Industry-level total-factor energy efficiency in developed countries: A Japan-centered analysis

Japan's energy security is more vulnerable today than it was before the Fukushima Daiichi nuclear power plant accident in March 2011. To alleviate its energy vulnerability, Japan has no choice but to improve energy efficiency. To aid in this improvement, this study compares Japan's energy efficiency at the industry level with that of other developed countries. We compute the total-factor energy efficiency (TFEE) of industries in 14 developed countries for 1995-2005 using data envelopment analysis. We use four inputs: labor, capital stock, energy, and non-energy intermediate inputs. Value added is the only relevant output. Results indicate that Japan can further optimize energy conservation because it experienced only a marginal decrease in the weighted TFEE, from 0.986 in 1995 to 0.927 in 2005. To improve inefficient industries, Japan should adapt energy conservation technologies from benchmark countries such as Germany, the United Kingdom, and the United States.