% overall, and by 475% in lower income APEC economies. y Real gross national product grew by about a third overall, and by 74% in lower income APEC economies. y Gross domestic product per person in lower income APEC economies grew by 61%.. 13.

(27) APEC works in three broad areas to meet the Bogor Goals of free and open trade and investment in the Asia-Pacific by 2010 for developed economies and 2020 for developing economies. Known as APEC's ‘Three Pillars,” APEC focuses on three key areas: y Trade and Investment Liberalization y Business Facilitation y Economic and Technical Cooperation APEC operates as a cooperative, multilateral economic and trade forum. Member economies take individual and collective actions to open their markets and promote economic growth. These actions are discussed at a series of meetings of Senior Officials, Ministers and finally, by the Leaders of APEC's 21 Member economies. APEC policy direction is provided by the 21 APEC Economic Leaders. Strategic recommendations, provided by APEC Ministers and the APEC Business Advisory Council are considered by APEC Economic Leaders as part of this process. APEC structure is shown in Figure 3. The Energy Working Group (EWG) is one of 11 Working Groups operating under the APEC umbrella, bringing together twenty-one economies from the APEC region who currently account for around 60% of world energy demand. EWG, launched in 1990, seeks to maximize the energy sector's contribution to the region's economic and social well-being, while mitigating the environmental effects of energy supply and use.. The EWG provides a multilateral forum for member. economies to cooperate on energy-related issues. The APEC region overall is a net energy importer. Energy imports to APEC economies are projected to increase by approximately 92%, as indigenous (or ‘within economy’) supply fails to keep pace with expanding energy demand driven by economic growth, industrialization and urbanization (APEC, 2006).. 14.

(28) Leaders’ Meeting. APEC Business Advisory Council. Ministerial Meeting. Sectoral Ministerial Meetings. Senior Officials Meeting (SOM) APEC Secretariat. Committee on Trade and Investment. Economic Committee. Budget and Management Committee. SOM Steering Committee on ECOTECH SOM Special Task Groups. Working Groups (WG). Figure 3 Organizational structure of APEC The major EWG initiatives relate to energy security and energy for sustainable development. With respect to sustainable development, ‘Energy for Sustainable Development: The Contribution and Role of the APEC Energy Working Group’ as a Type 2 Partnership Initiative is agreed by APEC Energy Ministers at their 6th meeting. The Initiative demonstrated to a global audience how voluntary regional partnerships can be effectively utilized to achieve sustainable development objectives. Energy for Sustainable Development highlights the four main elements of the EWG’s approach to furthering sustainable development objectives: y Strengthening the security and reliability of affordable energy to all within our APEC community; y Promoting clean and efficient technologies, and the efficient use of energy to achieve both economic gains and environmental enhancement; y Achieving environmental improvement of energy production, use and mineral extraction within our APEC community, and. 15.

(29) y Harnessing all expertise available to the EWG to give effect to the above objectives. Improving energy efficiency and CO2 abatement is the key target for APEC economies to work together and share the knowledge and technology. 2.4 Energy consumption and CO2 emissions status in APEC economies The causes of rapid Asian economic growth and its sustainability have generated considerable debates since the early 1990s (e.g., World Bank, 1993; Krugman, 1994; Kim and Lau, 1994, 1995; Young, 1994, 1995; Chen, 1997; Drysdale and Huang, 1997; Krüger et al., 2000; Chang and Luh, 2000; Iwami, 2004). Many economies have adopted environmental-energy policies and measures, but systematic information is only available for OECD economies. There is hence a significant need to improve environmental-energy policy collaboration among APEC economies and disseminate successful practices. 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. According to the statistics from APEC (2002), the level of primary energy supply in 2000 of 4,665 Mtoe was a rebound after the third year of a financial and economic crisis in Asia, which saw primary energy supply declining in 1998 for the first time in 17 years. In the period from 1980 to 2000, primary energy supply averaged 2.2% growth per annum, in contrast with 3.5% growth in real GDP over the same period. As a result, elasticity of demand was calculated at 0.63 for this period. For the period 1980 to 2000, coal supply rose by and average of 2.4% per annum to reach 1,278Mtoe in 2000. Oil supply rose by an average of 1.4% per annum to reach 1,894 Mtoe in 2000. Gas supply increased 2.0% per annum to reach 893 Mtoe. The supply of hydro, nuclear, etc. grew by 5.2% per annum to reach 479 Mtoe.. 16.

