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Inter-state analysis of energy efficiency- a stochastic frontier approach to the Indian paper industry
- Source :
- International Journal of Energy Sector Management. 12:547-565
- Publication Year :
- 2018
- Publisher :
- Emerald, 2018.
-
Abstract
- Purpose This paper aims to measure the state-level energy efficiency in Indian paper industry and simultaneously explain inter-state variation in efficiency by inefficiency effect model. Three variables, labor productivity, capital intensity and structure of paper industry, are included in inefficiency effect model to assess the likely impact on energy efficiency. Design/methodology/approach Sub-vector input distance function is derived through neo-classical production function which provides measures to estimate energy efficiency. Assuming a translog production function specification, energy efficiency is estimated by using Battese and Coelli (1995) stochastic frontier analysis (SFA). The authors also estimated four other SFA models, and energy efficiency from all the models is compared for robustness checking. Findings The results show the existence of a vast potential to improve energy efficiency. Inefficiency effect model reported a positive impact of structure of the industry and capital intensity on energy efficiency performance, while labor productivity does not have any significant impact on energy efficiency. There exists considerable energy efficiency variation among states. Uttarakhand, Punjab and Orissa are the best performing states while Rajasthan, Jharkhand and Goa have worst energy efficiency performance based on average efficiency. The ranks assigned to states according to inefficiency effects model are found contrary to the simple measure of energy efficiency, i.e. energy intensity. Thus, energy intensity may not always be a good proxy for underlying energy efficiency and need to be compared with a comprehensive possible measure. Originality/value To the best of the authors’ knowledge, this is the first study which measures energy efficiency of Indian paper industry through stochastic frontier model using region-level data. Instead of relying on traditional energy efficiency indicators (energy-output ratio), total-factor energy efficiency approach is used to conduct the empirical exercise. Deviations from the frontier because of factors beyond the scope of producers are also incorporated into analysis to portray the magnitude of random factors in influencing the efficiency performance.
- Subjects :
- 020209 energy
Strategy and Management
05 social sciences
02 engineering and technology
Pulp and paper industry
General Energy
Stochastic frontier analysis
Energy intensity
0502 economics and business
0202 electrical engineering, electronic engineering, information engineering
Production (economics)
Energy transformation
Capital intensity
050207 economics
Inefficiency
Productivity
Mathematics
Efficient energy use
Subjects
Details
- ISSN :
- 17506220
- Volume :
- 12
- Database :
- OpenAIRE
- Journal :
- International Journal of Energy Sector Management
- Accession number :
- edsair.doi...........8c52d3acf2b907252de3753f5f604ff7