Regulatory Intervention and Energy Efficiency: A Cross-Country Assessment of the Energy Efficiency Directive of the European Union

Abstract

Against the backdrop of global climate change and growing concerns over energy prices and security, improving energy efficiency has become an important policy goal for countries pursuing energy governance. Based on a difference-in-differences model, this paper uses World Bank data on 20 EU (European Union) member states and 12 non-EU OECD (Organization for Economic Co-operation and Development) countries from 2010 to 2023 to examine whether the EU's 2012 Energy Efficiency Directive (EED) promoted the strengthening of energy efficiency regulatory frameworks among member states, and to reflect the degree of improvement in energy efficiency regulatory frameworks across different countries. The results show that the EED has a significant positive effect on the energy efficiency regulatory score, and after controlling for economic development level, emission intensity, industrial structure, urbanization rate, and institutional quality, the energy efficiency score of EU member states increased by approximately 8.3 points compared to the non-EU group after the implementation of the EED. For the control variables, the rule of law index is significantly positively correlated with the energy efficiency score, while the proportion of industrial output value in GDP (Gross Domestic Product) has a negative correlation with it. This shows that the implementation capacity of the system and the industrial structure are important determinants of the adjustment of the regulatory framework. Overall, this paper claims that legally binding energy policies can effectively promote member states to enhance their energy efficiency regulatory frameworks, which have a positive effect on the environment.