(30) Final energy consumption in the APEC region grew by 1.7% per annum from 2,386 Mtoe in 1980 to 3,335 Mtoe in 2000. This growth rate for 20 years was lower than that of primary energy supply. It indicates that net energy consumption growth in the transformation sector surpassed the final energy consumption sector. In terms of changes in final energy consumption by sector, though the consumption in the industrial sector grew slowly (1.1% from 1980 to 2000), the total of 1,339 Mtoe was the largest for all sectors in 2000. The industry sector share of the total was 40.1%, the transportation sector share 30.1%, and the residential/commercial sector share 24.5% in 2000. By energy source, oil supply grew by 1.7% per annum from 1,210 Mtoe in 1980 to 1,685 Mtoe in 2000. Electricity supply with 624 Mtoe in 2000 marks the eighteenth straight year of increase from 1982. Coal supply dropped to 361 Mtoe in 2000, the fourth year in a row of decline. Developing economies with high demand growth are contributing significantly to increases in CO2 emissions, and use of energy is a major source of CO2 emissions in most of APEC economies.. CO2 emissions in the APEC region from fuel. combustion grew by 2.0% per annum from 2,874 Mt-C in 1992 to 3,362 Mt-C in 2000. As a result, CO2 emissions per total primary energy supply, per real GDP, and per population became 0.72 t-C/toe, 173.5 t-C/US Million-dollar (in 1995 price), and 1.46 t-C/person in 2000 respectively. Currently, specialized journals, technological fairs, multi-nationals’ global marketing strategies, etc. guarantee that new innovations are readily available to all economies (Zofío and Prieto, 2001). The international trade agreements among APEC force economies to be more competitive and the pressure of Kyoto Protocol requires updated technologies, improves input usage efficiency, and reduces CO2 emissions.. Facing the growth of economy, energy consumption, and CO2. emissions, finding efficient ESTs and CATs for APEC economies without reducing the potential maximum economic growth has become very important issues. The energy efficiency and targets of energy saving and CO2 abatement among APEC. 17.

(31) economies are needed further to study. Focusing on the international association as a partnership in sharing technology and resources, we apply the DEA approach using multiple inputs in order to analyze the total-factor environmental-energy efficiency in APEC economies.. This analysis computes the possible energy. savings and CO2 abatements without reducing the maximum potential economic outputs for APEC economies. 2.5 Overview of energy efficiency policies in selected APEC economies APEC economies, especially those undergoing rapid economic development, face serious energy policy challenges as they attempt to build and maintain the energy supply infrastructures needed to ensure national wealth creation and social well-being.. Energy policy must strike a balance in terms of common - but. sometimes conflicting - over-arching goals of economic growth, security of supply, and environmental integrity.. The main drives of energy efficiency policy are. political or industrial, or a combination of both.. In political policy, as each. economy understands its obligations in efforts to protect the global and local environment, it attempts appropriate measures to reduce its emissions of GHG. Regarding industrial policy, many governments are promoting innovative ideas and equipment to enhance energy efficiency.. Many have begun using financial. incentives such as rebates to ensure a greater impact in their economies. Subsidies or incentives offered by government to involve key players in emission reduction efforts have also generated energy efficiency gains, such as through industries opting for more fuel-efficient or technologically improved equipment.. Perhaps the end-use sectors which yield high gains or derive the. greatest energy efficiency savings are the industrial, power generation, transport, and commercial sectors, because of a desire – for political reasons – to meet global environmental concerns. Many economies have adopted energy efficiency policies. The good practice they have accumulated provided valuable lessons for other economies. 18. The.

