Carbon Neutrality and Energy Efficiency

Climate change is affecting the whole world, with extreme weather conditions. To limit global warming, carbon neutrality by the middle of the 21st century is essential. Being carbon neutral means reducing the emissions emitted into the atmosphere and offsetting them with dedicated balancing measures, in order to eliminate and neutralize greenhouse gases emissions. The term carbon neutral indicates zero emissions and the concept of carbon neutrality involves any type of activity and entity in the industrial, economic and financial world. Energy efficiency is a key tool to achieve carbon neutrality, given that it allows to use energy as efficiently and economically as possible. In this chapter, we have applied the Global Malmquist-Luenberger index method to analyse the cross-country differences in terms of energy and environmental efficiency among 27 OECD countries from 2000 to 2020. The analysis of the differences that emerge between countries is a useful tool for policy makers to evaluate the effectiveness of the policies implemented. The empirical estimates reveal that the investigated countries are more oriented towards GDP growth rather than the reducing polluting emissions. During the investigated period, in most OECD countries, the decrease in greenhouse gases emissions has been less emphasized than the GDP growth and, in turn, countries have shown a weaker focus toward a sustainable economic growth. The increase in greenhouse gases emissions is still strongly driven by the economic growth of the countries.