Energy transition in Europe

: a stochastic frontier approach

Abstract

This dissertation aims to address for energy transition movement in Europe, by evaluating each country's ability to decouple economic growth from GHG emissions. A Stochastic frontier model was deployed to allow us to estimate technical efficiencies and TFP growth for 25 European countries between 2005 and 2019. The model included the ratio between gross domestic product and greenhouse gas emissions as output, time, human capital, total energy consumption per worker as inputs and a set of environmental variables. No country in the data was fully efficient in the period in analysis, however, France, Portugal and Sweden reached that status in specific years. Estimations suggested that solid fossil fuel consumption, a bad business environment, country´s economic complexity and demand for heating building have a negative impact on technical efficiency. Contrarily, the remaining environmental variables as population index, the share of energy consumed coming from clean energy sources, and energy dependence impact positively technical efficiency scores. A decomposition analysis was also performed, and it was possible to observe a positive technical change, representing an upward movement of the production frontier with time that contributed partially to a negative technical efficiency change by increasing the country´s relative distance from the frontier, outweighing the positive change in technical change leading to an overall negative TFP change. Total factor accumulation also contributed negatively to decoupling growth. Consequently, output growth was significantly explained by positive random shocks.

Date of Award	10 Jul 2023
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Leonardo Costa (Supervisor) & Alexandra Leitão (Co-Supervisor)