(32) following is an overview of the status of energy efficiency policies in Australia, Canada, New Zealand, Japan, and the United States. Also included is a review of energy efficiency programs in Chile, China, Hong Kong, China, South Korea, Mexico, the Philippines, and Taiwan (APERC, 2001, 2002). 2.5.1 Energy efficiency policies in developed APEC economies 2.5.1.1 The industrial sector Table 1 summarizes the efforts by each economy in its industrial sector. It is apparent that most of the economies have ongoing energy audit programs with continuous information dissemination systems using training and distribution of brochures, media and so on. Some have industries carrying out demand-side management in order to conserve energy and maximize output. Most have concerns about environmental safeguards. Table 1 Energy efficiency policies in the industrial sector, developed APEC economies Program Type. Australia. Canada. New Zealand. Japan. United States. Energy audits. ×. ×. ×. ×. ×. Information dissemination. ×. ×. ×. ×. ×. Demand side management. ×. ×. ×. ×. ×. Environmental concerns. ×. ×. ×. ×. ×. Industrial concerns. ×. ×. ×. ×. ×. Financial incentives. ×. Regulatory requirements. ×. Innovative incentives. ×. Possible drivers Duration results expected. Industrial and Political. Industrial and Political. Industrial and Political. Industrial and Political. Industrial and Political. Long term. Long term. Long term. Long term. Long term. Note: Source: IEA (2001).. The table shows Japan is promoting energy savings by offering financial incentives or tax rebates. Furthermore, technological advances made by Japan. 19.

(33) (and other economies) may be transferred to developing economies that need to save energy by retrofitting more cost-effective equipment. Australia and New Zealand follow closely in energy savings achievements. The United States is continuing many of its programs despite its reluctance to ratify the Kyoto Protocol.. The international community should maintain. cooperation to reduce GHG emission levels, because safeguarding the global environment is largely the responsibility of industrial nations, which produced a major part of the accumulated GHG emissions in past industrial development. 2.5.1.2 The residential and commercial sector Table 2 summarizes the efforts by each economy in its residential and commercial sector. It is apparent from the table that most of the economies have building codes or standards for residential and commercial buildings. Energy labeling of consumer goods and household appliances may become common practice in the immediate future if mandatory standards are agreed by economies. There are also ongoing programs to continuously disseminate information. Table 2 Energy efficiency policies in the residential and commercial sector, developed APEC economies Program Type. Australia. Canada. New Zealand. Japan. United States. Energy audits. ×. -. -. -. -. Building codes/laws/standards. ×. ×. ×. ×. ×. Energy labeling. Environmental concerns. × × ×. × × ×. × × ×. × × ×. × × ×. Residential/commercial concerns. ×. ×. ×. ×. ×. Information dissemination. ×. Financial incentives. ×. Regulatory requirements Possible drivers Duration results expected. Industrial and Political. Industrial and Political. Industrial and Political. Industrial and Political. Industrial and Political. Long term. Long term. Long term. Long term. Long term. Note: Source: IEA (2001).. 20.

