Estimation and determinants of energy efficiency in Japanese regional economies

Abstract

In response to increased environmental constraints, it has become an important policy issue for Japan to improve energy efficiency for the future, along with the growth of regional economies. This paper uses a stochastic frontier model to estimate the energy demand function and analyse the levels and determinants of energy efficiency. The empirical analysis conducted by using data from 47 prefectures in Japan revealed the following four findings. First, the proposed energy efficiency measure (calculated using the stochastic frontier model) is found to be effective, as its ranking is highly correlated with that of energy intensity. Second, increasing population density is effective in improving energy efficiency. Third, improving regional accessibility by developing a highway network helps to improve the energy efficiency in Japan. Fourth, the level of energy efficiency is deteriorating in areas where raw material industries are clustered. These results indicate that the means to increasing both economic productivity and environmental efficiency are to implement a regional decentralization policy by creating major urban areas across the nation and expand a wide-area transportation network to link these areas. In addition, the promotion of technological innovations through appropriate environmental regulations is important to advance such regional policies.JEL classification: Q40, Q50, R10

Population Agglomeration and Residential Energy Consumption: Evidence from Japan

“…Previous research has shown a negative correlation between population density and energy efficiency (Otsuka and Goto [9]), suggesting that the former may increase the energy efficiency of the entire region. For the scope of this study, land population density (D) is assumed as the index measuring population agglomeration.…”

“…Otsuka and Goto [9] have empirically demonstrated that urban population concentration fosters energy efficiency. Japan's national land planning has stressed the importance of compact cities from both the economic and the environmental point of view.…”

Regional energy demand in Japan: dynamic shift-share analysis

“…The study expected that the compositional effect-expressing the degree by which the national energy demand from each energy user exceeds the rate of change of the national energy demand-would be low in the manufacturing industry, because energy demand changes mainly arise from efficiency efforts in this sector. The study also verifies that the agglomeration of industry enforces this effect (Otsuka et al [5], Otsuka and Goto [6]). The study results are fully consistent with these insights.…”

“…Globally, there is very little previous research on regional energy demands, because of a lack of relevant data. Bernstein et al [2] and Metcalf [3] targeted individual states in the USA, and Raupach-Sumiya et al [4], Otsuka et al [5], and Otsuka and Goto [6] investigated regions in Germany and Japan. However, each of these studies analyzed the factors determining the energy efficiency, rather than the dynamic changes in the regional energy demand.…”

Regional Determinants of Energy Efficiency: Residential Energy Demand in Japan

“…Thus, promoting electrification may increase the energy efficiency of the residential sector. Considering the nonlinear effect of population density, this study estimates Equation (4) in addition to Equation (3). If there is a threshold for the effect of population density, the regression coefficient of the quadratic term should be statistically significant.…”