Factors Affecting Energy Sector Efficiency in OECD Countries

Abstract

Energy efficiency is an important concept for ensuring sustainable development and reducing energy consumption. Efficiency means using a minimal amount of energy to complete a process. Consideringthe amount of energy needed by OECD countries, we aimed to analyze the energy efficiency of 37 OECD countries in different sectors, such as transport, industry, trade, and agriculture for 2015. The analysis involves modeling the efficiency results obtained using multivariate adaptive regression splines to explore linear and nonlinear relationships. We examined the effects of various factors, such as Gross National Income (GNI), population density, Gross Fixed Capital Formation (GFCF), Gross Floor Area (GFA), CO2 density, and Total Primary Energy Supply (TPES). The results showed that the energy efficiency of OECD countries varies greatly between different sectors, with transport and industry being the least productive. In addition, this study revealed that the nonlinear effects of the GNI of the energy mix, population density, and CO2 density significantly affect energy efficiency. The findings show that policies aiming to promote energy efficiency in different sectors should consider the non-linear effects of various factors that can lead to more efficient and sustainable energy use. In addition, increasing energy efficiency has many benefits, including environmental protection, cost savings, and improved economic performance.