(34) For Australia in the residential and commercial sector, there are no indicatives figures in terms of actual savings or savings potential to date as the programs are still being evaluated, just started or are nearly due for evaluation. For New Zealand only residential sector is considered, as commercial sector is combined with industrial sector. 2.5.1.3 The transport sector Table 3 summarizes the efforts by each economy in its transport sector. It is apparent from the table that most of the economies have strong transport policy frameworks, public transport planning, fuel efficiency standards, and transport concerns.. Some highly developed economies tend to have policies that. encourage road users to favor the best vehicles – those that make less noise and cause less pollution. There is also ongoing dissemination of information by training and distribution of brochures, media and so on for transport equipment purchasers. Road infrastructure, railway lines, airports, wharves, and supporting construction tend to be developed and operated taking into account environmental issues. Table 3 Energy efficiency policies in the transport sector, developed APEC economies Australia. Canada. New Zealand. Japan. United States. Transport policy framework. ×. ×. ×. ×. ×. Fuel efficiency standards. ×. ×. ×. ×. ×. Efficient public transport planning. ×. ×. ×. ×. ×. Information dissemination. ×. ×. ×. ×. ×. Environmental concerns. ×. ×. ×. ×. ×. Transport concerns. ×. ×. ×. ×. ×. Program Type. ×. Financial incentives Possible drivers. Industrial and Political. Industrial and Political. Industrial and Political. Industrial and Political. Industrial and Political. Duration results expected. Long term. Long term. Long term. Long term. Long term. Note: Source: IEA (2001).. 21.

(35) 2.5.2 Energy efficiency policies in selected APEC non-OECD economies 2.5.2.1 Chile Initiatives in demand-side energy efficiency is as follow, however, no quantitative evaluation is available for these programs. y Monitoring energy efficiency indicators for energy-intensive industries: copper mining, sugar production, etc. y Energy standards have been defined for appliances, lighting, air conditioning and thermal equipment, motors and pumps, and transformers and cables. y Voluntary agreements on energy consumption in the copper mining sector. 2.5.2.2 China Energy efficiency policies in China are driven by the need to ensure adequate energy supplies and improve environmental quality in the face of rapid economic growth. China’s energy use, notably coal use, discharges 19 million tones of sulphur dioxide into the atmosphere annually and affects 30 percent of the economy’s territory with acid rain. China’s cities have some of the worst air quality in the world, with only a third of cities meeting international air quality standards. Better energy efficiency and environmental control technologies are needed to improve the situation. As government energy efficiency budgets have declined and the private market economy has grown, China has sought ways to use the market economy to promote energy efficiency. The Energy Conservation Law of 1998 sets forth general principles and directions for energy efficiency practices.. Detailed. implementing regulations for the law include energy standards, an energy efficiency certification system for energy-using products, and energy management regulation for key energy consumers.. 22.

(36) As a national policy, the Chinese government promotes new technologies usage and encourages energy efficiency improvements.. In 1998, China. launched a national program aimed at updating electricity end use distribution grids in both urban and rural areas. This program will reduce the amount of electricity lost through the transmission process. Energy standards for some electric appliances such as television sets, refrigerators, air conditioners, and the like, are also being introduced. 2.5.2.3 Hong Kong Most energy efficiency programs in Hong Kong are voluntary. Labeling programs started in 1995, with the “Hong Kong Voluntary Energy Efficiency Labeling Scheme for Household Refrigeration Appliances” (revised in 1999). These voluntary labeling schemes have also been applied to washing machines (1997), air conditioners (1996, revised in 2000), compact fluorescent lamps (1998), electric clothes dryers (1999), electric storage water heaters (2000) and photocopiers (2000). In the transportation sector, subsidies are provided for electric cars (exemption from first registration tax), as well as to scrap old cars. There is also an information program on energy efficiency for cars. Only service buildings have mandatory thermal efficiency standards. Energy audits in dwellings, commercial buildings and industry are also voluntary. The Government pays for audits in public buildings. There are also a variety of information programs on energy efficiency for commercial and residential buildings. A code of practice and guidelines for the commercial and residential buildings, set minimum efficiency standards and provide advice on best practices concerning lighting, air conditioning, electrical and lift/escalator installations. The codes of practice are implemented by means of a voluntary registration scheme. A demand-side management program for non-residential sectors started in July 2000. It provides rebates for new installations of efficient lighting. A similar program for the residential sector is being planned.. 23.

