The impact of increased efficiency in the industrial use of energy: A computable general equilibrium analysis for the United Kingdom

Allan, G., Hanley, N. , McGregor, P., Swales, K. and Turner, K. (2007) The impact of increased efficiency in the industrial use of energy: A computable general equilibrium analysis for the United Kingdom. Energy Economics, 29(4), pp. 779-798. (doi:10.1016/j.eneco.2006.12.006)

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Abstract

The conventional wisdom is that improving energy efficiency will lower energy use. However, there is an extensive debate in the energy economics/policy literature concerning “rebound” effects. These occur because an improvement in energy efficiency produces a fall in the effective price of energy services. The response of the economic system to this price fall at least partially offsets the expected beneficial impact of the energy efficiency gain. In this paper we use an economy–energy–environment computable general equilibrium (CGE) model for the UK to measure the impact of a 5% across the board improvement in the efficiency of energy use in all production sectors. We identify rebound effects of the order of 30–50%, but no backfire (no increase in energy use). However, these results are sensitive to the assumed structure of the labour market, key production elasticities, the time period under consideration and the mechanism through which increased government revenues are recycled back to the economy.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Hanley, Professor Nicholas
Authors: Allan, G., Hanley, N., McGregor, P., Swales, K., and Turner, K.
College/School:College of Medical Veterinary and Life Sciences > Institute of Biodiversity Animal Health and Comparative Medicine
Journal Name:Energy Economics
Publisher:Elsevier
ISSN:0140-9883
ISSN (Online):0140-9883
Published Online:08 February 2007

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