IDEAS home Printed from https://ideas.repec.org/p/ssb/dispap/817.html
   My bibliography  Save this paper

Residental energy efficiency and European carbon policies A CGE-analysis with bottom-up information on energy efficiency technologies

Author

Listed:

Abstract

While the introduction and reformation of climate policy instruments take place rapidly in Europe, the knowledge on how the instruments interact lags behind. In this paper we analyse different interpretations of the 2030 climate policy goals for residential energy efficiency and how they interact with targets for restricting CO2 emissions. We focus on Norway, whose climate and energy policies are integrated with those of the EU. As we account for investment costs of improving energy efficiency we find substantial welfare costs of energy efficiency policies, particularly when interacting with carbon pricing. Rebound effects within households are small, but economy-wide indirect rebound is significant because energy-intensive, trade-exposed (EITE) industries expand. As residential energy use consists mainly of carbon-free electricity, this expansion of EITE-industries leads to increased total CO2 emissions.

Suggested Citation

  • Brita Bye & Taran Fæhn & Orvika Rosnes, 2015. "Residental energy efficiency and European carbon policies A CGE-analysis with bottom-up information on energy efficiency technologies," Discussion Papers 817, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:817
    as

    Download full text from publisher

    File URL: https://www.ssb.no/en/forskning/discussion-papers/_attachment/239058
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Turner, Karen, 2009. "Negative rebound and disinvestment effects in response to an improvement in energy efficiency in the UK economy," Energy Economics, Elsevier, vol. 31(5), pages 648-666, September.
    2. McDaniel, Christine A. & Balistreri, Edward J., 2002. "A Discussion on Armington Trade Substitution Elasticities," Working Papers 15856, United States International Trade Commission, Office of Economics.
    3. Krichene, Noureddine, 2002. "World crude oil and natural gas: a demand and supply model," Energy Economics, Elsevier, vol. 24(6), pages 557-576, November.
    4. Bye, Brita & Avitsland, Turid, 2003. "The welfare effects of housing taxation in a distorted economy: a general equilibrium analysis," Economic Modelling, Elsevier, vol. 20(5), pages 895-921, September.
    5. Hollis B. Chenery, 1949. "Engineering Production Functions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 63(4), pages 507-531.
    6. Aune, Finn Roar & Dalen, Hanne Marit & Hagem, Cathrine, 2012. "Implementing the EU renewable target through green certificate markets," Energy Economics, Elsevier, vol. 34(4), pages 992-1000.
    7. Jean-Charles Hourcade, Mark Jaccard, Chris Bataille, and Frederic Ghersi, 2006. "Hybrid Modeling: New Answers to Old Challenges Introduction to the Special Issue of The Energy Journal," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 1-12.
    8. Giraudet, Louis-Gaëtan & Guivarch, Céline & Quirion, Philippe, 2012. "Exploring the potential for energy conservation in French households through hybrid modeling," Energy Economics, Elsevier, vol. 34(2), pages 426-445.
    9. Oikonomou, Vlasis & Jepma, Catrinus & Becchis, Franco & Russolillo, Daniele, 2008. "White Certificates for energy efficiency improvement with energy taxes: A theoretical economic model," Energy Economics, Elsevier, vol. 30(6), pages 3044-3062, November.
    10. Saunders, Harry D., 2000. "A view from the macro side: rebound, backfire, and Khazzoom-Brookes," Energy Policy, Elsevier, vol. 28(6-7), pages 439-449, June.
    11. Horridge, Mark & Meeraus, Alex & Pearson, Ken & Rutherford, Thomas F., 2013. "Solution Software for Computable General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1331-1381, Elsevier.
    12. Kiuila, O. & Rutherford, T.F., 2013. "The cost of reducing CO2 emissions: Integrating abatement technologies into economic modeling," Ecological Economics, Elsevier, vol. 87(C), pages 62-71.
