Energy intensity efficiency and the effect of changes in GDP and CO2 emission.

We measure energy intensity efficiency of 104 countries by classifying them into both five income groups and four groups. Along measurement of energy intensity efficiency, we investigate the impact of GDP and CO2 emissions on intensity efficiency. In this study, since fossil fuels have a close relationship with not only GDP but also CO2 emission, the energy efficiency and energy intensity efficiency model of fossil fuels including CO2 emissions are presented together. We put CO2 emissions as a constraint variable as well as a combined product with the desired output. Unlike energy efficiency, energy intensity efficiency was higher in the group with higher income. This was the same in both results, with CO2 emissions as a constraint and a combined product. In particular, when countries’ heterogeneity was controlled by converting five groups to four groups by the mean–variance approach, the energy intensity efficiency of each group was more clearly different. The energy intensity efficiency improved most when income improvement and environmental regulations were simultaneously imposed in all five income groups. Therefore, to improve energy intensity efficiency, reduction of CO2 emissions is necessary not only in high-income countries but also in low-income countries. [ABSTRACT FROM AUTHOR]