Catching-up In Energy Efficiency With Environmental Constraints

Due to energy’s unique roles in economic attribute, environmental impacts, and strategic importance, the enhancement of comprehensive energy use is considered as a critical way to address economic development, energy security, climate change, and environmental quality optimization. Considering that efficiency gaps are still significant among economies, improvement and catching-up of energy efficiency is identified as a key strategy for late-development countries to release resource constraints, address climate change negotiations, seize the commanding heights of another round of development, and achieve the green growth scenarios. Therefore, identification of key paths for low-efficient countries to catch up with high-efficiency levels based on analyses of efficiency levels and efficiency gaps among countries has drawn extensive attentions in the field.Against this background, the G20 has been selected and categorized into three sub-groups (i.e., advanced economies, BRICS, and other developing countries).due to its richness in various economic types as a sample. Grouping analyses have been conducted based on the panel data during 2000-2010 using certain applicable approaches and techniques to observe the diversification, catching-up effects, and optimizing paths of energy efficiency.First of all, drawing on the concept of the "energy-environment-economy (3E)" system and the theory of externality, a national energy efficiency (hereafter "energy efficiency") concept has been constructed from the perspective of greenization. The undesirable Epsilon-Based Measure method was utilized to evaluate the efficiency level and trends of the G20 and its sub-groups. Countries at the optimum front (i.e., the benchmarking countries) have been identified as well. Moreover, the intergroup difference tests were used to observe the significance of efficiency gaps; second, the Global Malmquist Luenberger index has been constructed to observe the countries with higher growth rates (i.e., the best chasers). The absolute, conditional, and random convergence tests were conducted to observe the status and trends of catching-up effects among countries and groups; third, a determinant framework has been established from the perspective of structural adjustment and institutional optimization based on best practices, literature review, and relevant theories. The panel Tobit technique was used to identify how selected factors affected efficiency change in different groups. The critical paths for lagged countries, represented by China, to catch up with the advanced efficiency level have been summarized based on the empirical tests.The major findings reveal that:(1) the average efficiency of the G20 dropped slightly throughout the years and the efficiency of the developed countries outweighed the efficiency of the others (i.e., the BRCIS and the developing countries) significantly; however, the BRICS had the fastest growth rates and approached the efficiency level of the developing as well as the developed groups; moreover, the difference test rejected the null hypothese significantly, indicating that notable efficiency gap was existed in the G20; the U.S., U.K., and France all met their optimum frontier, while Brazil performed best among the BRICS. China’s efficiency ranked 18 in the G20, and was greatly lower than the advanced level of the G20 as well as the average level of the BRICS.(2) Russia and Korea experienced the fastest growth among others, while Indonesia became the representative of the developing economies in terms of growth rate of efficiency. Moreover, the absolute convergence was significant in the G20 and the sub-groups, indicating that the catching-up effect did exist in the sample; however, the BRICS was catching-up with the developing and developed groups, whereas the difference between developing countries and advanced economics was widened slightly throughout the years; the conditional convergence was notable in the sample, indicating that efficiency gaps can be narrowed but won’t be disappeared in the short term; the random convergence existed in all the groups with various significance levels, indicating that improvement of energy efficiency on a country level is a long-term and slow process.(3) Increasing in fossil use impeded the optimization of efficiency on a broad level, yet the significant level of the inhibitions on different countries varied; industrial upgrading improved the efficiency of the G20, developed group, and the developing economies, yet exerted negative impact on the BRICS represented by China; expansion of urbanization hindered the enhancement of efficiency in most countries, but helped to improve the efficiency of the BRICS represented by China; capital deepening and escalating of trade surplus hampered the growth of efficiency in the BRICS and developing economies greatly, but benefited the developed countries on the other side; government effectiveness played a notable positive role in facilitating efficiency optimization in most countries, whereas exerted weak negative impacts on developing countries as the "governance paradox" appeared in the group; the "halo effect" of FDI existed in the BRICS and developing economies (i.e., the positive correlation appeared between FDI and efficiency), but an opposite outcome was derived in the group of developed countries.Based on the outcomes of the aforementioned analyses, the study has pointed that for countries like the BRICS (including China) with low efficiency but high growth rates, attentions should be paid to the expansion of urbanization, governance optimization, investment, and technological focuses to catch-up with the optimal efficiency level. For other developing countries, industrial upgrading and expansion of FDI are two key dimensions to avoid the divergence of efficiency. Configurations of investment and technology need to be optimized in those countries as well.Based on the theoretical and practical international comparison on energy efficiency, certain optimizing paths and a comprehensive governance portfolio have been prompted against the Chinese context. Specifically, energy mix should be featured as low-carbon, clean, and scaled-up; industrial structure should be reasonable, upgraded, and green; the adjustment of technological structure should facilitate a green transition of technology via changing technological focus and adaptable technology; the adjustment of spatial structure should pay attention to the balance of urban-rural distribution and west-east distribution, as well as the exploration of inner-city space; in terms of investment structure, efforts should be provided to switch from scale-focused to quality-, structure-, and efficient-focused; additionally, China’s energy efficiency under environmental constraints can be augmented by optimizing the green objects, approaches, and capacity of energy governance.