Energy efficiency evaluation, changing trends and determinants of energy productivity growth across South Asian countries: SBM-DEA and Malmquist approach

Abstract

Energy efficiency is widely regarded as the most efficient means of supplying additional energy to meet the rising demand. However, extensive energy consumption causes greenhouse emissions, environmental destruction, and a decrease in energy efficiency (EE). This study investigates the role of energy efficiency and productivity growth in the ecological improvement of South Asia. Moreover, it evaluates the determinants (efficiency change or technology change) of energy productivity change across different SA (South Asian) countries. To estimate the energy efficiency and productivity change, we employed SBM-DEA and Malmquist Productivity Index methods with three inputs (capital stock, labor, and energy consumption), a single desirable output (gross domestic product) and a single undesirable output (CO2 emissions) on the well-extended dataset (2001-2019) for 6 South Asian countries. Furthermore, to check the impact of energy policy (2010) over the study period, the statistical significance of the change in mean scores for energy efficiency and productivity over two time periods (2001-2010 and 2011-2019) and six countries was examined using the Mann-Whitney U and Kruskal-Wallis tests. Results reveal that the average EE score of all 6 SA countries for the study period is 0.7278. This score shows that SA countries still have the potential of 27.22% to improve their energy efficiency to minimize the inputs to get the optimum output level with the least emissions. The primary determinant of energy productivity growth is technological change instead of efficiency. The average energy efficiency level is significantly different for two time periods, 2001-2010 and 2011-2019. Results conclude that energy efficiency and productivity in SA declined over the period, and potential causes are an inefficiency in the energy conversion process, extensive utilization of inputs, and less output growth.

Keywords: DEA; Energy efficiency; Malmquist Productivity Index, South Asia; Technological advancement.