Determinants of Energy Demand Efficiency: Evidence from Japan’s Industrial Sector

Abstract

With the growing demand for energy, improving energy efficiency has become a key policy issue in Japan. Therefore, this study estimates the energy demand function of Japan's industrial sector using a stochastic frontier model and analyzes the level of energy efficiency and its determinants. An empirical analysis based on the data of 47 Japanese prefectures presents three main findings. First, installment in large production facilities deteriorates energy efficiency and second, it is effective in increasing the electrification rate to improve energy efficiency. Finally, improving productivity leads to an increase in the electrification rate. These results suggest that policies aimed at increasing electrification by enhancing the productivity of factories and offices significantly contribute to improving energy efficiency.

Examining the Industrial Energy Consumption Determinants: A Panel Bayesian Model Averaging Approach

“…Its importance has been recognized in other parts of the world as well. For example, Otsuka [28] stated that energy consumption in Japan is mainly affected by energy efficiency and policies directed to increase electrification by enhancing the productivity of factories and offices. Malen and Marcus [29] provided empirical evidence on the important role of government policy in supporting clean energy technology and clean energy market development and, in general, in creating opportunities for entrepreneurship development in the USA.…”