Energy efficiency in OECD and non-OECD countries: estimates and convergence

Improvements in energy efficiency are essential for reducing CO2 emissions, reducing energy consumption, and increasing energy security. This paper uses stochastic frontier analysis applied to a large panel data set of 81 OECD and non-OECD countries covering the years 2000 to 2013 to estimate energy efficiency. Non-OECD energy efficiency has been increasing across the time period under study while OECD energy efficiency has been declining. On average, 3% of global energy consumption can be saved by reducing transient inefficiencies but this can represent a lot of energy saved when accumulated across time. Much larger global energy savings can be obtained by reducing persistent energy inefficiency. Sigma convergence of energy efficiency (a reduction in the dispersion of energy efficiency across countries) is investigated. There is not much evidence to support energy efficiency sigma convergence. Sigma divergence and energy efficiency reductions make it more difficult to negotiate international treaties on energy efficiency and climate change.