Energy Efficiency and Institutional Quality. The Role of Renewable Energies

Abstract

Energy efficiency and renewable energy systems have been a major concern of energy policy mainly due to resource scarcity and climate change issues. However, the successful deployment of energy efficiency and renewable energy systems can be compromised by institutions and governance performance. While the influence of institutions on these issues is well-documented in the literature, the absence of an index of energy efficiency governance has prevented testing the relationship between energy governance and the improvements of energy efficiency and renewable energy. This work contributes to fill this gap and proposes the construction of an index that captures the institutional, economic and political environment underpinning energy efficiency governance across three different areas: enabling frameworks, institutional arrangements and co-ordination mechanisms. The index assesses 32 OECD countries and represents the period between 2000 and 2015. The existence of this index enables both the establishment of a country ranking about energy efficiency governance and the characterization of the sample of countries in three groups. While countries such as Denmark, Germany or Spain compound the top group, others such as Mexico, Slovenia or, surprisingly, Switzerland are included within the bottom group. On average, the ranking is shown to be positively correlated with economic development and general governance. Finally, this work illustrates the positive correlation between energy efficiency governance and both the longrun energy intensity growth and changes in the share of renewable energy