Reducing Greenhouse Gas Emissions in Target Industries: A Computable General Equilibrium Model of Energy Conservation

This paper models the Hawaii’s economy in a CGE framework in order to analyze the economic impacts of energy (electricity) efficiency. Looking at energy flows in Hawaii’s economy, this paper traces the greenhouse gas (GHG) footprint of industry activities by linking a monetary computable general equilibrium model to physical (BTU) energy models of fuel use and resultant GHG emissions. This approach provides a detailed understanding of the drivers of GHG emissions from supply and demand driven sources. The CGE model provides scenarios for industrial, commercial, residential, and visitor driven reductions in energy use and GHG emissions resulting from marginal changes in operations. Comprehensive economic, energy, and emissions data are compiled for 68 sectors of Hawai‘i’s economy. The study develops energy and GHG emissions intensity measures for output, value added, and jobs. Greenhouse gas emissions elasticities are also developed for energy conservation and efficiency scenarios. Based on direct fuel combustion and indirect GHG emissions associated with intermediate good fuel combustion, the top GHG intensive sectors per dollar of output are electricity, utility gas, and air transport followed by fishing, ground transportation and trucking. CGE analysis determines that the most significant economic impact, in terms of increase in the sectoral output and job count, occurs in agricultural sector, followed by transportation, restaurants, and hotels. However, in terms of energy and GHG reductions, the largest potential lies in electricity efficiency in hotels, accommodations, and restaurants, respectively. This shows the high GHG emissions elasticity of technological change in tourism industry. Especially, considering the ratio of residents’ versus visitors’ population, it implies that the visitor expenditures are more energy and carbon intensive than that of Hawai‘i households on a per person basis. The study indicates the sensitivity of sectors to energy policy in a service-oriented economy. See above See above