    13. Bednar-Friedl, Birgit & Schinko, Thomas & Steininger, Karl W., 2012. "The relevance of process emissions for carbon leakage: A comparison of unilateral climate policy options with and without border carbon adjustment," Energy Economics, Elsevier, vol. 34(S2), pages 168-180.
    14. Rutherford, Thomas F, 1999. "Applied General Equilibrium Modeling with MPSGE as a GAMS Subsystem: An Overview of the Modeling Framework and Syntax," Computational Economics, Springer;Society for Computational Economics, vol. 14(1-2), pages 1-46, October.
    15. Finn Roar Aune & Rolf Golombek & Hilde Hallre, 2015. "Phasing out Nuclear Power in Europe," CESifo Working Paper Series 5403, CESifo.
    16. Kenneth Gillingham & Matthew J. Kotchen & David S. Rapson & Gernot Wagner, 2013. "The rebound effect is overplayed," Nature, Nature, vol. 493(7433), pages 475-476, January.
    17. Jean Charles Hourcade & Mark Jaccard & Chris Bataille & Frédéric Ghersi, 2006. "Hybrid Modeling: New Answers to Old Challenges," Post-Print halshs-00471234, HAL.
    18. Sav, G Thomas, 1984. "The Engineering Approach to Economic Production Functions Revisited: An Application to Solar Processes," Journal of Industrial Economics, Wiley Blackwell, vol. 33(1), pages 21-35, September.
    19. Raymond J.G.M. Florax & Henri L.F. de Groot & Peter Mulder (ed.), 2011. "Improving Energy Efficiency through Technology," Books, Edward Elgar Publishing, number 3830.
    20. Christoph Böhringer & Knut Rosendahl, 2010. "Green promotes the dirtiest: on the interaction between black and green quotas in energy markets," Journal of Regulatory Economics, Springer, vol. 37(3), pages 316-325, June.
    21. Harry D. Saunders, 2015. "Recent Evidence for Large Rebound: Elucidating the Drivers and their Implications for Climate Change Models," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    22. Hanley, Nick & McGregor, Peter G. & Swales, J. Kim & Turner, Karen, 2009. "Do increases in energy efficiency improve environmental quality and sustainability?," Ecological Economics, Elsevier, vol. 68(3), pages 692-709, January.
    23. Rob B. Dellink, 2005. "Modelling the Costs of Environmental Policy," Books, Edward Elgar Publishing, number 3637.
    24. Graham, Paul & Thorpe, Sally & Hogan, Lindsay, 1999. "Non-competitive market behaviour in the international coking coal market," Energy Economics, Elsevier, vol. 21(3), pages 195-212, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Krzysztof Nowak & Sławomir Rabczak, 2020. "Technical and Economic Analysis of the External Surface Heating System on the Example of a Car Park," Energies, MDPI, vol. 13(24), pages 1-15, December.
    2. Marcin Olkiewicz & Anna Olkiewicz & Radosław Wolniak & Adam Wyszomirski, 2021. "Effects of Pro-Ecological Investments on an Example of the Heating Industry—Case Study," Energies, MDPI, vol. 14(18), pages 1-24, September.
    3. Thomas Betten & Shivenes Shammugam & Roberta Graf, 2020. "Adjustment of the Life Cycle Inventory in Life Cycle Assessment for the Flexible Integration into Energy Systems Analysis," Energies, MDPI, vol. 13(17), pages 1-19, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bye, Brita & Fæhn, Taran & Rosnes, Orvika, 2018. "Residential energy efficiency policies: Costs, emissions and rebound effects," Energy, Elsevier, vol. 143(C), pages 191-201.
    2. Taran Faehn and Elisabeth T. Isaksen, 2016. "Diffusion of Climate Technologies in the Presence of Commitment Problems," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    3. Böhringer, Christoph & Rivers, Nicholas, 2021. "The energy efficiency rebound effect in general equilibrium," Journal of Environmental Economics and Management, Elsevier, vol. 109(C).
    4. Fæhn, Taran & Yonezawa, Hidemichi, 2021. "Emission targets and coalition options for a small, ambitious country: An analysis of welfare costs and distributional impacts for Norway," Energy Economics, Elsevier, vol. 103(C).
