| Author/Presenter |
Asgar Khademvatani (University of Calgary) |
| Title |
Shadow Value Measure of Energy Efficiency Changes: An Empirical Analysis of U.S. Industrial Sectors, 1958-2000 |
| Abstract |
Unlike the literature, this empirical study develops a distinctive marginal-economic measure called "energy shadow value" drawn on economic theory and data constructed of U.S. stone, clay and glass and communications industries as a high and low energy intensive sectors, respectively, over 1958-2000, and demonstrates empirically its advantages over the average indicator. The common average energy intensity indicator reveals only technical energy efficiency and suffers from Allocative efficiency perspective. Using shadow value measure enables us to (i) calibrate cost-minimizing levels of energy use, (ii) determine the convergence or divergence of energy use toward market-clearing levels, (iii) show the balances and imbalances in terms of expenditures incurred in an industry specific energy market or cross industries, and (iv) estimate the differences of energy utilization environmental effects and related policy stringency across sectors. The study applies a dual-restricted cost model imposing a generalized Cobb-Douglas functional form. We found that the wedges between energy price and its shadow values indicate misallocation and inefficient use of energy inputs with respect to the static equilibrium levels. Moreover, the results indicate potential-savings in terms of total costs, and energy use by utilizing energy at the cost-minimizing levels, but Allocative energy inefficiency and potential savings were more evident in communications than SCG. Hence, the results acknowledged that energy efficiency changes pattern may be misleading in terms of energy intensity changes whereas we achieved a different efficiency pattern within and across the U.S. sectors. Finally, decomposing energy shadow values revealed that capital composition and energy factor played key roles in shadow values increases, but with greater degrees in low intensive industry than high intensive sector. This is helpful for energy policy makers and business to understand the effects of impacting factors to speculate how to improve energy efficiency through energy policies and energy-savings technologies considering economic efficiency premises. |
|