The Relationship Between Financial Crisis and Energy Efficiency: A Sectoral Study in Turkey

Abstract

Energy efficiency, which refers to services and output being produced with less energy input, has become an important issue in terms of increasing environmental performance, energy security and international competitiveness today. Sectoral energy efficiency directly affects energy consumption per output on one hand, and contributes positively to profitability through costs on the other. It results in a competitive advantage by enabling investments to be made at a lower cost compared to other sectors and shortening the break-even period of the investments. However, a decrease in cash flow due to difficult financing conditions created by the financial crisis, which emerged in the housing market in the US in 2008 and became a global crisis through the financial sector, affected the energy sector by creating a negative impact on energy demand and supply. The cancellation of projects due to lack of financing, reduction of oil supply and drilling operations of energy companies, and reductions in refined pipelines are examples of the problems experienced on the supply side. On the consumption side, equipment and device sales decreased. The effect of the financial crisis on energy efficiency will be examined in this study. Using the Logarithmic Mean Divisia Index Decomposition method, the causes of changes in energy intensity and energy use will be analyzed on a sectoral basis in Turkey. The aim of this study is to explain the sectoral changes caused by the financial crisis with the help of energy intensity measure based on an analysis conducted with current data.