Energy structure and green productivity dynamics: Investigation from OECD Countries

Abstract

Aiming to provide insights for nations improving their natural resources management and facilitate smooth energy transition, this study investigates green productivity across 38 OECD countries by employing by-production technology, directional distance functions, data envelopment analysis, and the Luenberger-Hicks-Moorsteen (LHM) productivity indicator. The analysis includes a comparative examination of the LHM productivity indicator and its components, along with an exploration of the relationship between LHM indicator and the structure of renewable energy consumption. The main discoveries can be succinctly summarized as follows: Firstly, the LHM productivity indicator highlights growth driven primarily by technical progress (TP), despite impediments posed by changes in technical efficiency change (TEC) and scale efficiency change (SEC). Secondly, many countries have demonstrated successful attainment of positive green growth, with outstanding performances observed in Ireland and Latvia. Conversely, Turkey, Costa Rica, and Iceland exhibit relative shortcomings in terms of sustainability. Over time, there is a discernible widening gap in green productivity among countries, with improvements in TP being a major contributing factor to the growth of the LHM indicator in most nations. Thirdly, the study reveals that the consumption structure of renewable energy has a positive impact on the LHM indicator. Lastly, the transition towards sustainable energy yields a significant positive effect on smaller nations and those with lower per capita carbon dioxide emissions. This nuanced comprehension of the link between green productivity and the structures of renewable energy consumption provides valuable insights to the discourse on sustainable development and resource reallocation.