The productivity impacts of energy efficiency programs in developing countries: Evidence from iron and steel firms in China
Abstract
We study the impact of a national energy efficiency program on total factor productivity (TFP) growth in firms in China’s iron and steel industry. Using detailed firm-level survey data and multiple approaches to estimate program effects, we find participating firms experienced greater annualized TFP change. Our base specification estimates the program increased annual TFP growth by 3.1 percentage points, implying an annual private benefit of 148.7 million RMB/year per firm, with approximately equal contributions from technical change and scale efficiency change. Our results suggest that firms undervalued energy efficiency investments prior to the start of the program.
We thank participants at the Stanford Environmental and Energy Policy Analysis Center Lunch, the Young Swiss Economists Meeting 2017, the 6th Annual Summer Conference of the Association of Environmental and Resource Economists, 15th European Workshop on Efficiency and Productivity Analysis, the 23rd Annual Conference of the European Association of Environmental and Resource Economists, and the 8th Atlantic Workshop on Energy and Environmental Economics for helpful comments and discussion. This work was partially supported by a grant through the MIT Energy Initiative's Seed Fund Program and by the MIT Joint Program on the Science and Policy of Global Change through a consortium of industrial sponsors and federal grants. We further gratefully acknowledge the support of the Energy Information Administration of the U.S. Department of Energy through a cooperative agreement with MIT (DE-EI0003030). Da Zhang acknowledges the support of the National Science Foundation of China (Project No. 71690244).
