Energy intensity gap between enterprises and governments: A global perspective

Abstract

Information asymmetry on energy efficiency target between enterprises and governments is a major controversy about sustainability. Enterprises desire to pursue the maximum profits in the market while governments confront with incomplete information on energy intensity potential and policy implementation. To investigate the influence of information gap between them, this study uses two-tier stochastic frontier (TSF) model with scaling property on the panel data in 56 contracting countries in Kyoto Protocol from 1995 to 2014 on energy intensity from energy, economic and technological perspective. The results present that on average about 70% of the unexplained variations in energy intensity accounts for the influence of energy intensity gap on energy savings potential between enterprises and governments. And the actual energy intensity is upper biased by average 7.03% due to the information asymmetry although the net impacts differ slightly across developing and developed countries and over time. Enterprises have stronger influence on the energy intensity during sample period. We recommend developing countries' governments to have a strong renewable energy governance framework to support urbanization for economic development is their backbone for long period.