Drivers of Energy Efficiency in German Manufacturing: A Firm-Level Stochastic Frontier Analysis

33 Pages Posted: 21 Dec 2017

See all articles by Benjamin Johannes Lutz

Benjamin Johannes Lutz

ZEW – Leibniz Centre for European Economic Research

Philipp Massier

ZEW – Leibniz Centre for European Economic Research - Environmental and Resource Economics, Environmental Management Research

Katrin Sommerfeld

Centre for European Economic Research (ZEW), Department Labour Markets, Human Resources and Social Policy; IZA Institute of Labor Economics

Andreas Löschel

University of Muenster - Chair of Microeconomics, esp. Energy and Resource Economics

Date Written: 2017

Abstract

Increasing energy efficiency is one of the main goals in current German energy and climate policies. We study the determinants of energy efficiency in the German manufacturing sector based on official firm-level production census data. By means of a stochastic frontier analysis, we estimate the cost-minimizing energy demand function at the two-digit industry level using firm-level heterogeneity. Apart from the identification of the determinants of the energy demand function, we also analyze potential drivers of energy efficiency. Our results suggest that there is still potential to increase energy efficiency in most industries of the German manufacturing sector. Furthermore, we find that in most industries exporting and innovating firms as well as those investing in environmental protection measures are more energy efficient than their counterparts. In contrast, firms which are regulated by the European Union Emissions Trading System are mostly less energy efficient than non-regulated firms.

Keywords: Stochastic Frontier Analysis, Stochastic Demand Frontier, Energy Efficiency, Climate Policy, Manufacturing

JEL Classification: D22, D24, L60, Q41

Suggested Citation

Lutz, Benjamin Johannes and Massier, Philipp and Sommerfeld, Katrin and Löschel, Andreas, Drivers of Energy Efficiency in German Manufacturing: A Firm-Level Stochastic Frontier Analysis (2017). ZEW - Centre for European Economic Research Discussion Paper No. 17-68, Available at SSRN: https://ssrn.com/abstract=3091570 or http://dx.doi.org/10.2139/ssrn.3091570

Benjamin Johannes Lutz

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Philipp Massier (Contact Author)

ZEW – Leibniz Centre for European Economic Research - Environmental and Resource Economics, Environmental Management Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim
Germany

Katrin Sommerfeld

Centre for European Economic Research (ZEW), Department Labour Markets, Human Resources and Social Policy ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim
Germany

HOME PAGE: http://www.zew.de/en/mitarbeiter/mitarbeiter.php3?action=mita&kurz=kso

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Andreas Löschel

University of Muenster - Chair of Microeconomics, esp. Energy and Resource Economics ( email )

Universitätsstr. 14-16
48143 Munster
Germany

HOME PAGE: http://www.wiwi.uni-muenster.de/eroe

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