Towards energy conservation by constructing more transportation infrastructure?: An endogenous stochastic frontier analysis framework

Abstract

Whether constructing more transportation infrastructure can be helpful for the achievement of energy conservation is a long-running and debatable issue. To answer this question, the relationship between transportation infrastructure and energy efficiency must first be clarified. Nonetheless, the existence of the endogeneity problem poses a challenge to defining the relationship. In this paper, an endogenous stochastic frontier analysis method is used to investigate the influence of transportation infrastructure on energy efficiency. Based on the prefecture-city level panel data in China, we find that after addressing the endogeneity problem, the impact of transportation infrastructure on energy efficiency increases dramatically. Moreover, this impact is more pronounced in small-scale cities compared to large and medium-scale cities. Regardless of the measurement of transportation infrastructure, instrumental variable, or production function form, we get the similar conclusions, demonstrating the robustness of our findings. Additional simulation analysis shows that the energy conservation potential would be 1222-2935 million kilowatt hours if the level of transportation infrastructure could be optimized. We recommend accelerating the transportation infrastructure construction, particularly in the small-scale cities so as to boost the energy efficiency and achieve energy conservation targets.

Keywords: Endogenous stochastic frontier analysis; Energy conservation potential; Energy efficiency; Transportation infrastructure.