This study analyzes the potential for energy savings by identifying inefficiencies in electricity use and their determinants in the Japanese industrial sector. Specifically, we used stochastic frontier analysis to estimate inefficiencies in electricity consumption based on data obtained from electric power companies. We identified significant determinants of electricity consumption efficiency and that changes in national energy policy following the Great East Japan Earthquake changed electricity consumption behavior. The contribution of this study is that its findings can be used to improve the cost-effectiveness of policies aimed at improving energy efficiency.