(37) 2.5.2.4 South Korea Energy efficiency standards and a labeling program for household electrical appliances have been in place since 1992. Refrigerators, lighting products and air conditioners currently carry labels. This labeling program will be extended to gas boilers in 2001 and dishwashers and electric water heaters in 2002. Efficiency standards were set for incandescent bulb in 1997 and those for fluorescent lighting systems including ballast and lamp came into effect in 2000. By 2001, standards for appliances such as refrigerators, washing machines, air conditioners and domestic gas boilers will come into effect. Other efficiency measures in Korea include requirements for consumption reporting and preparation of energy saving plans for industrial and commercial buildings; provision of soft loans, tax breaks and credits for energy efficient equipment and measures; and information dissemination on best practices and energy efficiency measures. Moreover, research and development (R&D), demonstration and dissemination of technologies on energy and mineral resources, commercialization and diffusion of higher-efficiency energy appliances and climate change mitigation efforts are also being pursued in Korea. 2.5.2.5 Mexico Mexico has several national energy efficiency programs such as the Electricity Sector Savings Program (PAESE) and the Daylight Time Savings Program.. Several efficiency measures are mandatory, such as (a) thermal. efficiency standards for new dwellings and service buildings; and (b) labels and standards for refrigerators, washing machines and air conditioners.. Other. measures include soft loans for major end use sectors, technical assistance and information programs on best practice. Incentive and market transformation programs provide economic incentives to users that acquire and install high efficiency equipment. These programs have been geared to residential lighting. 24.

(38) and the productive sectors. Supply-side programs include the promotion of cogeneration and renewable energy. 2.5.2.6 The Philippines In the Philippines, there are specific energy efficiency programs for each of the energy-consuming sectors.. Programs in place for the industrial sector. include energy audits, special financing for energy conservation projects, power patrol and energy certification of industrial fans and blowers.. System loss. reduction, heat rate improvement of power plants and demand-side management are some of the programs available to the electricity sector. Programs for the residential and commercial sector are energy efficiency labeling of appliances such as room air-conditioners and refrigerators and freezers, and lamp ballast efficiency standards. The Power Patrol Programme provides information on energy efficient practices to all sectors and has been in operation since 1993. A similar program for the transport sector, the Road Transport Patrol was started in 1998. In addition, vehicle efficiency standards and testing protocols for motor vehicles are currently in place in the Philippines. 2.5.2.7 Taiwan The government in Taiwan has set goals to improve total energy efficiency by 1.2 percent per year from 1997 to 2010 and 1.0 percent per year from 2010 to 2020. The plan is expected to save about 18 Mtoe by 2010, and 39 Mtoe by 2020 (ADEME and APERC, 2000).. To achieve these goals, Taiwan has. implemented a “Comprehensive Plan for the Conservation of Energy and the Promotion of Energy Efficiency.” If energy utilization by an energy consumer reaches a certain level, the owner of the facilities must report energy utilization levels to the government, establish an energy audit system, and submit a conservation plan with energy targets. Taiwan has mandatory performance standards for all energy using equipment, including motor vehicles. It also has energy conservation standards for new buildings. To encourage investment in 25.

(39) high-efficiency equipment and facilities, the government offers accelerated depreciation, investment tax credits and low-interest loans. Taiwan also promotes voluntary action through public information campaigns, compiling teaching materials for schools and sponsoring training programs on energy conservation. The government offers technical conservation services such as energy audits, advisory services, technology transfer and voluntary commitments with industry. See Table 4 for a summary of energy efficiency programs in Taiwan. Table 4 Summary of energy efficiency policies in Taiwan Program Type. Industrial. Transportation. Commercial. Residential. Energy controls. ×. ×. Fiscal/financial incentives. ×. ×. Voluntary commitments. ×. Product efficiency standards. ×. ×. ×. ×. Information. ×. ×. ×. ×. Note: Source: ADEME and APERC (2000).. 2.5.3 Remarks on energy efficiency policies in selected APEC economies Good public policies on energy efficiency are vital for our livelihood because they promote technology progress, save the usage of petro-fossil fuels, and serve as an environment protection measure.. Sound policies also encourage achieving. better standards and a better quality of life. Energy policies overviewed here can be divided into eight broad categories (APERC, 2002): 1. Labels and standards, 2. Energy audits, 3. Demand side management (DSM), 4. Voluntary agreements, 26.

