Technical Efficiency Measures as a Tool for Energy Benchmarking in Industry?

Abstract

Energy benchmarking is a practical management tool to evaluate and improve the energy performance of an industrial firm, possibly revealing considerable potentials for energy savings and for reduction of emissions to the atmosphere and biosphere. Existing energy metrics used for energy benchmarking however are strictly limited to measuring energy efficiency, completely disregarding positive or negative effects energy savings may have on other environmental pressures (use of depletable resources other than energy, emissions of pollutants, effluents or waste). We therefore propose investigating the use of technical efficiency measures as energy benchmarking tools. Technical efficiency is explored from both an engineering and a micro-economic approach, although we limit our discussion to the non-parametric mathematical programming performance measures. Particular attention is given to the inclusion of undesirable outputs or ‘bads' in the existing performance measures. We conclude with a cursory review of empirical research done in the field of environmental performance indicators (EPIs), mainly in the sector of electricity generation and pulp and paper mills.