Institutional reform over technical fixes: The energy waste severity index for tackling persistent inefficiency and advancing SDG 7

Why do some advanced economies remain persistently energy productivity-inefficient despite technological progress? This study argues that the constraint is institutional, not merely technical. Using a dynamic Bayesian stochastic frontier model for 37 OECD countries (2000–2021), this study develops the Energy Waste Severity Index (EWSI), a frontier-based metric that captures both the level and persistence of energy productivity inefficiency. The EWSI reveals a clear divide: countries such as Poland and Ireland face high, entrenched waste consistent with structural and governance frictions, whereas Japan, Switzerland, New Zealand, and the United States pair low inefficiency with weaker persistence. Because persistence signals institutional drag, technical fixes alone are insufficient; coordinated policy and governance reforms are required. By pairing benchmarking with persistence, the EWSI provides policymakers with a practical diagnostic tool to identify bottlenecks, align energy planning with skills, investment, and regulation, and monitor progress toward achieving SDG 7.