Analysis of energy efficiency development in the German and Colombian food industries

Abstract

Purpose – The purpose of this paper is twofold. The first is to examine in detail energy efficiency performance of German and Colombian food industries. The second is to explain the factors that have influenced energy efficiency. Design/methodology/approach – Using data at the three-digit level of aggregation, the paper compares energy efficiency across sectors of the food industry for the period 1998-2005. Energy efficiency is analysed using the energy intensity (EI) indicator as well as a decomposition analysis. To determine the factors that have influenced energy efficiency performance, the concept of the production function is used. Findings – The results show that both countries’ food industries improved energy efficiency. During the period of study, energy consumption in the German food industry increased by an average of 1.3 per cent per year and the EI decreased 7 per cent, whereas the Colombian food industry decreased its energy consumption by an average of 1.9 per cent per the year and the EI decreased 11 per cent. However, the Colombian food industry needs 2.2 times more energy than the German food industry to produce a unit of gross production. A decomposition analysis indicated that economic and technical factors have played an important role in the energy efficiency performance because increases in economic growth and technology improvements increase the industrial sector’s ability to improve energy efficiency. A second-stage empirical analysis reveals that capital, material, investments and value-added variables had a positive influence on energy efficiency performance in both countries. Energy prices are shown to have a positive influence on energy efficiency in the German food industry, whereas the sizes of enterprises and concentration processes played an important role on energy efficiency performance in the Colombian food industry. Originality/value – The literature indicates the relative lack of attention paid to the analysis of energy use across sectors of food industry as well as the lack of studies determining the factors that have affected energy consumption and energy efficiency performance using cross-country and cross-sectoral comparisons.