This paper explores the differences between firms’ energy productivity using representative microdata for nine countries. It documents wide dispersion in energy productivity across firms within narrowly defined industries. On average, the 90th percentile firm is 20 times more energy productive than the 10th percentile firm in the same industry, compared with five times for labour productivity. There is no sign that this dispersion is narrowing down over time. Addressing this dispersion could have major implications: for example, raising the energy productivity of the least productive firms to that of the 25th percentile firm in their industry would reduce aggregate energy consumption (and associated emissions) by almost half for the same level of output. Machine learning and regression methods reveal a strong link between economic and energy efficiency. Higher energy prices, stronger competition, better access to finance and greater innovation activity also explain dispersion, suggesting a role for policies.
