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Rebound and disinvestment effects in oil consumption and supply resulting from an increase in energy efficiency in the Scottish commercial transport sector

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Author Info
Sam Anson (Scottish Government Transport Directorate)
Karen Turner () (Department of Economics, University of Strathclyde)

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Abstract

In this paper we use an energy-economy-environment computable general equilibrium (CGE) model of the Scottish economy to examine the impacts of an exogenous increase in energy augmenting technological progress in the domestic commercial Transport sector on the supply and use of energy. We focus our analysis on oil, as the main type of energy input used in commercial transport activity. We find that a 5% increase in energy efficiency in the commercial Transport sector leads to rebound effects in the use of oil-based energy commodities in all time periods, in the target sector and at the economy-wide level. However, our results also suggest that such an efficiency improvement may cause a contraction in capacity in the Scottish oil supply sector. This ‘disinvestment effect’ acts as a constraint on the size of rebound effects. However, the magnitude of rebound effects and presence of the disinvestment effect in the simulations conducted here are sensitive to the specification of key elasticities of substitution in the nested production function for the target sector, particularly the substitutability of energy for non-energy intermediate inputs to production.

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Publisher Info
Paper provided by University of Strathclyde Business School, Department of Economics in its series Working Papers with number 09-01.

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Length: 33 pages
Date of creation: Jan 2009
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Handle: RePEc:str:wpaper:0901

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Related research
Keywords: general equilibrium; energy efficiency; rebound effects; disinvestment;

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Find related papers by JEL classification:
D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
R15 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply
Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Kemfert, Claudia, 1998. "Estimated substitution elasticities of a nested CES production function approach for Germany," Energy Economics, Elsevier, vol. 20(3), pages 249-264, June. [Downloadable!] (restricted)
  2. Birol, Fatih & Keppler, Jan Horst, 2000. "Prices, technology development and the rebound effect," Energy Policy, Elsevier, vol. 28(6-7), pages 457-469, June. [Downloadable!] (restricted)
  3. J. Daniel Khazzoom, 1980. "Economic Implications of Mandated Efficiency in Standards for Household Appliances," The Energy Journal, International Association for Energy Economics, vol. 1(4), pages 21-40.
  4. David G. Blanchflower & Andrew J. Oswald, 1990. "The Wage Curve," NBER Working Papers 3181, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Karen Turner, 2008. "A Computable General Equilibrium Analysis of the Relative Price Sensitivity Required to Induce Rebound Effects in Response to an Improvement in Energy Efficiency in the UK Economy," Working Papers 08-07, University of Strathclyde Business School, Department of Economics. [Downloadable!]
  6. 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. [Downloadable!] (restricted)
  7. Patrick Minford & Peter Stoney & Jonathan Riley & Bruce Webb, 1994. "An Econometric Model of Merseyside: Validation and Policy Simulations," Regional Studies, Taylor and Francis Journals, vol. 28(6), pages 563-575, October. [Downloadable!] (restricted)
  8. 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, vol. 29(4), pages 779-798, July. [Downloadable!] (restricted)
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