Total-factor Energy Efficiency for Sectors in Japan

In this article, we measure the energy efficiency of 17 sectors in the Japanese economy during 19982005 using data envelopment analysis (DEA), in which a total-factor framework is applied. We compute the total-factor energy efficiency, which is defined as the ratio of the target energy input suggested by the DEA to the actual energy inputs in a sector. Energy, labor, and capital are the three inputs, while the value added in each sector is the single output. Our major finding is that remarkably energy-inefficient sectors in the Japanese economy include energy-intensive industries (i.e., pulp and paper, chemical, cement and ceramics, and primary metal sectors) as well as agriculture, forestry and fishery, transportation and communication, and miscellaneous manufacturing. There is much room to improve energy efficiency in Japanese industrial sectors. Moreover, for 8 sectors, including energy-intensive industries, the inefficiency of energy use is much worse than that of other resource usage.