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Abstract
This study investigates the efficiency of energy use and technology gap in the Indonesian sugar industry and the factors influencing energy efficiency. Using the firm-level data of sugar mills in 42 regencies in Indonesia from 2010 to 2014, this study applies the meta stochastic frontier based on the input distance function. The metafrontier analysis is applied in sugar mills in the East Java province and other provinces in Indonesia. All the data used in this study are the secondary data taken from the Indonesian Central Board of Statistics. The results reveal that there is a large room to save energy consumption in this industry. The mills in East Java provinces have higher energy efficiency, technology gap ratio, and metafrontier energy efficiency compared to the mills in other provinces. According to the metafrontier energy efficiency, energy inefficiencies in both groups come from operational inefficiency and technology gap. The size of the mills and age of the mills have a positive relationship with the energy efficiency of sugar mills and the size of the mills is positively related to the technology gap ratio. Meanwhile, the productivity of labor and the types of ownership do not affect the energy efficiency and technology gap.
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Copyright (c) 2021 Thinzar Win, Dyah Wulan Sari, Tri Haryanto
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References
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- Battese, G. E., & Rao, D. S. P. (2002). Technology Gap, Efficiency, and a Stochastic Metafrontier Function. International Journal of Business and Economics, 1(2), 87–93.
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- Geroski, P. A. (2000). Models of technology diffusion. Research Policy, 29(4–5), 603–625.
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- Herring, H. (2006). Energy efficiency - A critical view. Energy, 31(1), 10–20.
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References
Ajibefun, I. A. (2008). An evaluation of parametric and non-parametric methods of technical efficiency measurement: Journal of Agriculture and Social Sciences, 4(3), 95–100.
Ang, B. W. (2006). Monitoring changes in economy-wide energy efficiency: From energy-GDP ratio to composite efficiency index. Energy Policy, 34(5), 574–582.
Azhari, R. (2018). Analysis of efficiency of sugar industry in Indonesia (2000-2014). [Unpublished thesis]. Universitas Sriwijaya.
Battese, G. E., & Coelli, T. J. (1995). A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data. Empirical
Economics, 20, 325–332.
Battese, G. E., & Rao, D. S. P. (2002). Technology Gap, Efficiency, and a Stochastic Metafrontier Function. International Journal of Business and Economics, 1(2), 87–93.
Boyd, G. A. (2008). Estimating Plant Level Energy Efficiency with a Stochastic Frontier. The Energy Journal, 29(2), 23–43.
Evans, J., Filippini, M., & Hunt, L. C. (2013). The contribution of energy efficiency towards meeting CO2 targets. Handbook on energy and cimate change. Cheltenham, UK and Northampton, MA, USA.
Filippini, M., & Hunt, L. C. (2011). Energy Demand and Energy Efficiency in the OECD Countries : A Stochastic Demand Frontier Approach. The Energy Journal, 32(2), 59–80.
Geroski, P. A. (2000). Models of technology diffusion. Research Policy, 29(4–5), 603–625.
Haider, S., Danish, M. S., & Sharma, R. (2019). Assessing energy efficiency of Indian paper industry and influencing factors: A slack-based firm-level analysis. Energy Economics, 81, 454–464.
Hall, B. H., & Khan, B. (2002). Adoption of new Technology. New Economy Handbook, 38. University of California at Berkeley.
Hayami, Y., & Ruttan, V. W. (1970). Agricultural Productivity Differences among Countries. American Economic Review, 60(5), 895–911.
Herring, H. (2006). Energy efficiency - A critical view. Energy, 31(1), 10–20.
Honma, S., & Hu, J. L. (2018). A meta-stochastic frontier analysis for energy efficiency of regions in Japan. Journal of Economic Structures, 7(1), 21. Springer Berlin Heidelberg. Retrieved from https://doi.org/10.1186/s40008-018-0119-x
Hsiao, W. L., Hu, J. L., Hsiao, C., & Chang, M. C. (2019). Energy efficiency of the baltic sea countries: An application of stochastic frontier analysis. Energies, 12(1), 104.
Huang, C. J., Huang, T. H., & Liu, N. H. (2014). A new approach to estimating the metafrontier production function based on a stochastic frontier framework. Journal of Productivity Analysis, 42(3), 241–254.
InterCAFE. (2018). Market Study on Food Sector in Indonesia. InternationalCenter for Applied Finance and Economics, Indonesia.
