"Energy Efficiency, Market Competition, and Quality Certification: Lessons from Central Asia": Study by Olga Popova

Just published in Energy Policy: "Energy Efficiency, Market Competition and Quality Certification: Lessons from Central Asia" by Olga Popova (IOS), Vladimir Otrachshenko and Christopher A. Hartwell. This study uses four examples from Central Asia to examine how quality labels and the informal economy affect firms' energy efficiency in a weak institutional environment.

Energy efficiency at the firm level is determined by a series of complex and multifaceted factors related to firmspecific attributes and a firm’s external environment. A weak institutional environment may exacerbate barriers to energy efficiency, sending interested firms in search of ways in which to signal their commitment to improving their energy usage. Paramount among these mechanisms is internationally recognized quality certification, which can both reward a firm for prior improvements and alert consumers about the quality of a firm’s products. This paper examines the effect of quality certification on energy efficiency in a particularly low institutional quality environment, the four transition countries of Central Asia. Using firm-level data and controlling for other determinants of energy intensity, we find that firms that have quality certifications are indeed more efficient in their use of energy. Perhaps more importantly, we find that competition from the informal sector is also incredibly important to improved energy efficiency. The effect of certification also runs back to firm planning, as certified firms are more likely to focus on energy efficiency metrics rather than overall usage in planning for the future.