Estimating the changes in the distribution of energy efficiency in the U.S. automobile assembly industry Gale A. Boyd ⁎ Department of Economics, Duke University, Box 90989, Durham, NC 27708, United States abstract article info Article history: Received 14 January 2013 Received in revised form 11 November 2013 Accepted 18 November 2013 Available online 12 December 2013 JEL classification: Q48 Energy Government Policy L60 Industry Studies Manufacturing General L62 Automobiles Other Transportation Equipment O39 Technological Change Other Q55 Environmental Economics Technological Innovation Keywords: Energy efficiency Manufacturing Stochastic frontier Microdata This paper describes the EPA's voluntary ENERGY STAR program and the results of the automobile manufacturing industry's efforts to advance energy management as measured by the updated ENERGY STAR Energy Performance Indicator (EPI). A stochastic single-factor input frontier estimation using the gamma error distribution is applied to separately estimate the distribution of the electricity and fossil fuel efficiency of assembly plants using data from 2003 to 2005 and then compared to model results from a prior analysis conducted for the 1997–2000 time period. This comparison provides an assessment of how the industry has changed over time. The frontier analysis shows a modest improvement (reduction) in “best practice” for electricity use and a larger one for fossil fuels. This is accom- panied by a large reduction in the variance of fossil fuel efficiency distribution. The results provide evidence of a shift in the frontier, in addition to some “catching up” of poor performing plants over time. © 2013 Elsevier B.V. All rights reserved. 1. Introduction The environmental policy implications of lower energy use have led to the development of voluntary government programs for energy effi- ciency, particularly in the absence of, or supplement to, other types of climate policy. These programs arose in the early 1990s (Storey et al., 1997) and expanded in the US with the introduction of EPA ENERGY STAR for Industry (Environmental Protection Agency, 2013). In 2001, EPA created a new partnership as part of the ENERGY STAR buildings program (originally launched in 1999), the ENERGY STAR Focus on En- ergy Efficiency in Industry (hereafter “the Focus”). The initiative identi- fied barriers to energy efficiency, developed approaches for removing these barriers, and facilitated a support group of energy professionals within the industry. EPA's goal was to cultivate energy management functions within companies. EPA approached senior executives to es- tablish the business case for energy management, secure assignment of a responsible energy director for each corporation, and help the com- panies build the necessary internal supporting functions and networks. ENERGY STAR energy management tools such as program evaluation checklists, energy management guidelines, and information on forming energy management teams guided refinement of the energy manage- ment programs in participating companies. Voluntary programs like ENERGY STAR may require company commitments to specific energy reduction targets, or “energy management” generally. For example, a company joining ENERGY STAR as a Partner agrees to 1 • Measure, track, and benchmark energy performance • Develop and implement a plan to improve energy performance, adopting the ENERGY STAR strategy • Educate your staff and the public about your partnership and achieve- ments with ENERGY STAR. Recently the International Standards Organization (ISO) has established requirements for “establishing, implementing, maintaining and improving an energy management system, whose purpose is to en- able an organization to follow a systematic approach in achieving contin- ual improvement of energy performance, including energy efficiency, Energy Economics 42 (2014) 81–87 ⁎ Tel.: +1 919 660 6892. E-mail address: gale.boyd@duke.edu. 1 See http://www.energystar.gov/buildings/about-us/become-energy-star-partner/ online-partnership-agreement for the complete process. 0140-9883/$ – see front matter © 2013 Elsevier B.V. All rights reserved. http://dx.doi.org/10.1016/j.eneco.2013.11.008 Contents lists available at ScienceDirect Energy Economics journal homepage: www.elsevier.com/locate/eneco