Irawan, T., Hartono, D., & Achsani, N. A. (2010). An Analysis Of Energy
Intensity In Indonesian Manufacturing ( No. 201007). Working Paper in Economics and Development Studies, No. 21007.
Islam, M. Z., Ahmed, Z., Saifullah, M. K., Huda, S. N., & Al-Islam, S. M. (2017). CO2 Emission, Energy Consumption and Economic Development: A Case of Bangladesh. The Journal of Asian Finance, Economics and Business, 4(4), 61–66.
ISO. (2019). International Sugar Organization, Sugar Year Book. London.
Kumbhakar, S. C., Wang, H.-J., & Horncastle, A. P. (2015). A Practitioner’s Guide to Stochastic Frontier Analysis Using Stata. Cambridge University Press. Cambridge University Press.
Kuosmanen, T., Johnson, A., & Saastamoinen, A. (2015). Stochastic nonparametric approach to efficiency analysis : A unified framework. (Vol. 221). New York: Springer. Retrieved from http://link.springer.com/10.1007/978-1-4899-7553-9
Mandal, S. K., & Madheswaran, S. (2011). Energy use efficiency of Indian cement companies: A data envelopment analysis. Energy Efficiency, 4(1), 57–73.
McDonald, G., & Meylinah, S. (2019). Indonesia Sugar Annual Report 2019. Global Agricultural Information Network.
Ministry of Industry. (2012). Planning for Industrial Sector Energy Demand in the Context of Accelerated Industrialization, Indonesia.
Nelson, R., & Winter, S. G. (1982). An Evolutionary Theory of Economic Change (First edit.). The Belknap Press of Harvard University Press.
O’Donnell, C. J., Rao, D. S. P., & Battese, G. E. (2008). Metafrontier Frameworks for the Study of Firm-Level Efficiencies and Technology Ratios. Emprical Economics, 34, 231–255.
Patterson, M. G. (1996). What is energy efficiency? Concepts, indicators and methodological issues. Energy Policy, 24(5), 377–390.
Phylipsen, G. J. M., Blok, K., & Worrell, E. (1997). International comparisons of energy efficiency - Methodologies for the manufacturing industry. Energy Policy, 25(7–9), 715–725.
Priambodo, A., & Kumar, S. (2001). Energy use and carbon dioxide emission of Indonesian small and medium scale industries. Energy Conversion and Management, 42(11), 1335–1348.
Ramstetter, E. D., & Narjoko, D. (2014). Ownership and Energy Efficiency in Indonesian Manufacturing. Bulletin of Indonesian Economic Studies, 50(2), 255–276.
Sugiharti, L., Purwono, R., Primanthi, M. R., & Padilla, M. A. E. (2017). Indonesian productivity growth: Evidence from the manufacturing sector in Indonesia. Journal of Social Sciences and Humanities, 25(November), 29–44.
Susila, W. R., & Sinaga, B. M. (2005). Analysis Policy of National Sugar Industry. Jurnal Agro Ekonomi, 23(1).
UNIDO. (2017). Sugar Mill Sector Pagottan Sugar Mill PTPN-XI East Java, Indonesia, Resource Efficient and Cleaner Production Program.
Vivadinar, Y., Purwanto, W. W., & Saputra, A. H. (2012). What are the Key Drivers of Energy Intensity in Indonesia Manufacturing Sectors ? International Congress on Informatics, Environment, Energy and Applications-IEEA 2012, 38.
Vivadinar, Y., Purwanto, W. W., & Saputra, A. H. (2016). Tracing the energy footprints of Indonesian manufacturing industry. Energy Science and Engineering, 4(6), 394–405.
World Energy Council. (2006). ENERGY EFFICIENCIES : Pipe-dream or reality ? WEC Statement 2006.
Yessekina, A., & Urpekova, A. (2015). Energy Efficiency and CO2 Emissions of the Transportation System of Kazakhstan: A Case of Almaty. The Journal of Asian Finance, Economics and Business, 2(3), 41–46.
Zhou, P., Ang, B. W., & Zhou, D. Q. (2012). Measuring economy-wide energy efficiency performance: A parametric frontier approach. Applied Energy, 90(1), 196–200. Elsevier Ltd. Retrieved from http://dx.doi.org/10.1016/j.apenergy.2011.02.025