Global Co2 Efficiency: Country-Wise Estimates Using a Stochastic Cost Frontier

Energy Policy, Vol. 45, issue C, pp.762-770, 2012

Posted: 22 Mar 2016 Last revised: 19 Apr 2016

See all articles by Rajeev K. Goel

Rajeev K. Goel

Illinois State University - Department of Economics

Risto Herrala

European Central Bank (ECB) - Directorate General International and European Relations

Date Written: 2012

Abstract

This paper examines global carbon dioxide (CO2) efficiency by employing a stochastic cost frontier analysis of about 170 countries in 1997 and 2007. The main contribution lies in providing a new approach to environmental efficiency estimation, in which the efficiency estimates quantify the distance from the policy objective of minimum emissions. We are able to examine a very large pool of nations and provide country-wise efficiency estimates. We estimate three econometric models, corresponding with alternative interpretations of the Cancun vision (Conference of the Parties 2011). The models reveal progress in global environmental efficiency during a preceding decade. The estimates indicate vast differences in efficiency levels, and efficiency changes across countries. The highest efficiency levels are observed in Africa and Europe, while the lowest are clustered around China. The largest efficiency gains were observed in central and eastern Europe. CO2 efficiency also improved in the US and China, the two largest emitters, but their ranking in terms of CO2 efficiency deteriorated. Policy implications are discussed.

Suggested Citation

Goel, Rajeev K. and Herrala, Risto, Global Co2 Efficiency: Country-Wise Estimates Using a Stochastic Cost Frontier (2012). Energy Policy, Vol. 45, issue C, pp.762-770, 2012. Available at SSRN: https://ssrn.com/abstract=2752648

Rajeev K. Goel (Contact Author)

Illinois State University - Department of Economics ( email )

Normal, IL 61790-4200
United States

Risto Herrala

European Central Bank (ECB) - Directorate General International and European Relations ( email )

Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany

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