Exploring economic and environmental efficiency in renewable energy utilization: a case study in the Organization for Economic Cooperation and Development countries

Abstract

The share of renewable energy has grown significantly in global energy supply, yet the evaluation of renewable energy utilization has remained limited. Hence, this research explored economic and environmental efficiency in renewable energy utilization in 20 OECD (The Organization for Economic Cooperation and Development) countries from 2015 to 2020. The study approached the data envelopment analysis-slack-based measure (DEA-SBM) to evaluate economic efficiency, and the DEA undesirable output to measure environmental efficiency. Four inputs as labor force, gross capital formation, total renewable energy capacity, and share of renewable energy were compared to two desirable outputs as the gross domestic product (GDP), and total energy production in the economic efficiency model. In the environmental efficiency model, the same inputs were evaluated with GDP as the desirable output and CO 2 emissions as the undesirable output. The DEA-SBM revealed that Australia, Belgium, Norway, the UK, and the USA were efficient in economic evaluation, whereas DEA undesirable output indicated that Belgium, France, Sweden, the UK, and the USA were efficient in environmental evaluation. The governments are suggested to adjust the resources management since the number of efficient units decreased in the economic assessment while fluctuating in the environmental assessment.