Energy efficiency and factor productivity in Pakistan: Policy perspectives

Energy efficiency shows tremendous potential for enhancing economic growth while also conquering the emissions of greenhouse gases. It is generally acknowledged that Pakistan's decarbonization has to be escorted by energy efficiency developments. This study analyzes key factors behind the energy con-sumption variations at the sectorial level, such as agriculture, industrial and services that consume almost 70% of Pakistan's final energy. The logarithmic mean Divisia index method is applied to detect the impacting variables (i.e., energy intensity, economic activity, labor productivity, and employed labor), which oversee energy consumption for 2000-2020. Results show (1) the observed sectors provide a positive energy intensity at the maximum period, which is the main reason for negative economic ac-tivity. (2) Significant and optimistic labor productivity appeared during 2000-2020, which could be discussed due to an upsurge in capital investment and economic activity liable for increasing produc-tivity. (3) Each factor's ratio increases in which labor productivity and economic activity present maximum input, excluding the epidemic period. (4) The sectorial energy efficiency accounting system under current energy consumption declined by 40.7 Mtoe because of COVID-19. Finally, the study pro-vides policies linked to energy efficiency, pollution reduction, and economic sustainability based on empirical results.(c) 2022 Elsevier Ltd. All rights reserved.