How does energy-vost lead to energy efficiency? Panel evidence from Canada

Arbeitspapier

An increase in energy-cost can induce energy efficiency improvement - a reduction in energy-output ratio. There are well-established theoretical conjectures of how this can take place. As the relative energy-cost increases, it induces firms to reallocate and selectively utilize the most energy-efficient vintages. In the long-run firms could also achieve energy efficiency through investments in energy-efficient capital. This study uses the Canadian KLEMS panel data set to investigate these relationships. We employ panel vector auto regressions as well as co-integration and error correction techniques to test whether the conjectures hold in the data. Our findings support the theoretical conjectures. The channels we empirically identify suggest that the effect of increased energy-cost can be an increase in energy efficiency: by decreasing energy-capital ratio and increasing output-capital ratio. The latter effect is observed only in the long-run through induced investments in new capital.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Queen's Economics Department Working Paper ; No. 1368

Classification and Topics

• Classification: Wirtschaft ; Energy: Demand and Supply; Prices ; Energy and the Macroeconomy ; Energy: Government Policy ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models
• Subject: Energy intensities ; Capital productivity ; Energy Price ; Panel Data

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gamtessa, Samuel ; Olani, Adugna
• Event: Veröffentlichung
• (who): Queen's University, Department of Economics
• (where): Kingston (Ontario)
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/149094
• Last update: 10.03.2025, 11:42 AM CET