(40) 5. Financial incentives (subsides, soft loans), 6. Fiscal incentives (accelerated depreciation, tax rebates), 7. Environmental incentives (carbon tax, Clean Development Mechanism framework), 8. Information programs (‘best practice’, training). 2.6 DEA studies considering energy and CO2 emissions The DEA approach was originally intended for use in microeconomic environments to measure the performance of schools, hospitals, and the like, and it is also ideally suited to macroeconomic performance analysis. DEA can evaluate the efficiency of converting multiple into multiple outputs. Furthermore, DEA is also a theory-based, transparent, and reproducible computational procedure. In comparison to the traditional approaches such as ratio analysis and regression analysis, DEA has gained several more advantages. These characteristics include (Lewin et al., 1982): y capable of deriving a single aggregate measure of the relative efficiencies of units in terms of their utilization of input factors to produce desired outputs; y able to handle non-commensurate multiple outputs and multiple input factors; y able to adjust for factors outside the control of the unit being evaluated; y not dependent on a set of a priori weights or prices for the inputs or the outputs; y able to handle qualitative factors such as ‘extent of information processing available’, presence of certain state statues, etc.; y able to provide insights on the possibilities for increasing outputs and/or conserving inputs for the inefficient unit to become efficient; y able to maintain equity in performance assessment.. 27.

(41) Seiford and Thrall (1990) reviewed the various advantages of non-parametric approaches (including DEA) over parametric approaches. Among these advantages there are the robustness of the linear programming methods used to solve DEA problems and the new insights and additional information it provides with respect to conventional econometric methods. Charnes et al. (1985) also noted that a variable, neither an economic resource nor a product but an attribute of the environment or the production process, can be included easily in a DEA-based production model. One major advantage is that DEA has emerged as the leading method for efficiency evaluation in terms of both the number of research papers published and the number of applications to real world problems. Considering other factors’ complement and substitution, DEA using multiple inputs containing capital, labor, and energy consumption is an appropriate approach to analyze the total-factor energy efficiency. However, few studies apply DEA to compare productivity and efficiency by considering energy use and CO2 emissions across economies. Edvardsen and Førsund (2003) and Jamasb and Pollitt (2003) analyzed the benchmarking of the electricity industry in Europe and Northern Europe. The main purpose of these two studies is to find the firm and plant level’s efficiency and productivity. Boyd and Pang (2000) used plant level data to examine the relation between productivity and energy efficiency for two segments of the glass industry. Productivity is measured by DEA with electricity, fuel, and capital as the input while cumulative output represented in million US dollars. All coefficients of the regression models that link productivity to energy efficiency are significant. Haynes et al. (1994) applied DEA model and regarded the pollution generated as the only inputs of the production processes to the measurement of environmental performance. Tyteca (1996) reviewed the literature on environmental performance indicators. In this paper he calls for an index that simultaneously accounts for resources used, good outputs produced and pollutants or undesirable outputs emitted. He ultimately recommends using DEA approaches to evaluate environmental. 28.

