Global warming and the energy efficiency of Spanish industry

This paper uses a stochastic frontier production function model to analyze the energy efficiency of Spanish industry. We used minimum cost input demand equations as the reference in order to calculate the demand for electricity, gas and other fuels. On this basis, we found that there is no inherent conflict between the objectives of achieving productive efficiency and reducing energy consumption. Indeed, it is possible to reduce the industrial emissions of CO2 by up to 29.4%, by means of a bottom-up energy efficiency policy. However, if the government wants firms to reduce their emissions even further, then it would be necessary to implement some form of energy regulatory policy. In this respect, we estimate the cost of reducing CO, emissions by 20%. (C) 2002 Elsevier Science B.V. All rights reserved.