    5. Taran Faehn & Gabriel Bachner & Robert Beach & Jean Chateau & Shinichiro Fujimori & Madanmohan Ghosh & Meriem Hamdi-Cherif & Elisa Lanzi & Sergey Paltsev & Toon Vandyck & Bruno Cunha & Rafael Garaffa , 2020. "Capturing Key Energy and Emission Trends in CGE models: Assessment of Status and Remaining Challenges," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 5(1), pages 196-272, June.
    6. Chang, Juin-Jen & Wang, Wei-Neng & Shieh, Jhy-Yuan, 2018. "Environmental rebounds/backfires: Macroeconomic implications for the promotion of environmentally-friendly products," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 35-68.
    7. Lu, Yingying & Liu, Yu & Zhou, Meifang, 2017. "Rebound effect of improved energy efficiency for different energy types: A general equilibrium analysis for China," Energy Economics, Elsevier, vol. 62(C), pages 248-256.
    8. Broberg, Thomas & Berg, Charlotte & Samakovlis, Eva, 2015. "The economy-wide rebound effect from improved energy efficiency in Swedish industries–A general equilibrium analysis," Energy Policy, Elsevier, vol. 83(C), pages 26-37.
    9. Font Vivanco, David & Nechifor, Victor & Freire-González, Jaume & Calzadilla, Alvaro, 2021. "Economy-wide rebound makes UK’s electric car subsidy fall short of expectations," Applied Energy, Elsevier, vol. 297(C).
    10. Rocha, Felipe Freitas da & Almeida, Edmar Luiz Fagundes de, 2021. "A general equilibrium model of macroeconomic rebound effect: A broader view," Energy Economics, Elsevier, vol. 98(C).
    11. Cansino, José M. & Ordóñez, Manuel & Prieto, Manuela, 2022. "Decomposition and measurement of the rebound effect: The case of energy efficiency improvements in Spain," Applied Energy, Elsevier, vol. 306(PA).
    12. Taran Fæhn & Elisabeth Thuestad Isaksen, 2014. "Diffusion of climate technologies in the presence of commitment problems," Discussion Papers 768, Statistics Norway, Research Department.
    13. Dai, Hancheng & Mischke, Peggy & Xie, Xuxuan & Xie, Yang & Masui, Toshihiko, 2016. "Closing the gap? Top-down versus bottom-up projections of China’s regional energy use and CO2 emissions," Applied Energy, Elsevier, vol. 162(C), pages 1355-1373.
    14. Sebastian Rausch and Valerie J. Karplus, 2014. "Markets versus Regulation: The Efficiency and Distributional Impacts of U.S. Climate Policy Proposals," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
    15. Lemoine, Derek, 2020. "General equilibrium rebound from energy efficiency innovation," European Economic Review, Elsevier, vol. 125(C).
    16. Sara Proença, 2013. "The role of renewable energy in Portugal´s decarbonisation strategy – application of the HyBGEM model," EcoMod2013 5647, EcoMod.
    17. Maliyamu Abudureheman & Qingzhe Jiang & Xiucheng Dong & Cong Dong, 2022. "CO 2 Emissions in China: Does the Energy Rebound Matter?," Energies, MDPI, vol. 15(12), pages 1-25, June.
    18. Blackburn, Christopher J. & Moreno-Cruz, Juan, 2021. "Energy efficiency in general equilibrium with input–output linkages," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    19. Cansino, José M. & Román-Collado, Rocío & Merchán, José, 2019. "Do Spanish energy efficiency actions trigger JEVON’S paradox?," Energy, Elsevier, vol. 181(C), pages 760-770.
    20. Mahmood, Arshad & Marpaung, Charles O.P., 2014. "Carbon pricing and energy efficiency improvement -- why to miss the interaction for developing economies? An illustrative CGE based application to the Pakistan case," Energy Policy, Elsevier, vol. 67(C), pages 87-103.

    More about this item

    Keywords

    Carbon policies; Energy efficiency policies; General Equilibrium analysis; Rebound effects;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ssb:dispap:817. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: L Maasø (email available below). General contact details of provider: https://edirc.repec.org/data/ssbgvno.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.