Energy, renewable and technical efficiency convergence: a global evidence

Efficient energy consumption has become a top priority for countries in combating climate change while the contribution of renewable energy in the production process has increased over the recent decades. In this sense, the improvement of energy efficiency and promotion of renewable technologies without deteriorating economic performance are in the spotlight of policymakers. The aim of this study is to evaluate the energy, renewable and technical efficiency of 126 countries worldwide for the period 1990-2013. The total factor energy and renewable energy efficiency indices are estimated by applying the directional distance function (DDF). The incorporation of emissions as an undesirable output of the production process can actually eliminate any bias from the efficiency scores. The empirical results indicate that even though technical efficiency is low, both renewable and energy efficiency present high scores. Moreover, efficiency fluctuations are evident when income and continent classifications are employed. At the second stage, we further proceed with a convergence analysis for the corresponding efficiency measures. In order to become more efficient, countries should adapt their energy policies and technologies in accordance to other countries belonging to their convergence clubs.