Technical Efficiency Measures as a Tool for Energy Benchmarking in Industry?

Abstract

Energy benchmarking is a practical management tool to evaluate and improve the energy performance of an industrial firm, possibly revealing considerable potentials for energy savings and for reduction of emissions to the atmosphere and biosphere. Existing energy metrics used for energy benchmarking however are strictly limited to measuring energy efficiency, completely disregarding positive or negative effects energy savings may have on other environmental pressures (use of depletable resources other than energy, emissions of pollutants , effluents or waste). We therefore propose investigating the use of technical efficiency measures as energy benchmarking tools. Technical efficiency is explored from both an engineering and a micro-economic approach, although we limit our discussion to the non-parametric mathematical programming performance measures. Particular attention is given to the inclusion of undesirable outputs or 'bads' in the existing performance measures. We conclude with a cursory review of empirical research done in the field of environmental performance indicators (EPIs), mainly in the sector of electricity generation and pulp and paper mills. BENCHMARKING AS A MANAGEMENT TOOL TO IMPROVE ENERGY EFFICIENCY IN INDUSTRY Definition and Classifications of Benchmarking in General There is no universally accepted definition of benchmarking as a practical management tool. Reflecting the association of benchmarking with business performance, we can define benchmarking as 'the continuous, systematic process of comparing the current level of performance against a predefined point of reference, the benchmark, in order to evaluate and improve performance.' A useful classification of benchmarking types is based on the purpose (objective) and / or the type of reference for benchmarking: 1 Strategic benchmarking: organizations seek to improve their overall performance; Performance benchmarking or competitive benchmarking: organizations consider their positions in relation to performance characteristics of key products

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