Does Environmental Tax Affect Energy Efficiency? An Empirical Study of Energy Efficiency in OECD Countries Based on DEA and Logit Model

Abstract

OECD countries are the largest energy consuming economies in the world, improving energy efficiency and reducing pollution emissions is one of the important goals of the environmental tax policies of OECD countries. Based on the total factor energy efficiency index, this paper establishes an epsilon based measure-data envelopment analysis (EBM-DEA) model to measure the energy efficiency levels of 32 OECD countries during 1995–2016 when undesired outputs are included and not included. The effect of environmental factors on energy efficiency evaluation is compared by efficiency analysis and projection value analysis. On this basis, a Panel Logit model was established to empirically examine the impact of energy taxes on energy efficiency in 32 OECD countries. This paper finds that undesired output has a large impact on the energy efficiency level of OECD countries. Measuring energy efficiency levels without considering undesired outputs tends to lead to overestimation of the energy efficiency level of environmentally friendly countries and underestimate the energy efficiency level of countries that value environmental protection. The collection of energy tax has an important impact on energy consumption efficiency. Without considering the unexpected output, the energy tax has a significant impact on improving the efficiency of coal energy consumption. When considering the unexpected output, the energy tax has a significant impact on improving the efficiency of oil energy consumption. Regardless of the expected output or not, the energy tax has a positive effect on improving the efficiency of natural gas energy consumption. The experimental results also show that the energy structure and energy price have a negative impact on energy efficiency, while the progress of environmental protection technology and industrial structure have a positive impact on energy efficiency. Energy taxes have a “double dividend”. This paper argues that when evaluating a country’s energy efficiency, it should consider the undesired output factors of environmental constraints; governments should pay attention to the role of energy taxes in improving energy efficiency, improve the energy tax system, optimize industrial structure upgrades, stabilize energy prices and support the development of environmental technologies and improve energy efficiency.

Exploring the Role of Carbon Taxation Policies on CO2 Emissions: Contextual Evidence from Tax Implementation and Non-Implementation European Countries

“…Hence, the investigation into the role of carbon-tax for countries who implemented tax and non-tax implementation countries is of logical and sound mind. As a final remark, our study joins the strand of [2,6,8,11,12,19].…”

“…Although these efforts might be significant for energy security, but under the pressure of rising population growth, energy, and carbon intensity, the energy usage of developed economies raised by 2.5%/year. Among the developed economies, only the OECD energy consumption is accounted for 60% of global energy demand, which mainly consists of non-renewables and fossil fuels [12,13]. The inquiry into the role of carbon-tax, population, energy, and carbon intensity is logical and consistent with the strand of existing research [10,[14][15][16].…”

“…The empirical findings of panel quantile regressions revealed that energy taxes and income significantly boost the residential energy consumption in Europe. Studying the data of OECD economies, He et al [12] explored the role of environmental related taxes for energy efficiency. Based on the panel logit and DEA (data envelopment analysis) models, the results suggested that the energy related taxes significantly enhance the energy efficiency of coal and natural gas energy sources consumption.…”

“…Regarding the selection of covariates, Kaya decomposed the factors related to CO 2 emissions in population (POP), GDP per capita (GDPC = GDP POP ), energy intensity (EI = PE PIB ), and carbon intensity (CI = CO 2 PE ) with PE as primary energy. More recently, [6,12,15,19,24,26] also studied the role of energy taxes and environmental taxes for environmental issues in Europe, China, and OECD countries.…”

Environmental Tax Reform and the “Double Dividend” Hypothesis in a Small Open Economy

“…In other words, there is no double dividend effect of distribution [14]. Furthermore, several studies point out that the environmental tax will inevitably cause unfair distribution among different generations [15][16][17].…”