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Energy Efficiency And Economic Growth

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  • RICHARD B. HOWARTH

Abstract

Recent contributions by Brookes (1990), Saunders (1992), and Inhaber and Saunders (1994) argue that cost-effective improvements in energy efficiency may, in the long run, lead energy use to grow more rapidly than it would in a world of fixed technologies. Since efficiency improvements may be viewed as a form of technological change that both reduces the effective cost of energy services and stimulates economic activity, energy demand may, under some circumstances, rise even as energy productivity improves. This paper examines this hypothesis using a simple model that distinguishes the roles of energy and energy services in production activities. In this model, improved energy efficiency can-not give rise to increased energy use unless: (i) energy costs dominate the total cost of energy services and (ii) expenditures on energy services constitute a large share of economic activity. Since neither of these assumptions is empirically plausible, the paper concludes that energy efficiency improvements will yield long-run reductions in energy use under the assumptions of the model. Copyright 1997 Western Economic Association International.

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Bibliographic Info

Article provided by Western Economic Association International in its journal Contemporary Economic Policy.

Volume (Year): 15 (1997)
Issue (Month): 4 (October)
Pages: 1-9

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Handle: RePEc:bla:coecpo:v:15:y:1997:i:4:p:1-9

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Cited by:
  1. B. Howarth, Richard & Haddad, Brent M. & Paton, Bruce, 2000. "The economics of energy efficiency: insights from voluntary participation programs," Energy Policy, Elsevier, Elsevier, vol. 28(6-7), pages 477-486, June.
  2. Roger Fouquet & Peter J.G Pearson, 2011. "The Long Run Demand for Lighting: Elasticities and Rebound Effects in Different Phases of Economic Development," Working Papers, BC3 2011-06, BC3.
  3. Roger Fouquet, 2012. "Trends in Income and Price Elasticities of Transport Demand (1850-2010)," Working Papers, BC3 2012-01, BC3.
  4. Michael Huesemann & Joyce Huesemann, 2008. "Will progress in science and technology avert or accelerate global collapse? A critical analysis and policy recommendations," Environment, Development and Sustainability, Springer, Springer, vol. 10(6), pages 787-825, December.
  5. Alcott, Blake, 2008. "The sufficiency strategy: Would rich-world frugality lower environmental impact," Ecological Economics, Elsevier, Elsevier, vol. 64(4), pages 770-786, February.
  6. Jin, Sang-Hyeon, 2007. "The effectiveness of energy efficiency improvement in a developing country: Rebound effect of residential electricity use in South Korea," Energy Policy, Elsevier, Elsevier, vol. 35(11), pages 5622-5629, November.
  7. Schipper, Lee & Grubb, Michael, 2000. "On the rebound? Feedback between energy intensities and energy uses in IEA countries," Energy Policy, Elsevier, Elsevier, vol. 28(6-7), pages 367-388, June.
  8. David I. Stern & Cutler J. Cleveland, 2004. "Energy and Economic Growth," Rensselaer Working Papers in Economics, Rensselaer Polytechnic Institute, Department of Economics 0410, Rensselaer Polytechnic Institute, Department of Economics.
  9. Brookes, Leonard, 2000. "Energy efficiency fallacies revisited," Energy Policy, Elsevier, Elsevier, vol. 28(6-7), pages 355-366, June.
  10. Dimitropoulos, John, 2007. "Energy productivity improvements and the rebound effect: An overview of the state of knowledge," Energy Policy, Elsevier, Elsevier, vol. 35(12), pages 6354-6363, December.
  11. Allan, Grant & Hanley, Nick & McGregor, Peter & Swales, Kim & Turner, Karen, 2007. "The impact of increased efficiency in the industrial use of energy: A computable general equilibrium analysis for the United Kingdom," Energy Economics, Elsevier, Elsevier, vol. 29(4), pages 779-798, July.
  12. Sorrell, Steve, 2009. "Jevons' Paradox revisited: The evidence for backfire from improved energy efficiency," Energy Policy, Elsevier, Elsevier, vol. 37(4), pages 1456-1469, April.
  13. Saunders, Harry D., 2000. "Does predicted rebound depend on distinguishing between energy and energy services?," Energy Policy, Elsevier, Elsevier, vol. 28(6-7), pages 497-500, June.
  14. Saunders, Harry D., 2000. "A view from the macro side: rebound, backfire, and Khazzoom-Brookes," Energy Policy, Elsevier, Elsevier, vol. 28(6-7), pages 439-449, June.
  15. "Skip" Laitner, John A., 2000. "Energy efficiency: rebounding to a sound analytical perspective," Energy Policy, Elsevier, Elsevier, vol. 28(6-7), pages 471-475, June.
  16. Wei, Taoyuan, 2007. "Impact of energy efficiency gains on output and energy use with Cobb-Douglas production function," Energy Policy, Elsevier, Elsevier, vol. 35(4), pages 2023-2030, April.
  17. Saunders, Harry D., 2008. "Fuel conserving (and using) production functions," Energy Economics, Elsevier, Elsevier, vol. 30(5), pages 2184-2235, September.
  18. David I. Stern, 2010. "The Role of Energy in Economic Growth," CCEP Working Papers, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University 0310, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.

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