Energy Application for Country

**85**

**Chapter 5**

*Akihiro Otsuka*

**Abstract**

Industrial Sector

stochastic frontier analysis, Japan

final energy demand efficiency.

of this sector has become a key policy issue.

**1. Introduction**

Determinants of Energy Demand

Efficiency: Evidence from Japan's

With the growing demand for energy, improving energy efficiency has become a key policy issue in Japan. Therefore, this study estimates the energy demand function of Japan's industrial sector using a stochastic frontier model and analyzes the level of energy efficiency and its determinants. An empirical analysis based on the data of 47 Japanese prefectures presents three main findings. First, installment in large production facilities deteriorates energy efficiency and second, it is effective in increasing the electrification rate to improve energy efficiency. Finally, improving productivity leads to an increase in the electrification rate. These results suggest that policies aimed at increasing electrification by enhancing the productivity of factories and offices significantly contribute to improving energy efficiency.

Technological modernization is one of the key elements of success in improving productivity and environmental management [1]. It has advanced in power plants and as a result, energy efficiency has increased. Regarding plant efficiency, there are numerous findings from the engineering viewpoint [2, 3]. Research on fuel cells is also active, Taner [4] measuring the energy efficiency of the proton exchange membrane fuel cell. Based on these technical studies, this chapter focuses on the efficiency of the overall energy demand in a country and region, not the individual efficiencies of plants and technology unit. In other words, this study analyzes the energy consumption efficiency from an economic viewpoint. Energy consumption is primary and secondary, or final energy consumption. The focus of this study is

Energy consumption is mainly affected by energy efficiency. Given the current trend in Japan, the energy saving in the manufacturing sector as a subsector of the industrial sector has strengthened, given the drastic improvements in the energy efficiency of factory facilities. However, in the commercial sector as another subsector of the industrial sector, energy saving has deteriorated and this, in turn, has increased energy consumption. Japan's industrial sector accounts for a large proportion of the nation's energy consumption, and thus, increasing the energy efficiency

**Keywords:** energy efficiency, industrial sector, electrification rate,