(42) performance. Tyteca (1997) used four alternative DEA models developed from Tyteca (1996) to define standardized, aggregate environmental performance indicators for firms. Results are obtained with data from U.S. fossil fuel-fired electric utilities accounted for desirable output (electricity generation), undesirable outputs (sulphur dioxide, nitrogen oxide, and CO2), and resources used as input (installed capacity, coal, oil, gas, and labor). Färe et al. (2004) followed Tyteca’s model and used DEA to construct an alternative environmental performance index focusing on pollution. They developed a revised DEA approach to evaluate the environment efficiency considering pollution. Since their major objective is to find a method considering undesirable outputs, they used output-oriented DEA models. Then they applied their model to a sample of 17 OECD economies for 1990 with desirable output (real GDP), undesirable outputs (CO2, nitrogen oxide, and sulphur dioxide) and inputs (energy consumption, capital stock, and labor). Lovell et al. (1995) studied the macroeconomic performance of 19 OECD economies by taking four services- real GDP, a low rate of inflation, a low rate of unemployment, and a favorable trade balance- into analysis.. When two. environment disamenities (carbon and nitrogen emissions) were included into the service list, the rankings changed while the relative scores of the European economies decline. According to the above literature, energy efficiency indicator and environmental indicators did seem to have crucial effect on a nation’s relative performance. Most existing economic analyses of energy saving and air pollution abatement focus on benefit evaluation, possible impacts on economic activities, or strategies to achieve them. To the best our knowledge, the topic of efficient target rations seems to receive little attention by the existing literature.. However, for developing. economies such as APEC economies, finding out efficient and feasible energysaving target and pollution abatement target are definitely crucial for sustainable development. A special feature of this across economies study herein is that the data. 29.

(43) (for 1990s) are based on a sample of APEC economies at the economy level and the focus is on the use of energy and the abatement of CO2 emissions.. 30.

(44) Chapter 3 Research Design. 3.1 Production model An economy’s economical growth is provided by many factors. The most discussed factors are capital and labor. However, energy can substitute capital and labor for maintaining the same level of economic output. 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). In this study, we use the production approach to evaluate the energy efficiency. The production model includes three inputs: energy, labor, and real capital, while real GDP is the single output. The model is shown as Figure 4.. Input Factors y Real Capital y Labor y Energy. Outputs Production Process. y Real GDP. Figure 4 Production model for evaluating energy efficiency The DEA approach has been proposed as a method for evaluating producer’s performance in the presence of adverse environmental impacts. Environmental impacts are treated either as undesirable outputs (e.g., Färe et al., 1989; Zofío and Priteo, 2001; Färe et al., 2004)) or undesirable inputs (e.g., Tyteca, 1997; Lansink and Silva, 2003; Hu et al., 2005); conceptually there is no difference between the two approaches. The DEA approach allows an asymmetric treatment of desirable and undesirable inputs and outputs. A non-parametric piecewise linear technology that satisfies weak disposability of undesirable inputs (outputs) and strong disposability of desirable inputs (outputs) can be constructed without imposing a functional form on the production technology. Nonparametric efficiency measures that satisfy those requirements can be calculated as solutions to (nor-) linear. 31.

(45) programming problems. The DEA efficiency measures require data on output and input quantities rather than prices which is particularly useful when well-defined market prices for undesirable inputs or outputs do not exist (Lansink and Silva, 2003). Energy consumption in economic sectors is directly linked with CO2 emissions. In this study, CO2 emissions were calculated in using the methods of Marland and Rotty (1984). Appendix shows the factors and units for calculating CO2 emissions from fuel production and trade data (Marland et al., 2005). Energy related CO2 emissions vary significantly across APEC economies (APERC, 2001). In this study we treat the air emissions as proxies for the cost of environmental goods used for production (Oates and Schwab, 1988; Lόpez, 1994; Smulders, 1999; de Bruyn, 2000; Hu et al., 2005), e.g., the health problem caused, the corrosion of industrial equipment due to polluted air, and other related social expenses. Since energy consumption is responsible for roughly 90 percent of CO2 emissions (APERC, 2001) and the high correlation between energy consumption and CO2 emissions exists, they both cannot be considered together in the DEA model. Therefore, we use CO2 emissions instead of energy consumption for the production approach in Figure 2 to evaluate the target of CO2 abatement. The production model then includes three inputs: CO2 emissions, labor, and real capital. Real GDP is still the single output for every economy.. Figure 5 shows the model for. measuring CO2 abatement target.. Outputs. Input Factors y Real Capital y Labor y CO2 emissions. Production Process. y Real GDP. Figure 5 Production model for evaluating CO2 abatement target. 32.