Energy Demand and Efficiency: Explore the Potential of SFA and DEA as Tools for the Determination of the Efficiency of Energy in Mexico Transport and Industrial Sectors

Abstract

This research presents the process of research of the energy efficiency and demand in the transport and industrial sectors of Mexico. To do this, two types of methodologies were used: a parametric one Stochastic Frontier Analysis (SFA) and a non-parametric Data Envelopment Analysis (DEA). Both estimate the energy efficiency and are commonly used in the field. Once the data was collected and the research was carried out, three types of models were created. The first one for the SFA and the other ones for DEA, where one model was used for the transport sector and the other for the industrial sector. The results indicate the levels of efficiency in the sectors selected. For the SFA, the data showed statistical significance and the results expected, due to the economic theory of the price and income elasticities for the energy demand. In addition, the inefficiency component was significant and estimated for the 17 sectors analysed. While DEA results were estimated separately for each sector and therefore, different variables were used. The findings for the transport sector indicate that only one sector is efficient and in the industrial sector 10 of 13 are efficient. In both sets of results, the transport sector seems to be more efficient than the industrial sector. The purpose of estimating the levels of efficiency was to reach a conclusion on which sector could improve its productivity. Furthermore, this research could be developed into a doctoral thesis, where it would be necessary to use a more complex model of the aforementioned model and carry out more research into the impact of the productivity and energy policies.